Corn is about even with cotton, soybeans and wheat prices down for the week. The December U.S. Dollar Index was trading before the close at 77.16, up 1.94 since last Friday. The Dow Jones Industrial Average before the close was trading down 279 points for the week at 11,951. Crude Oil was trading before the close at 94.29 a barrel, up 1.07 a barrel since last Friday. Monthly jobs data out today fell short of expectations, but upward revisions of previous months were positive. Markets have somewhat been whipsawed this week on a couple of non-agriculture or at least non-fundamental factors. First, the on again, off again solution to European debt issues and whether there is a capacity for the issue to be resolved without Greece and possibly other countries going bankrupt. A called for referendum by the Greece Prime Minister on the bailout now seems to be dismissed and they are working toward a solution. As mentioned in previous comments, this has a direct impact on the strength or weakness of the U.S. Dollar which influences commodity prices. Also, early in the week Japan took currency measures that strengthened the Dollar and we saw prices retreat. If that wasn’t enough, the third largest brokerage firm in volume on the CME, MF Global, declared bankruptcy creating uncertainty on existing futures position that clients had. The CEO resigned today amid rumors of investments in European bonds and missing customer funds. This could impact agricultural firms including grain elevators who were their clients. Next week, at least for a day, the focus will be on fundamental supply and demand numbers as USDA’s monthly report is released on Wednesday, November 9. Look for comments on this report to be posted at http://economics.ag.utk.edu/outlook.html .
Corn:
Current Crop: December closed today at $6.55 ¾ a bushel, up ¾ cents a bushel since last Friday. Support is at $6.39 with resistance at $6.65 a bushel. Technical indicators have changed to a strong sell bias. Weekly exports were above expectations at 24.5 million bushels for the 2011/12 marketing year. Corn harvested as of October 30 was at 78% compared to 65% last week, 90% last year and the five year average of 62%. Average trade estimates from one wire service for next week’s USDA report puts corn yields at 147.9 bushels per acre and production at 12.402 billion bushels compared to USDA’s October number of 148.1 bushels and 12.433 billion bushels. The export pace is indicative of higher exports than the 1.835 billion bushels currently projected and could mean that USDA will increase exports and possibly lower ending stocks slightly. On price declines, commercial end users have been active buyers supporting the market. 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. 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 $6.66 ¼ a bushel, down ¾ cents a bushel since last Friday. Technical indicators have changed to a strong sell bias. Support is at $6.49 with resistance at $6.76 a bushel. September 2012 corn closed at $6.33 ¾ a bushel. Watch closely over the next few months for opportunities to price the 2012 crop.
Cotton:
Current Crop: December closed at 98.74 cents per pound, down 5.63 cents since last week. Support is at 97.10 cents per pound, with resistance at 100.64 cents per pound. Technical indicators have changed to a strong sell bias. All cotton weekly export sales were 175,500 bales (net sales of 92,000 bales of upland cotton for 2011/12; sales of 78,900 bales of upland cotton for 2012/13 and sales of 4,600 bales of Pima cotton for 2011/12). The Adjusted World Price for November 4 – November 10 is 90.07 cents/lb.; up 2.67 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. Cotton harvested is at 55% compared to 44% last week, 58% last year and the five year average of 43%. The general feeling among analyst is that USDA needs to cut U.S. cotton production by 500,000 to 1 million bales in next week’s report. Cotton usage and prices are generally influenced by economic numbers and it will take sustained positive news (barring greater than expected cuts in production) for prices to move out of its trading range. I am currently at 60% priced and would target any additional rallies to the 105 cent range as a point to evaluate pricing although if cotton is put in the loan, it is more important to watch equity price movement. If equities get to a level that you are comfortable with on your overall pricing (loan, equity, seed, and hauling), have your recap sheets ready for your cotton buyer and price them out.
Deferred: March cotton closed at 98.46 cents per pound, down 4.04 cents for the week. Support is at 96.69 cents per pound, with resistance at 99.89 cents per pound. Technical indicators have changed to a strong sell bias. December 2012 prices closed at 97.10 cents/lb.
Soybeans:
Current Crop: The January contract closed at $12.21 a bushel, down 5 cents a bushel since last Friday. Support is at $12.11 with resistance at $12.35 a bushel. Technical indicators have changed to a strong sell bias. Weekly exports were below expectations at 7.7 million bushels for the 2011/12 marketing year. Soybeans harvested were at 87% compared to 80% last week, 95% last year and the five year average of 79%. The average trade guess for next week’s USDA report is for a nationwide soybean yield of 41.5 and production of 3.059 billion bushels compared to the October report of 41.5 bushels per acre and 3.060 billion bushels. Exports have been lagging last year’s pace to the point that it is anticipated that the export number of 1.375 billion bushels will be lowered and ending stocks increased. Fundamentals may change next week, but price direction may be more influenced by the movement of the U.S. Dollar. In weekly comments, I am currently 50% forward 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 $12.80 -$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. Consider locking in a portion of the basis on stored soybeans.
Deferred: May soybeans closed today at $12.39 ¼ a bushel, down 5 ½ cents since last week. Support is at $12.20 with resistance at $12.44 a bushel. Technical indicators have changed to a strong sell bias. November 2012 soybeans closed at $12.30 this week.
Wheat:
Nearby: December futures contract closed at $6.36 ¾ a bushel, down 7 ¾ cents a bushel since Friday. Support is at $6.16 with resistance at $6.50 a bushel. Technical indicators have changed to a strong sell bias. Weekly exports were below expectations at 11.8 million bushels for 2011/12. USDA re-surveyed northern Plains states since the September 30 Small Grains Report and is expected to update their production numbers, most likely downward. Exports also are likely to be reduced.
New Crop: July 2012 wheat closed at $7.01 a bushel, down 18 cents since last week. Support is at $6.83 with resistance at $7.14 a bushel. Technical indicators have changed to a strong sell bias. Nationwide, winter wheat planted is 89% compared to 82% last week, 92% last year and the five year average of 88%. As of October 30, winter wheat emergence is at 68% compared to 56% last week, 73% last year and the five year average of 72%. Winter wheat condition ratings were 46% good to excellent compared to 47% last week and 46% a year ago. The poor to very poor ratings were 13% compared to 16% last week and 16% a year ago. Texas led the way with 38% in the very poor to poor category.
