Corn prices are up; soybeans mixed with cotton and wheat prices down for the week. The June U.S. Dollar Index was trading mid day at 73.16, down 1.16 for the week and at its lowest since July, 2008. A weaker dollar continues to be supportive for commodity prices. The Dow Jones Industrial Average traded mid day at 12,825; up 320 points for the week buoyed by robust corporate earnings and prospects for low interest rates through the rest of the year. Crude Oil was trading mid day at 112.21 a barrel, up 2.05 a barrel for the week. The markets have rebounded Friday as the mid week selling pressure has been attributed more to fund selling on rumors a major fund was getting out of commodities and technically generated sell signals. Weather still is a major factor as the market direction somewhat hangs on the most updated forecast. Planting conditions look to improve in the western Cornbelt while the eastern Cornbelt and upper Midwest may take longer to dry out and still expect additional rainfall. While the hard red winter area received some rain, it is not expected to be of much benefit and the bulk of Texas remains in a drought. Many producers face uncertain situations as some await the outcome of flood damage and the effect on crops that can be planted and when; and some pondering on how late they can plant corn and cotton with an acceptable yield. Some of these decisions will need to take into account how much of a crop has been forward priced. Current price levels still seem to favor corn and cotton over soybeans at even a planting delayed reduction in yield but that will depend on how late the crop would be planted and individual situations. Keep proactive with buyers, suppliers, crop insurance agents, Extension Agents and others as we go into May and sort through this situation. There is no one answer for all.
Corn:
Nearby: July futures closed today at $7.56 1/2 a bushel, up $0.12 for the week. Support is at $7.13 with resistance at $7.84 a bushel. Technical indicators have a buy bias. Weekly exports were below expectations at 17.4 million bushels (13.7 million bushels for 2010/11 and 3.7 million bushels for 2011/12). Corn for ethanol rebounded this last week using 883,000 barrels per day compared to 856,000 per day the previous week as reported by Department of Energy. The CME Group is proposing raising daily limits for corn futures traded at the Chicago Board of Trade to 50 cents from the current 30 cent level. The proposal must be approved by the Commodity Futures Trading Commission before it can be implemented.
New Crop: September closed at $7.16 a bushel, up $0.12 bushel for the week. Support is at $6.69 with resistance at $7.40 a bushel. Technical indicators have changed to a buy bias. As of April 24, 9% of the corn crop was planted compared to 7% last week, 46% last year and the 5 year average of 23%. Still concerns over planting delays in the Midwest and the effects on the much needed trend line yield. Given a window, producers will get the crop planted and then weather conditions the rest of the summer will take over. Markets will remain volatile. I am currently at 45% priced and I would use a trailing stop of $6.86 for new sales. If that is too tight, use $6.32 a bushel. Put options would set a floor and buying a December $6.60 Put option would cost $0.74 and set a $5.86 floor on the December market while keeping an upside.
Cotton:
Nearby: July futures contract closed at 158.02 cents/lb., down 9.49 cents/lb. for the week. Support is at 144.39 cents per pound, with resistance at 164.83 cents per pound. Technical indicators have changed to a strong sell bias. All cotton weekly export sales were below expectations at 29,100 bales (a reduction of 43,900 bales of upland cotton for 10/11; 66,300 bales of upland cotton for 11/12; 5,000 bales of Pima for 2010/11 and 1,700 bales of Pima for 2011/12. The Adjusted World Price for April 29 – May 5 is 163.23 cents/lb.; down 32.49 cents/lb. Chinese demand appears to be slowing.
New Crop: December closed at 130.93 cents per pound, down 1.21cents for the week. Support is at 123.03 cents per pound, with resistance at 135.15 cents per pound. Technical indicators have a buy bias. Keep in contact with your cotton buyer for current quotes on loan equities. As of April 24, 13% of the cotton crop was planted compared to 9% last week, 15% last year and the 5 year average of 16%. Supporting the market is the continued drought in Texas. Some wheat acreage in Texas will be abandoned and go to cotton and then depend on summer rains to make the crop. Other areas of the cotton belt may not reach their intended acres. The market does have considerable downside risk if or maybe when the drought in Texas breaks. During the week, prices fell through my 130.25 cent trailing stop and have traded back above it today. I would take the opportunity to price another 5% up to 45% priced. Evaluate the option market as a good tool to set a floor price and still leave an upside. A December 131 Put option would cost 19.26 cents and set a 111.74 futures floor. An out of the money December 115 Put would cost 11 cents and set a 104 futures floor. December 2012 prices closed at 102.81 cents/lb.
Soybeans:
Nearby: The July contract closed at $13.94 a bushel, up $0.04 for the week. Support is at $13.28 with resistance at $14.28 a bushel. Technical indicators have a hold bias. Weekly exports were below expectations at 7.3 million bushels (5.3 million bushels for 2010/11 and 2.0 million bushels for 2011/12). March crush was reported at 140.3 million bushels, 1.2 million bushels higher than expected.
New Crop: November soybeans closed at $13.74 a bushel, down $0.09 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 $1.25 a bushel and set a $12.55 futures floor.
Wheat:
Current Crop: July futures contract closed at $8.01 ¼ a bushel, down $0.34 a bushel this week. Support is at $7.51 with resistance at $8.31 a bushel. Technical indicators have changed to a sell bias. Weekly exports were within expectations at 15.3 million bushels (9.7 million bushels for 2010/11 and 5.6 million bushels for 2011/12). Nationwide, 23% of the winter wheat crop has headed compared to 14% last week, 14% last year and the five year average of 19%. Winter wheat crop condition ratings as of April 24 were 35% good to excellent compared to 35% last week and 69% last year. Poor to very poor ratings are 40% compared to 38% last week and 6% a year ago. Statistics Canada reports with normal weather intended spring wheat acres will be up 17%, however, conditions currently are less than normal. I am currently at 50% priced and would wait until we get further into spring before pricing more. Buying a July $8.00 Put would cost $0.55 and set a $7.45 futures floor.
Deferred: September wheat closed at $8.46 ½ a bushel Friday, down $0.29 since last week. Support is at $7.96 with resistance at $8.76 a bushel. Technical indicators have changed to a sell bias. July 2012 wheat closed at $9.15 ¼ a bushel.
