Cotton and soybean prices are up; corn and wheat prices are down for the week. The September U.S. Dollar Index before the close was 82.69 up 0.06 for the week. The Dow Jones Industrial Average before the close was 13,265, up 58 points since last Friday. Crude Oil before the close was 96.10 a barrel, up 2.78 a barrel for the week. Farm Service Agency certified acres were released this week and by my preliminary review compared to the USDA June 30 report were 1.4 million acres higher for corn; 821,000 acres less for cotton; 1 million acres less for soybeans; and 3.7 million acres less for wheat. Granted, these acres will be revised by FSA as late certified acres are added and corrections are made. USDA will reconcile these certified acres with the NASS acres when reporting them in most likely the October 11 USDA report. This year, the abandoned acres or acres cut for silage and hay for corn and soybeans along with cotton abandoned acres could have a big impact on harvested acres and production. Several states have joined together to request a waiver for the Renewable Fuels Standard requirement for ethanol produced from corn. However, at least one study from the Center for Agricultural and Rural Development at Iowa State concludes that flexibility on corn for ethanol mandates would have limited price impact on corn. Ethanol plants could continue to be a strong competitor for corn even without the mandates.
Current Crop: September closed at $7.98 ½ a bushel, down 1 ½ cents a bushel for the week. Technical indicators have changed to a buy bias. Support is at $7.84 a bushel with resistance at $8.07 a bushel. Weekly exports were below expectations with net sales of 9.9 million bushels (net sales of 4.8 million bushels for the 2011/12 marketing year and net sales of 5.1 million bushels for the 2012/13 marketing year). Since corn harvest has started in the South and southern Midwest, the condition ratings will not be quite as meaningful, but I will report them for a few more weeks. Corn condition ratings this week were 23% rated good to excellent as compared to 23% last week and 60% a year ago. Poor to very poor were at 51% compared to 50% last week and 15% last year. Corn dented nationwide is 42% compared to 26% last week, 14% last year and the five year average of 16%. Corn in the mature stage is 10% nationwide compared to 6% last week and 6% last year and the five year average of 3%. Harvested numbers nationwide will be reported next week. Prices, for the most part have traded sideways this week. At one point this week, prices were supported by reports that China’s corn production would be down from insect problems. I am currently priced at 50% of anticipated production, and 30% with Put Options. As harvest has started in Tennessee, I would be inclined to sell the remainder of un-priced corn at harvest. I would not store corn un-priced or at least without a floor price. A December $8.10 Put would cost 50 cents and set a $7.60 futures floor. This option expires November 23.
Deferred: March 2013 contract closed at $8.07 ¾ a bushel, down 4 ¼ cents a bushel since last Friday. Technical indicators have a strong buy bias. Support is at $7.95 a bushel with resistance at $8.15 a bushel. September 2013 corn closed at $6.82 a bushel, down 1 ¼ cents for the week. I would have 10% of 2013 production priced.
Current crop: December closed at 73.30 cents per pound, up 0.28 cents since last week. Support is at 71.85 cents with resistance at 74.89 cents per pound. Technical indicators have a buy bias. The Adjusted World Price for August 17– August 23 is 63.14 cents per pound, down 1.00 cents. All cotton weekly export net sales were 93,600 bales (77,800 bales of upland cotton net sales for 2012/13; and net sales of 15,800 bales of Pima cotton for 2012/13). Cotton equities for 2012 loan cotton have been quoted in the 14.5 – 15 cent range. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. Cotton bolls opening were 12% compared to 9% last week and 11% last year and the five year average of 10%. Cotton crop condition ratings were 42% good to excellent compared to 41% last week and 31% last year. Poor to very poor were reported at 28% compared to 27% last week and 40% last year. News from India that they won’t decide whether to restrict exports until they have reviewed production has been supportive of the cotton market. Poor monsoon rainfall is expected to lower their production and has prompted this review.
Deferred: March 2013 cotton closed at 73.99 cents per pound, up 0.18 cents for the week. Support is at 72.78 cents with resistance at 75.44 cents per pound. Technical indicators have a buy bias.
Current crop: The November contract closed at $16.45 ¾ a bushel, up 2 cents a bushel since last Friday. Technical indicators have a strong buy bias. Support is at $16.05 a bushel with resistance at $16.53 a bushel. Weekly exports were above expectations at 37.5 million bushels (3.6 million bushels for the 2011/12 marketing year and net sales of 33.9 million bushels for 2012/13). Soybean setting pods were 83% this week as compared to 71% last week, 64% last year and the five year average of 70%. Soybean condition ratings were 30% good to excellent compared to 29% last week and 61% last year. Poor to very poor ratings were 38% compared to 39% last week, and 13% last year. The National Oilseed Processors Association reported their latest crush numbers at 137.4 million bushels, 4.9 million bushels greater than expected and above last year and the five year crush. So far, higher prices have yet to slow down demand. I am currently 50% priced overall on anticipated production; with an additional 30% priced in Put Options. As stated last week, soybean yields do have the potential to improve if beneficial rains are received this month so there is some downside risk in the market. From a price risk management standpoint, a $16.50 November Put option would cost 80 cents and set a $15.70 futures floor.
Deferred: January 2013 soybeans closed today at $16.37 a bushel, up 1 ½ cents since last week. Technical indicators have a strong buy bias. Support is at $15.97 a bushel with resistance at $16.41 a bushel. November 2013 soybeans closed at $12.83 ½ down 19 ¼ cents for the week. Start watching for 2013 opportunities.
Nearby: September futures contract closed at $8.74 ½ a bushel, down 10 ¾ cents a bushel since Friday. Technical indicators have a buy bias. Support is at $8.29 a bushel with resistance at $8.84 a bushel. Weekly exports were less than expected at 14.6 million bushels for 2012/13. Winter wheat harvest has progressed to 94% harvested on August 12 compared to 88% last week, 88% a year ago and the five year average of 91%. Wheat prices continue to be supported by the wheat trade in the Black Seas region where supplies could be low this fall. Other support is coming from an estimated 20% drop in wheat seedings in Argentina and Australian production issues.
Deferred: March 2013 wheat closed at $9.02 ¾ a bushel, down 8 cents since last week. Technical indicators have changed to a strong buy bias. Support is at $8.59 a bushel with resistance at $9.13 a bushel. Spring wheat harvested is being reported at 65% compared to 47% last week, 11% last year and the five year average of 24%. July 2013 wheat closed at $8.42 ½ a bushel, down 9 ½ cents for the week. I would be 10% priced for 2013 production.