Cotton, soybeans, and wheat prices are down for the week while corn prices are mixed. The December U.S. Dollar Index before the close on Friday was at 78.72, essentially unchanged for the week. The Dow Jones Industrial Average before the close was up 177 points for the week at 12,196. Crude Oil was trading before the close at 99.27 a barrel, down 1.69 a barrel. European leaders agreed on some measures to shore up their financial crises, but disagreed on others. Today, the effect was positive as Wall Street rebounded and the dollar was weaker. However, this could be an on again off again deal and continue to cause uncertainty until some positive results are seen. USDA released their monthly supply & demand report today which has overall been considered bearish to the market as U.S. ending stocks increased for corn, soybeans, and wheat while global stocks increased for cotton. Market watchers may want to keep an eye on the South American weather as they did start their production year a little drier than normal. Currently they are in good shape with good growing conditions but there is concern on the effects La Nina will have on production. I would not pin my marketing plan on hopes of dry conditions there, but it does bear watching.
Corn:
Nearby: March closed Friday at $5.94 ¼ a bushel, down 1 cent a bushel for the week. Support is at $5.75 with resistance at $6.12 a bushel. Technical indicators have a strong sell bias. Weekly exports were above expectations at 27.9 million bushels (27.4 million bushels for the 2011/12 marketing year and 500,000 bushels for 2012/13 marketing year). USDA bumped up 2011/12 U.S. ending stocks 5 million bushels from last month to 848 million bushels, 10 million bushels more than what the trade expected. The bigger change was in global stocks which saw a 221 million bushel increase to 5.007 billion bushels. This was mainly on an increase in China’s production. If China’s production is increased as much as estimated, it is hard to make a case for additional corn exports from the U.S. to China. Ethanol production has been at record levels, but concern is whether that production is sustainable in 2012 when blender credits expire. The January USDA report will incorporate the Grain Stocks report which will indicate whether domestic usage has been better than previously estimated. Price targets for stored corn may need to be reset and should consider the positive basis that we are seeing. Cash prices above $6.00 a bushel do need to be considered.
New Crop: September closed at $5.75 a bushel, up 3 ¼ cents a bushel since last Friday. Technical indicators have a strong sell bias. Support is at $5.66 with resistance at $5.88 a bushel. Watch closely over the next few months for opportunities to price the 2012 crop.
Cotton:
Nearby: March closed at 90.43 cents per pound, down 1.41 cents since last week. Support is at 89.47cents per pound with resistance at 93.71 cents per pound. Technical indicators have a strong sell bias. All cotton weekly export sales were a negative 21,800 bales (reductions of 34,100 bales of upland cotton for 2011/12; sales of 1,100 bales of upland cotton for 2012/13; and a marketing year high sales of 11,200 bales of Pima cotton for 2011/12). The Adjusted World Price for December 9 – December 15 is 78.36 cents/lb.; down 0.13 cents/lb. from last week. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. USDA offered a friendly report with respect to U.S. stocks, but considering the global picture was bearish. U.S. yields were lowered 23 pounds to 771 pounds per acre as supply was reduced 473,000 bales. Domestic mill use was cut 200,000 bales and ending stocks were about expected at 3.5 million bales, a 300,000 bales reduction from last month. Global stocks were raised 2.7 million bales to 57.67 million bales as uncertain world economics and competition from polyester are expected to reduce consumption. Cotton has recently been in a narrow range from 89 to 94 cents and is expected to stay in that range for at least the short term. At this time, I am currently at 60% priced and would target any substantial rallies 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.
New Crop: December 2012 cotton closed at 87.83 cents per pound, down 1.10 cents for the week. Support is at 86.28 cents per pound with resistance at 90.08 cents per pound. Technical indicators have a strong sell bias.
Soybeans:
Nearby: The January contract closed at $11.07 a bushel, down 28 ¾ cents a bushel since last Friday. Support is at $10.79 with resistance at $11.46 a bushel. Technical indicators have a strong sell bias. Weekly exports were above expectations at 29.2 million bushels (28.3 million bushels for the 2011/12 marketing year and 926,000 bushels for 2012/13). USDA raised U.S. soybean ending stocks 35 million bushels this month to 230 million bushels as exports where reduced 25 million bushels and crush cut 10 million bushels. The trade was expecting a 213 million bushel ending stock number. World ending stocks at 2.371 billion bushels were projected 36 million bushels higher than in November. Projected U.S. ending stocks have increased 70 million bushels in the last 2 months taking a bullish situation to a bearish one. The cash market is saying to sell now and not store which is a change from a couple of months ago. I would look to sell at least half of my stored crop on any short term rebound in the market and continue to hold the other half for a possible rally from South American weather or even from a weaker dollar.
New Crop: November soybeans closed today at $11.35 ¼ a bushel, down 20 ¼ cents since last week. Support is at $11.14 with resistance at $11.66 a bushel. Technical indicators have a strong sell bias.
Wheat:
Nearby: March futures contract closed at $5.96 a bushel, down 29 ½ cents a bushel since Friday. Support is at $5.77 with resistance at $6.08 a bushel. Technical indicators have changed to a sell bias. Weekly exports were just below expectations at 15.7 million bushels for 2011/12. USDA raised U.S. ending stocks 50 million bushels to 878 million bushels on a 50 million bushel cut in exports. World ending stocks are projected at 7.662 billion bushels, up 218 million bushels from the November estimate as increased usage was more than offset by an increase in beginning stocks and a world production increase. Overall, this report is bearish wheat as ending stock projections came in above the pre report estimates.
New Crop: July 2012 wheat closed at $6.33 ¼ a bushel, down 20 ¾ cents since last week. Support is at $6.15 with resistance at $6.45 a bushel. Technical indicators have changed to a strong sell bias. It appears most of the bearish news is in for wheat with production concerns for the U.S. southern Plains and Ukraine adding some support to the market.
