Soybean and wheat prices are up with corn and cotton prices mixed for this holiday shortened week. Markets are closed on Friday in observance of Good Friday. The June U.S. Dollar Index was trading mid day at 74.32, down .70 for the week and at its lowest since August, 2008. The Dow Jones Industrial Average traded mid day at 12,489; up 147 points for the week. The Dow has recovered almost 400 points since its low on Monday after Standard and Poor’s lowered its long term credit outlook for the U.S. to negative from stable. Crude Oil was trading mid day at 112.21 a barrel, up 2.05 a barrel for the week. Weather and weather forecasts seem to be the driving force in the markets this week along with a weakened dollar.
Corn:
Nearby: May futures closed today at $7.37 ¼ a bushel, down $0.09 since Friday. Support is at $7.22 with resistance at $7.48 a bushel. Technical indicators have changed to a buy bias. Weekly exports were at the low end of expectations at 33.7 million bushels (24.1 million bushels for 2010/11 and 9.6 million bushels for 2011/12). Corn for ethanol could be showing the effects of price rationing as weekly ethanol production dropped 4.7% to 856,000 barrels per day. It will take a couple of weekly reports from Department of Energy to determine whether that is the case or whether the drop was due to other reasons such as plant maintenance. Wheat prices have moved back higher than corn so that may ease some of the substitution of wheat for corn in feed rations for those considering it. China appears to be undertaking measures to slow corn use and rebuild strategic stockpile, further leading to speculation that their corn stocks are tight. If their attempt to slow usage is not successful they likely will increase imports.
New Crop: September closed at $7.04 ¼ a bushel, up $0.03 bushel since Friday. Support is at $6.89 with resistance at $7.12 a bushel. Technical indicators have a strong buy bias. As of April 17, 7% of the corn crop was planted compared to 3% last week, 16% last year and the 5 year average of 8%. Rain and wet conditions in the Midwest are expected to hamper planting over the next 10 days. The more critical period to watch will be the first half of May as corn planted after May 10 in the Midwest is generally considered to not have as good of yield potential as that planted before. I am currently at 45% priced and I would use a trailing stop of $6.73 for new sales. If that is too tight, use $6.24 a bushel. Put options would set a floor and buying a December $6.60 Put option would cost $0.76 and set a $5.84 floor on the December market while keeping an upside.
Cotton:
Nearby: May futures contract closed at 186.67 cents/lb., down 8.85 cents/lb. for the week. Support is at 176.82 cents per pound, with resistance at 193.36 cents per pound. Technical indicators have changed to a sell bias. All cotton weekly export sales were below expectations at 29,900 bales (a reduction of 38,500 bales of upland cotton for 10/11; 65,800 bales of upland cotton for 11/12; 1,500 bales of Pima for 2010/11 and 1,100 bales of Pima for 2011/12.
New Crop: December closed at 132.14 cents per pound, up 2.96 cents for the week. Support is at 126.68 cents per pound, with resistance at 134.34 cents per pound. Technical indicators have a buy bias. Keep in contact with your cotton buyer for current quotes on loan equities. Current quotes for equities on 2011 loan cotton are in the 65 cent range. As of April 17, 9% of the cotton crop was planted compared to 7% last week, 10% last year and the 5 year average of 12%. Weather concerns still persist in Texas as the drought continues. Rain is forecast in some areas, but is not considered to be significant. I would currently be priced up to 40% with a trailing stop of 130.25 cents. If that stop is too tight use the 100 day moving average of 115.35 or somewhere in between. Evaluate the option market as a good tool to set a floor price and still leave an upside. A December 132 Put option would cost 18.76 cents and set a 113.24 futures floor. An out of the money December 115 Put would cost 10 cents and set a 105 futures floor. December 2012 prices closed at 101.24 cents/lb.
Soybeans:
Nearby: The May contract closed at $13.80 ½ a bushel, up $0.49 for the week. Support is at $13.41 with resistance at $14.00 a bushel. Technical indicators have changed to a hold bias. Weekly exports were above expectations at 20.4 million bushels (12.8 million bushels for 2010/11 and 7.6 million bushels for 2011/12). China canceled six to eight cargoes of South American soybeans with rumors of delaying shipment on another twenty cargoes scheduled for July – September. The delayed shipments could affect Chinese demand for U.S new crop soybeans this fall; however, China is still buying U.S. new crop soybeans.
New Crop: November soybeans closed at $13.82 ½ a bushel, up $0.43 bushel this week. Support is at $13.51 with resistance at $13.98 a bushel. Technical indicators have changed to a strong buy bias. I am currently priced 50% for 2011 and would wait until late spring-early summer before forward pricing more. Currently, buying a November $13.80 Put option would cost $1.10 a bushel and set a $12.70 futures floor.
Wheat:
Nearby: May futures contract closed at $7.99 ½ a bushel, up $0.55 a bushel since Friday. Support is at $7.72 with resistance at $8.12 a bushel. Technical indicators have changed to a buy bias. Weekly exports were below expectations at 11.1 million bushels (4.9 million bushels for 2010/11 and 11.1 million bushels for 2011/12).
New Crop: July wheat closed at $8.34 ¾ a bushel Friday, up $0.55 since last week. Support is at $8.08 with resistance at $8.48 a bushel. Technical indicators have changed to a buy bias. Nationwide, 14% of the winter wheat crop has headed compared to 6% last year and the five year average of 10%. Winter wheat crop condition ratings as of April 17 were 36% good to excellent compared to 36% last week and 69% last year. Poor to very poor ratings are 38% compared to 36% last week and 6% a year ago. Extension specialists in Texas and Oklahoma are estimating that due to dry weather wheat production in those states will drop sharply from last year. I am currently at 50% priced and would wait until we get further into spring before pricing more. Buying a July $8.40 Put would cost $0.65 and set a $7.75 futures floor.
