Corn, cotton, and wheat prices are up with soybean prices mixed for the week. The June U.S. Dollar Index was trading mid day at 75.25, down .91 for the week. The Dow Jones Industrial Average traded before the close at 12,368; about unchanged for the week. Crude Oil was trading mid day at 112.81 a barrel, up 5.30 a barrel for the week. USDA released their monthly supply and demand report today, April 8, and comments on this report have been posted at http://economics.ag.utk.edu/outlook.html . The market seems to have discounted the USDA report and is trading more on the weather and outside influences.
Corn:
Nearby: May futures closed today at $7.68 a bushel, up $0.32 since Friday. Support is at $7.45 with resistance at $7.81 a bushel. Technical indicators have a strong buy bias. Weekly exports were within expectations at 31.8 million bushels (24.4 million bushels for 2010/11 and 7.4 million bushels for 2011/12). Ending stocks were left unchanged in today’s USDA, more or less a surprise but one it appears the market is not buying. USDA is projecting that some feed usage will be switched to soft red winter wheat when that crop comes off this summer. Stocks are still tight and are estimated at a 5% stocks to use ratio. End users seem to buy on the price breaks so it is difficult to definitely say that price rationing is occurring.
New Crop: September closed at $7.11 a bushel, up $0.30 bushel since Friday. Support is at $6.93 with resistance at $7.20 a bushel. Technical indicators have a strong buy bias. Concern over planting weather and the effects a late planted crop would have on production seem to be driving the market. The market will stay volatile until we get further along with planting and see what shape the crop is in. I am currently at 45% priced and I would use a trailing stop of $6.50 for new sales. If that is too tight, use $6.08 a bushel. Put options would set a floor and buying a December $6.50 Put option would cost $0.78 and set a $5.72 floor on the December market while keeping an upside.
Cotton:
Nearby: May futures contract closed Friday at 202.97 cents/lb., up 7.42 cents/lb. for the week. Support is at 194.14 cents per pound, with resistance at 216.44 cents per pound. Technical indicators have changed to a strong buy bias. All cotton weekly export sales were below expectations at 259,400 bales (a reduction of 16,700 bales of upland cotton for 10/11; 268,200 bales of upland cotton for 11/12; 1,000 bales of Pima for 2010/11 and 6,900 bales of Pima for 2011/12. The Adjusted World Price for April 8 – April 14 is 207.21 cents/lb.; down 1.19 cents/lb. USDA lowered U.S ending stocks 300,000 bales to 1.6 million bales on a 215,000 reduction in 2010 production and a 100,000 bale increase in domestic usage. Global ending stocks were also reduced 830,000 bales to 41.55 million bales. This friendly report was for the most part anticipated as the drop in production was based on the March 25 Cotton Ginnings report. The market today may have been showing a little disappointment that the domestic usage number was not increased more than it was. Ending stocks are at a record low.
New Crop: December closed at 138.08 cents per pound, up 5.90 cents for the week. Support is at 134.19 cents per pound, with resistance at 140.51 cents per pound. Technical indicators have a strong buy bias. Keep in contact with your cotton buyer for current quotes on loan equities. It is hard to see how the cotton market can’t be on edge as dryness in Texas could have production implications. Competition from synthetic fibers could eventually impact usage. I would currently be priced up to 40% with a trailing stop of 126.80 cents. If that stop is too tight use the 100 day moving average of 111.34. Continue evaluating the option market as a good tool to set a floor price and still leave an upside. Buying a December 138 Put Option would cost 19.49 cents and set a 118.51 futures floor. Buying an out of the money December 113 Put would cost 7.12 cents and set a 105.88 cent futures floor. December 2012 prices closed at 100.80 cents/lb.
Soybeans:
Nearby: The May contract closed at $13.92 ¼ a bushel, down $0.015 for the week. Support is at $13.51 with resistance at $14.14 a bushel. Technical indicators have a buy bias. Weekly exports were below expectations at 7 million bushels (2.8 million bushels for 2010/11 and 4.2 million bushels for 2011/12). USDA left ending stocks unchanged from March at 140 million bushels, just slightly higher than the average pre report guess. The soybean market was trading more outside influences today as the Dollar was down and crude oil was up.
New Crop: November soybeans closed at $13.96 a bushel, up $0.07 bushel this week. Support is at $13.54 with resistance at $14.17 a bushel. Technical indicators have a strong buy bias. I am currently priced 50% for 2011 and would wait until late spring-early summer before forward pricing more. If you are using a trailing stop to trigger pricing, use $13.44 as a pricing point. Currently, buying a November $14.00 Put option would cost $1.24 a bushel and set a $12.76 futures floor.
Wheat:
Nearby: May futures contract closed at $7.97 ½ a bushel, up $0.38 a bushel since Friday. Support is at $7.52 with resistance at $8.25 a bushel. Technical indicators have changed to a buy bias. Weekly exports were above expectations at 26.6 million bushels (16.9 million bushels for 2010/11 and 9.7 million bushels for 2011/12). USDA projected ending stocks for wheat slightly lower at 839 million bushels, 18 million bushels lower than the average pre report guess. Global wheat stocks were raised 34 million bushels to 6.718 billion bushels.
New Crop: July wheat closed at $8.32 ¼ a bushel Friday, up $0.36 since last week. Support is at $7.88 with resistance at $8.58 a bushel. Technical indicators have changed to a buy bias. USDA released their Crop Condition report for conditions as of April 3. Winter wheat good to excellent ratings were 37% compared to 65% a year ago. Poor or very poor were 32% compared to 6% a year ago. The Plains states ranged from 34% poor to very poor in Kansas to 61% poor to very poor in Texas. Concern over this crop is supportive to the market. I am currently at 50% priced and would wait until we get further into spring before pricing more. Prices will tend to trade with corn and soybeans. Buying a July $8.30 Put would cost $0.63 and set a $7.67 futures floor.
