Corn

In today’s report, final corn production increased 48 million bushels on a 0.5 bushel per acre increase in yield and 100,000 acre increase in harvested acres. This was 78 million bushels higher than the average pre report trade guess. The yield of 147.2 bushels per acre was a 0.5 bushel increase from the last estimate and 0.8 higher than the average trade guess. The only adjustment in usage was a 50 million bushel increase in exports reflecting a strong pace of sales and reduced prospects for Argentina. Ending stocks were lowered 2 million bushels to 846 million bushels and a 6.7% stock to use ratio. The trade was expecting stocks of 753 million bushels. Corn stocks as of December 1 in the grain stocks report was 9.642 billion bushels and while within range of trade guesses but higher than the average trade guess of 9.391 billion bushels. The season average price is projected to range from $5.70 to $6.70 a bushel, 20 cents lower on each end. Global corn stocks increased 37.4 million bushels from last month to 5.045 billion bushels nearly unchanged from last year. As with the 6.7% domestic stocks to use ratio, the global stocks to use ratio of 14.7% remain at the second tightest levels since 1995/96 and 1973/74. March corn closed down the 40 cent limit at $6.11 ½ a bushel while technical indicators have a strong sell bias with support at $5.79 and resistance at $6.75 a bushel. It may be difficult to overcome this bearish report in the short term, but long term fundamentals are still on the bullish side.  September corn closed down 31 ½ cents at $5.80 a bushel.  Over the past 30 years the average difference between the January projection for U.S. ending stocks and the final estimate has been 233 million bushels with 18 years below the final estimate and 12 years above.  These numbers can and will change, but do reflect the best information and estimates at the time of the report. The next USDA Supply & Demand report will be released February 9, 2012.

Supply and Demand Projections and Historical Data Source: USDA

 Cotton

USDA’s projection for the 2011/12 marketing year reflects a 200,000 bale increase in ending stocks at 3.7 million bales on a 153,000 bale decrease in production from last month and a 300,000 bale decrease in exports. Production is estimated at 15.67 million bales, with harvested acres reduced 100,000 acres at 9.75 million acres and overall yield raised 1 pound per acre to 772 pounds. Domestic mill use was unchanged while exports were cut 300,000 bales to 11.0 million bales on lower U.S. supplies and strong competition from foreign exports. The cut in production was expected by the trade, however, the reduction in exports and ending stocks were not expected. Pre report guesses pegged exports at 11.35 million bales and ending stocks at 3.38 million bales.   The projected price range for 2011/12 was narrowed 1 cent on each end to 86 to 94 cents per pound. The stocks to use ratio is estimated at 25.3% up from December’s 23.5%. World projections reflect slightly lower beginning stocks, decrease in world production of 580,000 bales, and a 1% reduction in world consumption, mainly in China and Thailand. Global ending stocks are forecast at 58.35 million bales, an increase of 700,000 bales. The global stocks to use ratio is 53%, above both the 5 and 10 year averages.  March futures closed at 95.69 cents per pound, down 1.18 cents.  Technical indicators have a buy bias with support at 92.40 cents and resistance at 99.14 cents. Export numbers reported today were the largest in seven weeks.  It should be noted that China today announced additional cotton import quotas to help meet the demands of their mills. This has most likely provided some support to market with an otherwise bearish USDA report. Keep in contact with your cotton buyer on current quotes. At this time, I am currently at 80% priced for 2011 production and would be willing to hold the remainder for an additional rally. December 2012 cotton closed at 92.07cents/pound, down 0.77 cents. Over the past 30 years the average difference between the January projection for U.S. ending stocks and the final estimate has been 900,000 bales with 9 years below the final estimate and 21 years above. These numbers can and will change, but do reflect the best information and estimates at the time of the report. The next USDA Supply & Demand report will be released February 9, 2012.

Supply and Demand Projections and Historical Data Source: USDA

 Soybeans

Ending stocks for 2011/12 are increased 45 million bushels from last month to 275 million bushels as production increased 10 million bushels and exports are reduced 25 million bushels with crush cut 10 million bushels. The average trade guess was 227 million bushels for ending stocks. Final yields were reported at 41.5 bushels per acre, slightly higher than the average trade guess. Harvested acres were reduced 100,000 acres. Exports were reduced with strong competition from last year’s South America crop. As a side note a 15.2 million bushel export to unknown destinations was reported today on USDA daily reporting system. Crush was reduced reflecting industry reported data. The season average price for 2011/12 is estimated to range from $10.95 to $12.45 a bushel, up 25 cents on the bottom and down 25 cents on the top. Stocks to use ratio is projected at 9.1%, up from last month’s estimate of 7.6%.  World ending stocks for 2011/12 are projected to decrease 41 million bushels from the December estimate to 2.331 billion bushels on mainly lower production in South America. This is a 189 million bushel reduction from last year. Due to excessive heat and dry conditions, Brazilian production was lowered 36.7 million bushels while Argentina was cut 55 million bushels from the December estimate. At this point, Argentina and southern Brazil soybean production have time to recover, but forecast for the next 10 days are dry. This uncertainty will provide some level of support to the market on what is considered a bearish report. Soybean stocks as of December 1 were 2.366 billion bushels, 40 million bushels higher than trade expectations. March soybeans closed at  11.82 ½ , down 20 ½ cents per bushel. Technical analysis has a sell bias with support at $11.18 and resistance at $12.45 a bushel.  The dollar is weaker today which also has given support to today’s market. If weather problems further develop in South America and/or the dollar weakens we could see a rally back to the mid-$12 range. If your cash flow needs are currently met, I would look to hold the remainder of stored soybeans and evaluate at that point. If prices fall back to the mid-$11 range, I would view that as an indication prices are going lower and go ahead and get out of the stored crop. November soybeans closed at $11.88 ½  a bushel, down 16 cents. Watch for opportunities to price soybeans over the next few months.  Over the past 30 years the average difference between the January projection for U.S. ending stocks and the final estimate has been 62.5 million bushels with 7 years below the final estimate and 23 years above. These numbers can and will change, but do reflect the best information and estimates at the time of the report. The next USDA Supply & Demand report will be released February 9, 2012.

Supply and Demand Projections and Historical Data Source: USDA

 Wheat

U.S. projections for 2011/12 lowered ending stocks 8 million bushels from last month to 870 million bushels compared to the average pre report trade guess of 831 million bushels. Food use is reduced 5 million bushels based on flour production data and feed and residual use is cut 15 million bushels based on the Grain Stocks report reflecting stocks as of December 1. Seed usage was raised 4 million bushels based on acreage reported in the Winter Wheat Seeding report which showed winter wheat acres at 41.947 million acres, about 1 million acres higher than expected. Exports are raised 25 million bushels based on the pace of sales. The season average price is estimated to range from $6.95 to $7.45 a bushel, down 10 cents on both sides. World ending stocks are projected at 7.717 billion bushels, up 55 million bushels from the December estimate as increased usage was more than offset by a world production increase. July wheat closed at $6.48, down 30 cents. Technical analysis shows a sell bias with support at $6.02 and resistance at $7.07 a bushel. Overall, this report is bearish wheat as ending stock projections came in above the pre report estimates. Over the past 30 years the average difference between the January projection for U.S. ending stocks and the final estimate has been 55 million bushels with 18 years below the final estimate and 11 years above. These numbers can and will change, but do reflect the best information and estimates at the time of the report. The next USDA Supply & Demand report will be released February 9, 2012.

Supply and Demand Projections and Historical Data Source: USDA