Corn, soybean and wheat prices are up and cotton prices are down for the week. The June U.S. Dollar Index was trading mid day at 75.89, down 1.14 for the week. The Dow Jones Industrial Average traded before the close at 11,866; down 178 points for the week but well off the week’s lows. Crude Oil was trading mid day at 100.90 a barrel, about even for the week. Panic selling griped the markets earlier in the week as fear of the magnitude of the disaster in Japan dominated all markets. Stability returned at mid-week and markets rebounded. Private estimates on acreage for the March 31 Prospective Planting report are starting to work their way into the market.
Corn:
Nearby: May futures closed today at $6.83 ½ a bushel, up $0.24 since Friday. Support is at $6.35 with resistance at $7.14 a bushel. Technical indicators have change to a buy bias. Weekly exports were above expectations at 52.6 million bushels (40.8 million bushels for 2010/11, and 11.8 million bushels for 2011/12). USDA reported a sale of 4.3 million bushels to unknown destination which was rumored to be China. This news helped spark the rally.
New Crop: September closed at $6.37 a bushel, up $0.14 since Friday. Support is at $5.96 with resistance at $6.77 a bushel. Technical indicators have changed to a buy bias. One private research firm based in the Midwest released their farmer survey results of 91.291 million acres of intended corn acres. Although higher than last year’s acres, it would not generate enough production to substantially rebuild stocks. Another private estimate of 91.758 million acres was reported today. This starts to confirm that there cannot be any drop off in yields if stocks are to rebuild. Spring flooding is also forecast for the High Plains which could cut into intended acres. During the week, the market hit the trailing stop of $5.89 and I would have priced 5% more to 40% overall. I would use a new trailing stop of $5.92. Put options would set a floor and buying a December $6.00 Put option would cost $0.77 and set a $5.23 floor on the December market while keeping an upside.
Cotton:
Nearby: May futures contract closed Friday at 199.12 cents/lb., down 5.82 cents/lb. for the week. Support is at 194.04 cents per pound, with resistance at 201.66 cents per pound. Technical indicators have changed to a buy bias. All cotton weekly export sales were below expectations at 187,500 bales (reduction of 55,400 bales of upland cotton for 10/11; 231,600 bales of upland cotton for 11/12; 5,300 bales of Pima for 2010/11 and 6,000 bales of Pima for 2011/12. The Adjusted World Price for March 18 – March 24 is 205.35 cents/lb., down 14.13 cents/lb.
New Crop: December closed at 123.84 cents per pound, down 4.48 cents for the week. Support is at 120.01 cents per pound, with resistance at 126.52 cents per pound. Technical indicators have a changed to buy bias. Loan equities have been quoted in the 58 cent range. Keep in contact with your cotton buyer for current quotes on loan equities. A private estimate released today indicated that 13.13 million acres of cotton would be planted in 2011. Although slightly higher than USDA’s statistical estimate of 13 million acres from the Outlook Forum, it has been pretty well assumed that there would be at least that many acres. Dryness in Texas will be closely watched as to the effects on abandonment and yield. I would currently be priced up to 40% with a trailing stop of 117.10 cents. With the volatility in the market from the Japan disaster, I opted to use the wider trailing stop during the week to give prices more room to change before pricing. Continue evaluating the option market as a good tool to set a floor price and still leave an upside. Buying a December 123 Put Option would cost 18.91 cents and set a 104.09 futures floor. Buying an out of the money December 109 Put would cost 10.3 cents and set a 98.70 cent futures floor. December 2012 prices closed at 98.27 cents/lb.
Soybeans:
Nearby: The May contract closed at $13.62 ½ a bushel, up $0.28 for the week. Support is at $12.94 with resistance at $14.20 a bushel. Technical indicators have a changed to a buy bias. Weekly exports were below expectations at 7.9 million bushels (5.4 million bushels for 2010/11 and 2.5 million bushels for 2011/12). Rains in Brazil have delayed harvest and reduced quality which may shift some soybean sales to the U.S.
New Crop: November soybeans closed at $13.34 a bushel, up $0.34 this week. Support is at $12.59 with resistance at $13.94 a bushel. Technical indicators have changed to a buy bias. Private estimates from the Midwest on soybean acres are at 77.193 million acres, 211,000 less than in 2010. Another estimate released today put soybean acres at a bullish 75.269 million acres. This would be considered positive for soybean prices. I am currently priced 50% for 2011 and would wait until late spring-early summer before forward pricing more. Currently, buying a November $13.40 Put would cost $1.44 and set an $11.96 futures floor.
Wheat:
Nearby: May futures contract closed at $7.23 a bushel, up $0.04 a bushel since Friday. Support is at $6.83 with resistance at $7.71 a bushel. Technical indicators have a strong sell bias. Weekly exports were above expectations at 31.6 million bushels (24.4 million bushels for 2010/11 and 7.2 million bushels for 2011/12).
New Crop: July wheat closed at $7.58 ½ a bushel Friday, up $0.08 since last week. Support is at $7.18 with resistance at $8.06 a bushel. Technical indicators have a strong sell bias. Private estimates for all wheat planted have been 57-58 million acres with one at 57.435 million acres and one released today at 57.651 million acres. I think these are considered neutral to the market with more concern on the condition of the crop in the dry areas of the Plains. I am currently at 50% priced and would wait until we get on into spring before pricing more. Producers with a buy up crop insurance policy may feel comfortable pricing more. Prices have moved with corn and soybeans. Buying a July $7.70 Put would cost $0.83 and set a $6.87 futures floor.
