Corn, cotton, soybeans, and wheat prices are all down for the week. The December U.S. Dollar Index was trading before the close at 79.09, up 2.00 since last Friday. The Dow Jones Industrial Average before the close was trading down 721 points for the week at 10,788. Crude Oil was trading before the close at 80.30 a barrel, down 7.88 a barrel since last Friday. Fear and panic again griped the stock and commodity markets this week as the U.S. Dollar was the only thing up. Comments from the Fed that significant downside risk to the economic outlook including strains on global financial markets contributed to the meltdown. Fundamentals have not changed and it is difficult to see that even in a double dip recession that the demand for agricultural products would be much less than currently projected. Even with the recent correction in commodity prices we are still within parameters of corrections earlier in the year with some research indicating that it could be over next week. However, global financial markets and the effects on currency valuations could override normal market reactions. Commodity prices could struggle until a clearer direction on the U.S. and world economy is given. The next major USDA report will be the Grain Stocks report on September 30.
Corn:
Current Crop: December closed today at $6.38 ½ a bushel, down $0.54 a bushel since last Friday. Support is at $6.24 with resistance at $6.66 a bushel. Technical indicators have changed to a strong sell bias. Weekly exports were within expectations at 23.5 million bushels for 2011/12. The corn crop has 46% in the mature stage compared to 29% last week, 67% last year and the five year average of 48%. Corn harvested as of September 18 was at 10% compared to 18% last year and the five year average of 11%. Corn crop condition ratings as of September 18 were 51% good to excellent compared to 53% last week, and 68% last year. Poor to very poor ratings were 21% compared to 20% last week and 11% a year ago. The latest private estimate out this week put corn yields at 147.3 bushels per acre and production at 12.37 billion bushels which is 127 million bushels less than the September USDA report. Reported yields throughout the Midwest have been variable and difficult to get a definite handle on at this time. I am currently 50% forward priced and 25% priced using a December Put option locking in a futures floor of $6.34. Prices have corrected enough to the point that storage has become a viable alternative. I do think that will be a harvest time decision and will depend on if a rally has occurred by the time the corn is shelled.
Deferred: March closed at $6.52 a bushel, down $0.54 bushel since last Friday. Technical indicators have changed to a strong sell bias. Support is at $6.38 with resistance at $6.79 a bushel. September 2012 corn closed at $6.08 ½ a bushel. One private estimate out this week has projected planted corn in 2012 at 94.316 million acres, which would be an increase of 2 million acres over USDA’s 2011 estimate. Watch closely over the next few months for opportunities to price the 2012 crop.
Cotton:
Current Crop: December closed at 101.24 cents per pound, down 9.28 cents since last week. Support is at 97.75 cents per pound, with resistance at 103.75 cents per pound. Technical indicators have changed to a strong sell bias. All cotton weekly export sales were 66,300 bales (sales of 65,900 bales of upland cotton for 2011/12; sales of 700 bales of Pima cotton for 2011/12. The Adjusted World Price for September 23 – September 29 is 96.71 cents/lb.; down 3.86 cents/lb. from last week. Quotes on 2011 loan equities are in the 41 – 42 cent range. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. As of September 18, cotton bolls opening were at 69% compared to 57% last week, 66% last year and the five year average of 54%. Cotton harvested is at 11% compared to 9% last week, 12% last year and the five year average of 10%. Cotton crop condition ratings as of September 18 were 27% good to excellent compared to 28% last week and 58% last year. Poor to very poor ratings are 45% compared to 44% last week and 13% a year ago. Texas cotton is rated 65% poor to very poor an increase of 1% from last week. Market reaction today may be an indication that at least for now a bottom has been found. It will take more than just today’s prices for confirmation. Demand would be impacted by a global recession, but supply is still uncertain as the U.S. crop is questionable and concerns of excessive rainfall impacting the crop in Pakistan, India and China. I am currently at 45% priced and would hold at that level.
Deferred: March cotton closed at 98.02 cents per pound, down 9.47 cents for the week. Support is at 94.79 cents per pound, with resistance at 100.35 cents per pound. Technical indicators have changed to a strong sell bias. December 2012 prices closed at 93.90 cents/lb. One private estimate out this week projects 2012 cotton acreage at 11.968 million acres, which would be down 2.75 million acres from USDA’s September estimate for 2011. Initially, that should be positive for 2012 prices.
Soybeans:
Current Crop: The November contract closed at $12.58 a bushel, down $0.98 since last Friday. Support is at $12.26 with resistance at $13.05 a bushel. Technical indicators have changed to a strong sell bias. Weekly exports were within expectations at 14.9 million bushels for the 2011/12 marketing year. USDA did report a 4.6 million bushel sale to China today so we are seeing some buying as prices have corrected downward. As of September 18, soybeans dropping leaves were 33% compared to 15% last week, 56% last year and the five year average of 47%. Soybean crop condition ratings as of September 18 were 53% good to excellent compared to 56% last week, and 63% last year. Poor to very poor were rated at 18% compared to 17% last week and 12% a year ago. Conditions in Minnesota and South Dakota worsened most likely as the effect of the frost about 2 weeks ago. Both states dropped 10% in their good to excellent ratings while increasing their poor to very poor. 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. As in corn, the price drops this week brings storage in as a viable alternative and maybe storing soybean ought to be preferred over corn. Again, that should be a harvest time decision and would depend on prices at that time. Soybean prices appear oversold, but will be dependent on the global financial markets.
Deferred: May soybeans closed today at $12.82 ¼ a bushel, down $0.98 since last week. Support is at $12.49 with resistance at $13.30 a bushel. Technical indicators have changed to a strong sell bias. November 2012 soybeans closed at $12.53 ¼ this week. Soybean acreage for 2012 from one private firm has been projected at 75.8 million acres which would be 800,000 higher than USDA’s September estimate for 2011.
Wheat:
Nearby: December futures contract closed at $6.40 ¾ a bushel, down $0.48 a bushel since Friday. Support is at $6.25 with resistance at $6.56 a bushel. Technical indicators have a strong sell bias. Weekly exports were better than expected at 25 million bushels for 2011/12. Spring wheat as of September 18 is 93% harvested as compared to 83% last week, 86% last year and the five year average of 92%.
New Crop: July 2012 wheat closed at $6.98 a bushel, down $0.57 since last week. Support is at $6.85 with resistance at $7.15 a bushel. Technical indicators have a strong sell bias. Winter wheat planted is 14% compared to 6% last week, 19% last year and the five year average of 20%. Planting conditions for winter wheat are drawing concerns not only in the U.S. Plains, but also in the southern portion of the Black Sea region as well as concerns on growing conditions in western Argentina. The deadline for enrolling wheat in crop insurance in Tennessee is September 30.
