Corn, soybean, and wheat prices are up with cotton prices about even for the week. The December U.S. Dollar Index was trading before the close at 76.92, down 2.23 (2.9%) since last Friday. The Dow Jones Industrial Average before the close was trading up 507 points for the week at 11,610. Crude Oil was trading before the close at 87.51 a barrel, up 4.34 a barrel since last Friday. A mostly bearish USDA Supply and Demand report on October 12 has been for the most part overlooked by the markets as more emphasis this week has been on exports to China and a weakening dollar.

Corn:

Current Crop: December closed today at $6.40 a bushel, up 40 cents a bushel since last Friday. Support is at $6.24 with resistance at $6.56 a bushel.  Technical indicators have changed to a hold bias. Weekly exports were above expectations at 52.9 million bushels (49.5 million bushels for 2011/12 and net sales of 3.4 million bushels for 2012/13). Next week’s export sales should also be strong as daily reported sales have included large sales to China this week. The corn crop has 89% in the mature stage compared to 79% last week, 97% last year and the five year average of 88%. The most noticeable delay in maturity is in Ohio at 39% compared to their five year average of 83%. Corn harvested as of October 9 was at 33% compared to 21% last week, 50% last year and the five year average of 32%. Corn crop condition ratings as of October 9 were 53% good to excellent compared to 52% last week, and 68% last year. Poor to very poor ratings were 19% compared to 20% last week and 11% a year ago. USDA corn numbers came in at a 148.1 bushel per acre yield, unchanged from last month and slightly lower than the average trade guess. Harvested acres were lowered 452,000 acres resulting in production of 12.433 billion bushels compared to the average pre report guess of 12.479 billion bushels. Supplies including an expected increase in beginning stocks were projected by USDA to be 144 million bushels higher than the September report. Demand was lowered 50 million bushels on a cut in exports which with the recent corn buys in China has the market appearing to question USDA’s export number as too low. Ending stocks for the current crop marketing year were forecast at 866 million bushels, 194 million bushels higher than in the September report and 36 million bushels higher than the average pre report guess. This was a bearish report, but the market this week has been more interested in the weakening dollar and confirmed sales to China with the prospects of additional sales to China increasing overall export demand and lowering ending stocks. I am currently 50% forward priced for 2011 and 25% priced using a December $6.90 Put option that has been offset with a 42 cent profit. There is price risk in storing un-priced grain, so storage should be evaluated carefully.  Cash prices for corn from now to the early part of 2012 show very little carry in prices and by itself would make un-priced storage questionable. I would hold the remaining 25% of production in storage, but be ready to price on any rallies back up to the $6.80 – $7.00 range.

Deferred: March closed at $6.51 ½ a bushel, up 38 ¾ cents a bushel since last Friday. Technical indicators have changed to a hold bias. Support is at $6.36 with resistance at $6.67 a bushel. September 2012 corn closed at $6.23 ¼ a bushel. A private estimate released today projected corn acreage for 2012 at 93.1 million acres, up 1.3 million acres from 2011 planted acres but down from their September estimate. Watch closely over the next few months for opportunities to price the 2012 crop.

Cotton:

Current Crop: December closed at 101.94 cents per pound, down 0.04 cents since last week. Support is at 99.65 cents per pound, with resistance at 104.79 cents per pound.  Technical indicators have a sell bias. All cotton weekly export sales were 107,600 bales (sales of 63,000 bales of upland cotton for 2011/12 and sales of 44,600 bales of upland cotton for 2012/13. The Adjusted World Price for October 14 – October 20 is 91.33 cents/lb.; up 0.43 cents/lb. from last week. Quotes on 2011 loan equities are in the 42 cent range. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives.  As of October 9, cotton bolls opening were at 90% compared to 84% last week, 92% last year and the five year average of 83%. Cotton harvested is at 26% compared to 16% last week, 31% last year and the five year average of 24%. Cotton crop condition ratings as of October 9 were 30% good to excellent compared to 29% last week and 55% last year. Poor to very poor ratings are 42% compared to 42% last week and 15% a year ago. The USDA October 12 report was considered bearish for cotton as ending stocks were raised 500,000 bales from September to 3.9 million bales. Production was estimated at 16.61 million bales, an increase of 48,000 bales from September on a nationwide yield of 809 pounds per acre. The trade was looking for a drop in production. Demand was lowered 500,000 bales as exports were cut by that amount. A greater impact was made on the global picture as global ending stocks are forecast at 54.83 million bales, an increase of 2.92 million bales from last month. Even with this bearish type report, prices are up about 2 cents since USDA released these numbers. The weakening dollar is supporting prices as well as most likely skepticism on USDA’s production numbers.  I am currently at 45% priced and would use any rallies in the 104 -110 cent range as a point to evaluate pricing.

