Cotton and soybean prices are mixed while corn and wheat prices are down for the week. The June U.S. Dollar Index is trading midday at 79.31, down .75 for the week. The Dow Jones Industrial Average at midday was up 185 points for the week at 13,035. Crude Oil traded before the close at 103.68 a barrel, up 0.36 a barrel for the week. News from Argentina’s Agriculture Ministry project that corn and soybean production there will be less than earlier thought. USDA may reduce Argentina’s production in the May report although a possible increase in Brazil and the Ukraine’s corn production could offset any corn reductions.
Nearby: July closed at $6.03 a bushel, down 17 ¾ cents a bushel for the week. Technical indicators have changed to a strong sell bias. Support is at $5.87 a bushel with resistance at $6.26 a bushel. Weekly exports were well below expectations at 11.7 million bushels (11.8 million bushels for the 2011/12 marketing year and reductions of 94,500 bushels for the 2012/13 marketing year). Rumors late in the week of old crop corn sales to China offered support to the market, but prices waned as confirmation of sales has not yet materialized.
Current Crop: September closed at $5.45 a bushel, down 10 ½ cents a bushel since last Friday. Technical indicators have a strong sell bias. Support is at $5.29 a bushel with resistance at $5.65 a bushel. Corn planted as of April 15 was 17% nationwide as compared to 7% last week, 5% last year and the five year average of 5%. Although at a record pace for this time of year, some analysts were expecting 20% – 25% to be planted. During the week prices hit the $5.43 stop and I would have priced another 15% to 40% overall. From a price risk management standpoint, a December $5.40 Put would cost 47 cents and set a $4.93 futures floor.
Nearby: July closed at 91.01 cents per pound, up 1.28 cents since last week. Support is at 89.55 cents per pound with resistance at 91.97 cents per pound. Technical indicators have changed to a sell bias. The Adjusted World Price for April 20– April 26 is 77.10 cents per pound down 0.10 cents. All cotton weekly export sales were 35,600 bales (reduction of 3,900 bales of upland cotton for 2011/12; sales of 38,800 bales of upland cotton for 2012/13; and reduction of 2,800 bales of Pima cotton for 2011/12 and sales of 3,500 bales of Pima cotton for 2012/13. The slight reduction in old crop cotton exports were seen as neutral as no large cancellations were reported. Revisions by India’s Cotton Advisory Board would seem to indicate that additional exports there would be unlikely. They slashed their ending stocks 55% to the equivalent of 1.96 million bales as compared to the latest USDA number of 9.55 million bales. There is quite a bit of uncertainty with India’s number so in itself it is doubtful that this carryout will be taken at face value by the market. I am currently at 80% priced for 2011 production and would be willing to hold the remainder for an additional rally. I would target the $1 to $1.05 range as a pricing point.
Current Crop: December cotton closed at 88.28 cents per pound, down 0.40 cents for the week. Support is at 87.33 cents per pound with resistance at 88.91 cents per pound. Technical indicators have a strong sell bias. Equities for 2012 cotton have been quoted in the 28-29 cent range. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. Cotton planting is pegged at 13% compared to 9% last week, 8% last year and the five year average of 9%. Look at prices in the mid 90s as a pricing point to price a portion of the 2012 crop.
Nearby: The July contract closed at $14.49 ½ a bushel, up 8 ¾ cents a bushel since last Friday. Technical indicators have a strong buy bias. Support is at $14.01 a bushel with resistance at $14.82 a bushel. Weekly exports were above expectations at 44.8 million bushels (13.8 million bushels for the 2011/12 marketing year and sales of 31 million bushels for 2012/13). China accounted for 61% of the total. Reports from China indicate that they will be importing 170 million bushels this month and 562 million bushels in the 2nd quarter, both more than the same period last year. Friday’s up move was bolstered by trade rumors that Brazil had closed its doors to exports and China had switched purchases of old crop soybeans to the U.S., tightening stocks. More will be known next week as we see it these rumors are confirmed.
Current Crop: November soybeans closed today at $13.56 a bushel, down 5 ¾ cents since last week. Technical indicators have changed to a buy bias. Support is at $13.28 a bushel with resistance at $13.78 a bushel. During the week, prices hit the $13.45 stop so I would have priced another 10% of the crop to be 50% priced overall. From a price risk management standpoint, a $13.60 Put option would cost 85 cents and set a $12.75 futures floor.
Current crop: July futures contract closed at $6.23 a bushel, down 7 ¼ cents a bushel since Friday. Technical indicators have a strong sell bias. Support is at $6.12 a bushel with resistance at $6.39 a bushel. Weekly exports were below expectations at 16.2 million bushels (13.4 million bushels for 2011/12 and 2.8 million bushels for 2012/13). Winter wheat conditions as of April 15 were 64% good to excellent compared to 61% last week, and 36% last year. Poor to very poor conditions are estimated at 11% compared to 10% last week and 38% last year. I am priced 20% on the current crop and would target any rallies to the $6.65 to $7.00 range as a point to price more. Wheat on its own will have trouble rallying and will need help from corn or maybe soybeans. A $6.25 Put option would cost 31 cents and set a $5.94 futures floor. This option expires on June 22.
Deferred: December wheat closed at $6.61 ¾ a bushel, down 3 ½ cents since last week. Technical indicators have a strong sell bias. Support is at $6.51 a bushel with resistance at $6.75 a bushel. Spring wheat planted is at 37% compared to 21% last week, 5% last year and the five year average of 9%. Spring wheat emergence is 10% compared to 1% last year and the five year average of 1%.