Prices and comments are through Wednesday, July 27, 2011. Corn, cotton, and wheat prices are up and soybeans down for the week through Wednesday. The September U.S. Dollar Index was trading before the close at 74.29, down 0.11 since last Friday. The Dow Jones Industrial Average closed at 12,303; down 378 points through Wednesday. Crude Oil was trading before the close at 97.43 a barrel, down 2.28 a barrel since last Friday. The cotton market rebounded from a 10 month low early in the week on an overdue correction. The grain and soybean markets continue to focus on the weather which is drawing interest from the funds. Crop condition ratings show slight deterioration in the crop and have many analysts starting to reduce the yields for the next crop report.  The market does continue to hinge on the weather forecasts. Continue to watch the U.S. Drought Monitor at http://drought.unl.edu/dm/monitor.html for moisture conditions. The wildcard in the commodity market is how the Dollar responds to what happens or doesn’t happen with the government debt crisis and potential credit default. A weaker dollar usually is favorable to exports and prices while a stronger dollar generally has the opposite effect. There is speculation on how the dollar and commodity prices will respond to various scenarios, but the reality is we can’t predict how prices will behave on what the President and Congress works out. Throw in weather uncertainties and we still have a volatile market that could have wide price swings.

 Corn:

Current Crop: September closed Wednesday at $6.91 ½ a bushel, up $0.02 a bushel since last Friday. Support is at $6.71 with resistance at $7.03 a bushel.  Technical indicators have a buy bias. Corn silking is at 65% compared to 35% last week, 82% last year and the five year average of 69%. The corn crop has 9% in the dough stage compared to 16% last year and the five year average of 12%.Corn crop condition ratings as of July 24 were 62% good to excellent compared to 66% last week, and 72% last year. Poor to very poor ratings were 14% compared to 11% last week and 9% a year ago. The trade was expecting corn to be 64% good to excellent so condition ratings have provided some support. Above normal temperatures are expected across the Midwest causing concern on potential yield loss. I am currently 50% priced and would use a December Put option to lock in a futures floor on 25% of production. Put options would set a floor and buying a December $6.90 Put option would cost $0.56 and set a $6.34 floor on the December market while keeping an upside. Although weather concerns could move prices higher, economic policy could have an offsetting affect and cause prices to weaken.

 Deferred: March closed at $7.04 a bushel, up $0.06 bushel since last Friday. Technical indicators have changed to a strong buy bias. Support is at $6.82 with resistance at $7.16 a bushel. September 2012 corn closed at $6.79 ½ a bushel.

Cotton:

Current Crop: December closed Wednesday at 103.61 cents per pound, up 4.97 cents since last week. Support is at 98.04 cents per pound, with resistance at 107.22 cents per pound.  Technical indicators have a strong sell bias. Current quotes for 2011 loan equities are in the 42.50 – 43 cent range.  Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. As of July 24, 79% of the cotton crop is squaring compared to 71% last week, 92% last year and the five year average of 87%. Cotton setting bolls was rated at 46% compared to 31% last week, 56% last year and the five year average of 49%. Cotton crop condition ratings as of July 24 were 29% good to excellent compared to 28% last week and 68% last year. Poor to very poor ratings are 41% compared to 40% last week and 8% a year ago.  The very poor ratings increased 2% and the Texas crop is rated 59% poor to very poor. Prices have rebounded through Wednesday on oversold conditions and probably some on hope that lower prices will stabilize demand. It may be too early for a clear indication of usage.  I am currently at 45% priced and would hold at that level. Evaluate the option market as a good tool to set a floor price and still leave an upside. A December 104 Put Option would cost 11.03 cents and set a 92.97 futures floor.

 Deferred:  March cotton closed at 101.18 cents per pound, up 4.35 cents for the week. Support is at 96.42 cents per pound, with resistance at 104.50 cents per pound.  Technical indicators have a strong sell bias. December 2012 prices closed at 95.20 cents/lb.

 Soybeans:

Nearby: The August contract closed Wednesday at $13.75 ¾ a bushel, down $0.05 since last Friday. Support is at $13.57 with resistance at $13.97 a bushel. Technical indicators have a buy bias.  

 Current Crop: November soybeans closed at $13.80 ½ a bushel, down $0.08 a bushel since last week. Support is at $13.62 with resistance at $14.03 a bushel. Technical indicators have changed to a strong buy bias. As of July 24, 60% of the soybean crop is blooming compared to 40% last week, 73% last year and the five year average of 68%.  Soybeans setting pods were 16% compared to 32% last year and the five year average of 27%. Soybean crop condition ratings as of July 24 were 62% good to excellent compared to 64% last week, and 67% last year.  Poor to very poor were rated at 11% compared to 10% last week and 10% a year ago. The trade was expecting good to excellent to be 63%. Crop condition ratings were supportive of prices, but August will be the critical month to watch for soybean production. In these comments, I am currently priced 50% for 2011 and have locked in a $13.21 futures floor with a November $14 put option on 25% of production. Currently, buying a November $13.80 Put option would cost $0.58 a bushel and set a $13.22 futures floor.

Wheat:

Nearby: September futures contract closed Wednesday at $7.04 ¾ a bushel, up $0.13 a bushel since Friday. Support is at $6.74 with resistance at $7.28 a bushel. Technical indicators have a sell bias.  Nationwide, 75% of the winter wheat crop has been harvested compared to 68% last week, 78% last year and the five year average of 80%. Spring wheat as of July 24 is 83% headed as compared to 60% last week, 92% last year and the five year average of 95%. Spring wheat crop condition ratings as of July 24 were 74% good to excellent compared to 73% last week, and 83% last year. Price support is coming from spring wheat crop tour yield results and concerns that the ongoing drought will reduce winter wheat acres.

 Deferred: December wheat closed at $7.45 ¼ a bushel, up $0.14 since last week. Support is at $7.17 with resistance at $7.65 a bushel. Technical indicators have a sell bias. July 2012 wheat closed at $7.99 ½ a bushel.