Corn prices are up; cotton and soybean prices are down with wheat prices mixed for the week. The U.S. Dollar Index traded at 79.75 before the close, up 0.32 for the week. The Dow Jones Industrial Average before the close was 13,324 down 286 points for the week. Crude Oil was trading at 91.73 a barrel, up 1.85 a barrel for the week. USDA released a grain friendly supply and demand report on October 11 that has led way to profit taking today on the heels of poor grain export numbers. Cotton while enduring more negative numbers yesterday is up today. Projections of a record 2013 South American soybean crop may be a bit premature as the expected El Nino weather pattern has weakened and the slam dunk production anticipated may not be a certainty. This could be enough of an issue to keep the market on edge into next year.
Current Crop: December closed at $7.50 ¾ a bushel, up 2¾ cents a bushel for the week. Technical indicators have a buy bias. Support is at $7.18 a bushel with resistance at $8.03 a bushel. Weekly exports were below expectations with net sales of 559,040 bushels (165,350 bushels of net sales for the 2012/13 marketing year and 393,690 bushels of net sales for the 2013/14 marketing year). Corn harvested nationwide on October 7 was a record 69% compared to 54% last week, 29% last year and the five year average of 28%. USDA estimated the 2012/13 ending stocks at 619 million bushels, down 114 million bushels from last month and 26 million bushels less than the average pre-report guess. Supply was decreased 214 million bushels with demand cut 100 million bushels. In future reports some analysts expect harvested acres for grain to be reduced further that the 87.7 million acres. Exports may be optimistic so it could balance out. We may continue to see some demand drop off due to current price levels. I am forward priced priced at 50% of anticipated production, 30% with Put Options with the remainder sold at harvest. The exception is if storage is available I would contract un-priced corn for future delivery taking advantage of basis improvement. I would not store corn un-priced or at least without a floor price. A December $7.55 Put would cost 25 cents and set a $7.30 futures floor. This option expires November 23. Producers also anticipating a crop insurance claim may want to look at buying a put option to protect from any price decline. If more time is needed a March $7.50 Put costs 43 cents and would set a $7.07 futures floor.
Deferred: March 2013 contract closed at $7.50 ¾ a bushel, up 2 ¼ cents a bushel since last Friday. Technical indicators have a buy bias. Support is at $7.19 a bushel with resistance at $8.02 a bushel. September 2013 corn closed at $6.60 ½ a bushel, up 4 cents for the week. I would have 10% of 2013 production priced.
Current crop: December closed at 71.36 cents per pound, down 0.13 cents since last week. Support is at 70.45 cents with resistance at 71.87 cents per pound. Technical indicators have a sell bias. The Adjusted World Price for October 12 – October 18 is 60.60 cents per pound, up 0.25 cents. All cotton weekly export net sales were 157,000 bales (121,000 bales of Upland cotton net sales for 2012/13; net sales of 36,900 bales of Upland cotton for 2013/14 and net sales reductions of 400 bales of Pima cotton for 2012/13). Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. Cotton harvested was 21% compared to 14% last week, 24% last year and the five year average of 22%. USDA’s October 11 report increased U.S. ending stocks 300,000 bales to 5.3 million bales and more importantly increased world stocks 2.8 million bales to what would be another record global stocks number of 79.11 million bales. China holds 46% of the world stocks. Whiles cotton prices were down after the report, they did close up 0.65 cents today. Demand for cotton has struggled and is more dependent on a good economic recovery before demand can recover. It will be difficult for nearby cotton contracts to increase dramatically in the short term. It will take a greater than expected cut in 2013 cotton acreage to help pull up the current crop prices. Look for rallies to the 75 – 77 range as pricing opportunities for at least some of the production.
Deferred: March 2013 cotton closed at 71.91 cents per pound, down 0.39 cents for the week. Support is at 71.07 cents with resistance at 72.43 cents per pound. Technical indicators have changed to a strong sell bias.
Current crop: The November contract closed at $15.22 ½ a bushel, down 49 cents a bushel since last Friday. Technical indicators have changed to a strong sell bias. Support is at $14.85 a bushel with resistance at $15.72 a bushel. Weekly exports were below expectations at net sales of 19.2 million bushels (18.4 million bushels of net sales for 2012/13 and 845,000 bushels of net sales for 2013/14). Soybeans harvested were reported at 58% compared to 41% last week, 42% last year and the five year average of 40%. USDA projected soybean ending stocks for the 2012/13 marketing year at 130 million bushels, up 15 million bushels from last month. Supply was increased 265 million bushels but was partially offset by a 250 million bushels increase in demand as crush was bumped up 40 million bushels and exports raised 210 million bushels. Yields were increased 2.5 bushels per acre to 37.5 bushels per acre. As in corn, harvested acres could see a downward adjustment in future reports. I am currently 50% priced overall on anticipated production; with an additional 30% priced in Put Options. At these levels, I would be inclined to sell any un-priced soybeans at harvest. Storing soybeans should be examined for possible basis appreciation and not necessarily futures price speculation. From a price risk management standpoint, a January $15.30 strike price put option will cost 55 cents and set a $14.75 futures floor. It expires on December 21.
Deferred: March 2013 soybeans closed today at $14.92 a bushel, down 21 cents a bushel since last week. Technical indicators have a sell bias. Support is at $14.56 a bushel with resistance at $15.41 a bushel. November 2013 soybeans closed at $13.38 ½ up 17 cents for the week. Watch for 2013 opportunities.
Nearby: December futures contract closed at $8.56 ¾ a bushel, down ¾ of a cent a bushel since Friday. Technical indicators have changed to a sell bias. Support is at $8.32 a bushel with resistance at $8.98 a bushel. Weekly exports were below expectations at 10.3 million bushels of net sales for 2012/13. USDA 2012/13 projections estimate ending stocks at 654 million bushels compared to the average pre-report guess of 627 million bushels. Supply was raised 1 million bushels to 3.142 billion bushels with usage increased 45 million bushels at 2.488 billion bushels. Demand changes include a 95 million bushel increase in wheat for feed and residual use and a 50 million bushel reduction in exports. The stock to use ratio was lowered 2.3% to 26.3%. Global stocks are expected to decrease 136 million bushels from last month’s projection to 6.357 billion bushels on mostly lower production for Australia, Russia, and the EU-27.
New Crop: July 2013 wheat closed at $8.41 ¼ a bushel, up 1 cent since last week. Technical indicators have changed to a buy bias. Support is at $8.24 a bushel with resistance at $8.85 a bushel. Winter wheat planted nationwide is reported at 57% compared to 40% last week, 53% last year and the five year average of 59%. Emergence is reported at 23% compared to 12% last week, 24% last year and the five year average of 30%. I would be 10% priced for 2013 production.