USDA released a mainly neutral report today which in today’s market can be continued as slightly bearish to prices as the market needs continued bullish information to go up. Corn and wheat prices were down today and cotton and soybean prices were up as along with the Supply & Demand report a below expectations export report was released for corn and wheat and a above expectations export report was released for cotton and soybeans. Other influences such as a 228 point drop in the Dow, strength in the Dollar, and a 1.72 a barrel drop in crude oil also are a factor on prices.

USDA will release the Prospective Plantings report and Grain Stocks report on March 31, 2011.The next USDA Supply & Demand report will be released April 8, 2011.

Corn

There was no real surprise in this month’s USDA report as USDA left ending stocks at 675 million bushels, the same as February’s report. The trade had estimated 667 million bushels in the average pre report guess. The stocks to use ratio is still at a tight 5.0%, equal to the all time modern low from 1995/96. USDA is most likely looking toward the March 31 Quarterly Grain Stocks report before making additional adjustments in usage. The season average price for 2010/11 is forecast to range from $5.15 – $5.65, an increase of 10 cents on the lower end and a decrease of 10 cents on the top side. World ending stocks for 2010/11 increased 24.8 million bushels as lower beginning stocks and lower production were more than offset by a reduction in consumption. May futures closed down 18 ¼ cents at $6.82 ¾ a bushel with support at $6.68 and resistance at $7.13. Technical’s have a hold bias.  September corn closed down 19 ¾ cents at $6.35 ½   bushel. Support is at $6.20 and resistance at $6.62. Technical’s have a buy bias. I am currently 30% priced for 2011 and since prices hit the trailing stop of $6.35 I would price an additional 5% to 35% overall. In the absence of bullish information, I would look for corn to trade sideways into the March 31 Prospective Plantings report. End users have been stepping in and buying the breaks, so the next couple of trading days should give an indication if the sell off will continue. Over the past 29 years the average difference between the March projection for U.S. ending stocks and the final estimate has been 10.2% or 183 million bushels. These numbers can and will change, but do reflect the best information and estimates at the time of the report. 

Supply and Demand Projections and Historical Data Source: USDA

Cotton

USDA’s projection for the 2010/11 marketing year estimates U.S. ending stocks of 1.9 million bales, unchanged from the February report. The supply of 21.27 million bales and use of 19.35 million bales were left unchanged from February. The projected range for the 2010/11 marketing year is narrowed 1 cent on both ends to 80 to 83 cents per pound.  World production was reduced 300,000 bales as a1 million bale decrease in India, a 500,000 bale decrease in China were mainly offset by a 600,000 bale increase in Brazil and a 500,000 bale increase in Australia. World ending stocks were lowered 480,000 bales to 42.33 million bales as world trade is raised slightly as lower Chinese production is expected to increase import demand. Some market analysts were looking for world stocks to drop further.  December futures closed at 128.80 cents per pound, up 2.20 cents. Support is at 120.25 cents and resistance at 132.55 cents. Technical’s have a strong buy bias. Equity quotes were in the 61 – 64 cent range.  Keep in contact with your cotton buyer on current prices as well as forward pricing alternatives. A strong export report is offering support on otherwise what was a neutral report and about expected. I would be 40% priced at this time and use a trailing stop of 120.15 cents as a place to price more if the market should fall back. If the market continues to go up, move your stop up.  If you think that stop is too tight with current prices, a little wider stop would be 114.87 cents. Over the past 29 years the average difference between the March projection for U.S. ending stocks and the final estimate has been 10.6% or 500,000 bales. These numbers can and will change, but do reflect the best information and estimates at the time of the report.

Soybean

USDA had no surprises for soybeans in today’s reports. Soybean ending stocks are left unchanged from February at 140 million bushels compared to the pre report guess of 141 million bushels. Global ending stocks for 2010/11 were virtually left unchanged at 2.143 billion bushels, an increase of 4.4 million bushels. Argentina’s production was unchanged from last month while Brazil’s is forecast to be a record 2.572 billion bushels.  The season average price for 2010/11 was down 10 cents on both ends and is forecast to range from $11.10 – $12.10 bushel. Although soybean stocks are historically tight at a 4.2% stocks to use ratio, bullish information including a bullish March 31 Prospective Plantings report is needed to get back to the winter highs. After that report, attention for all crops will turn to the weather. I look for the market to trade sideways going into the March 31 report.  May soybeans closed at $13.63 bushel, up 6 ½ cents per bushel. Support is at $13.01 and resistance at $13.95. Technical’s have a sell bias. November 2011 close up 1 cent at $13.21 per bushel. Support is at $12.73 and resistance at $13.56. Technical’s have a sell bias. I am currently 50% priced for 2011 and would wait until late spring-early summer before forward pricing more. On any substantial rallies, I would look to the options market as a price risk management tool. Over the past 29 years the average difference between the March projection for U.S. ending stocks and the final estimate for has been 22.8% or 62.5 million bushels. These numbers can and will change, but do reflect the best information and estimates at the time of the report.  

Supply and Demand Projections and Historical Data Source: USDA

Wheat

Wheat was the lone surprise in today’s USDA reports as exports were lowered 25 million bushels resulting in ending stocks of 843 million bushels as compared to the pre report guess of 809 million bushels. Export shipments have been slower than the expected pace heading into the final quarter of the wheat marketing year. World wheat ending stocks are projected at 6.684 billion bushels; 152 million bushels higher than the February report on increased production and lower consumption. The season average price for all wheat is unchanged and is projected to range from $5.60 to $5.80. Wheat appears to be in a down trend with its only hope for a rebound in production problems in the Plains or abroad or a strong rally in corn and soybeans. July wheat closed down 18 ½ cents at $7.72 ½ . Support is at $7.47 and resistance at $8.09. Technical’s have a strong sell bias. On my comments, I am currently 50% priced for 2011 and would hold off pricing more until we get further along in the spring. On any substantial rallies, I would look to the options market as a price risk management tool.  Over the past 29 years the average difference between the March projection for U.S. ending stocks and the final estimate has been 6.3% or 40 million bushels. These numbers can and will change, but do reflect the best information and estimates at the time of the report.  

Supply and Demand Projections and Historical Data Source: USDA