Deferred:  March cotton closed at 99.43 cents per pound, up 0.37 cents for the week. Support is at 97.22 cents per pound, with resistance at 102.00 cents per pound.  Technical indicators have a sell bias. December 2012 prices closed at 94.21 cents/lb. A private estimate out today projected 2012 cotton acres at 12 million acres which is 2.8 million acres less than planted in 2011. There remains concerns that the drought centered in Texas may be a multi-year drought which would impact cotton production in 2012.

 Soybeans:

Current Crop: The November contract closed at $12.70 a bushel, up $1.11 ¾ a bushel since last Friday. Support is at $12.38 with resistance at $12.91 a bushel. Technical indicators have changed to a sell bias.  Weekly exports were within expectations at 24.7 million bushels for the 2011/12 marketing year. Next week’s export report should include additional sales to China. Soybeans harvested were at 51% compared to 19% last week, 63% last year and the five year average of 46%.  Soybean crop condition ratings as of October 9 were 56% good to excellent compared to 54% last week, and 64% last year. Poor to very poor were rated at 16% compared to 17% last week and 12% a year ago. The National Oilseed Processors Association reported its members crushed 110.3 million bushels in September, 8 million bushels less than the trade expected. In its latest report, USDA lowered soybean yields 0.3 bushel per acre to 41.5 bushels and lowered harvested acreage 147,000 from September resulting in production of 3.060 billion bushels. The trade was expecting production at 3.102 billion bushels. Ending stocks for 2011/12 are decreased 5 million bushels from last month to 160 million bushels as the decrease in beginning stocks and production is partially offset by a 40 million bushel reduction in exports and a 9 million bushel increase in residual use. The trade was looking for a stocks number of 186 million bushels. World ending stocks for 2011/12 are projected to increase 17 million bushels from the September estimate to 2.315 billion bushels.  In weekly comments, I am currently 50% priced for 2011 and 25% priced using a November $14 Put option that has been offset or closed out with a $1.62 profit. Storage is still a harvest time decision and I think an alternative if soybean prices stay under $13.00 bushel. If storage is available, I would look to store the remainder with a price target in the $13.00 – $13.40 range. I still would look at storing soybeans over corn; the cash price spread is currently favoring soybeans.

 Deferred: May soybeans closed today at $12.89 a bushel, up $1.01 ¾ since last week. Support is at $12.59 with resistance at $13.06 a bushel. Technical indicators have changed to a sell bias. November 2012 soybeans closed at $12.51 this week. A private estimate out today projected 2012 soybean acreage at 77 million acres; 2 million acres higher than planted in 2011.

Wheat:

Nearby: December futures contract closed at $6.22 ¾ a bushel, up 15 ¼ cents a bushel since Friday. Support is at $6.01 with resistance at $6.43 a bushel. Technical indicators have changed to a sell bias. Weekly exports were above expectations at 17.8 million bushels for 2011/12. USDA projections for 2011/12 raise ending stocks 76 million bushels to 837 million bushels compared to the average pre report trade guess of 753 million bushels. Supply is reduced 57 million bushels on a 200,000 reduction in harvested acres, a reduction of 1.3 bushels per acre yield, a 1 million bushel increase in beginning stocks and a 10 million bushels increase in wheat imports. Usage is cut 134 million bushels as seed use is reduced 4 million bushels, feed/residual use cut 80 million bushels, and exports reduced 50 million bushels. World ending stocks are projected at a 10 year high of 7.436 billion bushels, up 286 million bushels from the September estimate as beginning stocks increased, world production increased and consumption decreased from the September estimate. Wheat continues to be the bearish of the grain crops with more than adequate supply in the U.S. and globally. However, it does have a tendency to trade along with corn.

 New Crop: July 2012 wheat closed at $6.97 ¼ a bushel, up 16 ¼ cents since last week. Support is at $6.78 with resistance at $7.18 a bushel. Technical indicators have changed to a sell bias. Nationwide, winter wheat planted is 59% compared to 42% last week, 69% last year and the five year average of 67%. As of October 9, winter wheat emergence is at 28% compared to 16% last week, 37% last year and the five year average of 38%. A private estimate out today projected all wheat seedings 57 million acres; 2.6 million acres higher than last year.