Corn, cotton, soybean and wheat prices are up for the week. The March U.S. Dollar Index was trading mid day at 76.42, down .90 for the week. The Dow Jones Industrial Average closed at 12,169; up 26 points for the week. Crude Oil was trading mid day at 104.04 a barrel, up 6.07 a barrel for the week. Oil rose as political tensions in Libya caused concerns about oil supplies and whether unrest will spread to other oil producing nations. The unemployment rate fell in February to 8.9%, the best since April, 2009. Still, at least today, that news was not enough to offset the rise in oil rises as the Dow was down 88 points at the close. Money from funds seems to have come back into the commodity market this week. USDA will release the monthly supply and demand report on March 10. Comments on that report will be posted that afternoon at http://economics.ag.utk.edu/outlook.html. For the most part, trade guesses for next week’s report have not yet been released. The few that have been, seem to indicate a further tightening in corn stocks, a potential increase in soybean stocks, tightening in cotton stocks, and neutral to slight decrease in wheat stocks. In the absence of a big surprise in the March 10 report, markets currently look to trade sideways leading up to the March 31 Planting Intentions report.
Corn:
Nearby: May futures closed today at $7.28 a bushel, up $0.06 since Friday. Support is at $7.12 with resistance at $7.50 a bushel. Technical indicators have a strong buy bias. Weekly exports were just above the top end of expectations at 47.3 million bushels (42.5 million bushels for 2010/1, and 4.8 million bushels for 2011/12). Halfway through the marketing year, exports are running ahead of year ago levels whereas USDA’s projection is for a slight reduction from the 2009/10 marketing year. It does not appear that price rationing has occurred with exports at current prices and value of the dollar. Ending stocks are already tight at the projected 675 million bushels for this marketing year and could tighten further. Pressure will be on 2011 production to replenish stocks.
New Crop: September closed at $6.60 a bushel, up $0.14 since Friday. Support is at $6.49 with resistance at $6.71 a bushel. Technical indicators have changed to a strong buy bias. Base prices for revenue crop insurance have been set at a record high $6.01 per bushel. This price relative to the $13.49 soybean base crop insurance price would tend to favor corn. On my comments I am priced 30% for 2011 production with a trailing stop of $6.35 bushel. Buying a December $6.10 Put option would cost $0.76 and set a $5.36 floor on the December market.
Cotton:
Nearby: May futures contract closed Friday at 212.70 cents/lb., up 28.47 cents/lb. for the week and a contract high. Support is at 204.30 cents per pound, with resistance at 216.90 cents per pound. Technical indicators have changed to a strong buy bias. All cotton weekly export sales were above expectations at 411,200 bales (153,300 bales of upland cotton for 10/11; 250,000 bales of upland cotton for 11/12; 4,300 bales of Pima for 2010/11 and 3,600 bales of Pima for 2011/12. Domestic mill use for January was an annualized 3.9 million bales; USDA most likely will increase domestic use next week at least 200,000 bales. Foreign production, mainly China and India, is expected to be reduced next week with global carryover possibly as low as 38 million bales, down 4 million bales from February. The Adjusted World Price for March 4 – March 10 is 203.65 cents/lb., down 2.66 cents/lb.
New Crop: December closed at 123.31 cents per pound, up .57 cents for the week. Support is at 119.57 cents per pound, with resistance at 129.81 cents per pound. Technical indicators have changed to a strong buy bias. Equity quotes are in the 58 cent range. Keep in contact with your cotton buyer for current quotes on loan equities. Dry conditions in Texas and the South may cause concern for cotton acres as we move toward the planting season. Subsoil moisture will be lacking. Timely rains will be necessary to produce an adequate crop to refill the cotton pipeline. I would currently be priced up to 40% with a trailing stop of 118.46 cents. If that is too tight a stop, 112.59 cents would be the next level, then 102.17. The market is volatile, so more room may be needed before pulling the trigger. Buying a December 123 Put Option would cost 17.63 cents and set a 105.37 futures floor. December 2012 prices closed at 98.01 cents/lb.
Soybeans:
Nearby: The May contract closed at $14.14 a bushel, up $0.39 for the week. Support is at $13.82 with resistance at $14.91 a bushel. Technical indicators have a buy bias. Weekly exports were above expectations at 23.6 million bushels (13.3 million bushels for 2010/11 and 10.4 million bushels for 2011/12). Exports may be boosted by rain delay harvest in Brazil and work stoppages and slowdowns at Argentina’s ports. China has not officially announced what goods could see a cut in import tariffs. If soybeans and or soy oil are included, it could mean more business for the U.S. Some analysts expect that soybean ending stocks will be higher than February’s 140 million bushels, although with strong exports; USDA may be reluctant to make many changes.
New Crop: November soybeans closed at $13.61 a bushel, up $0.32 this week. Support is at $13.34 with resistance at $13.83 a bushel. Technical indicators have changed to a strong buy bias. I am currently priced 40% with a trailing stop of $13.35. If that is too tight, use $12.89 as a stop. If prices move up, move your stop up. Buying a November $13.60 Put would cost $1.30 and set a $12.30 futures floor.
Wheat:
Nearby: May futures contract closed at $8.32 ¼ a bushel, up $0.21 a bushel since Friday. Support is at $8.04 with resistance at $8.51 a bushel. Technical indicators have changed to a buy bias. Weekly exports were below expectations at 23.9 million bushels (20.6 million bushels for 2010/11 and 3.3 million bushels for 2011/12). Dry conditions in the Plains with overall global concerns on milling quality wheat added support to the market.
New Crop: July wheat closed at $8.60 a bushel Friday, up $0.19 since last week. Support is at $8.33 with resistance at $8.78 a bushel. Technical indicators have changed to a buy bias. At this point, I would hesitate to price more until we get on into spring. Producers with a buy up crop insurance policy may feel comfortable pricing more. Put options may be worth considering. Buying a July $8.60 Put would cost $0.73 and set a $7.87 futures floor.
