Cotton and soybean prices are up while corn and wheat prices are mixed for the week. The March U.S. Dollar Index before the close on Friday was at 80.42, down 1.37 for the week. The Dow Jones Industrial Average before the close was up 278 points for the week at 12,694. Crude Oil was trading before the close at 98.36 a barrel, down 0.52 a barrel for the week. European measures this week have been positive to the Euro and caused weakness in the dollar. Unemployment claims dropped 50,000 from last week to 352,000, the lowest since April 2008, giving some hope that economy is showing positive signs. Forecasts for rains in Argentina and southern Brazil have been a little better than earlier thought and are putting pressure on the market. Dry weather is expected to return somewhat in that region, but depending on the recent rains may not have as severe an impact. Still, private projections on production for Argentina and Brazil have been less than USDA’s recent estimate. Overall, export sales data released today (a day later than usual due to Monday holiday) is better than expected.
Corn:
Nearby: March closed at $6.11 ½ a bushel, up 12 cents a bushel for the week. Support is at $5.96 with resistance at $6.21 a bushel. Technical indicators have changed to a strong sell bias. Weekly exports were above expectations at 29.9 million bushels for the 2011/12 marketing year. Sales to Mexico lead the way at 15.3 million bushels followed by South Korea, 7.4 million bushels; China, 5.2 million bushels; and Japan, 4.9 million bushels. The Rosario Grains Exchange in Argentina projects their corn production 180 million bushels less than USDA’s number in the January 12 report. Another analyst puts it at 197 million bushels less than USDA. If realized, this would be a reduction in exports for Argentina and most likely additional business for the U.S.
New Crop: September closed at $5.75 ½ a bushel, down 2 ½ cents a bushel since last Friday. Technical indicators have changed to a strong sell bias. Support is at $5.63 with resistance at $5.87 a bushel. One private estimate released today pegs 2012 U.S. corn acreage at 94.748 million acres, up 2.827 million acres from 2011. Acreage of that magnitude at trend line yields of around 161 bushels/acre would cause stocks to go from tight to surplus in just one year. However, the Upper Midwest is still officially under abnormally dry to moderate drought conditions and without additional winter precipitation will start the production year short of subsoil moisture. I would target $6.30 futures as a place to start although producers should evaluate their own profitability to assess a starting point.
Cotton:
Nearby: March closed at 98.60 cents per pound, up 3.13 cents since last week. Support is at 96.95 cents per pound with resistance at 99.53 cents per pound. Technical indicators have changed to a strong buy bias. The Adjusted World Price for January 20 – 26 is 80.44 cents per pound up .32 cents. All cotton weekly export sales were 218,600 bales (sales of 189,400 bales of upland cotton for 2011/12; sales of 22,500 bales of upland cotton for 2012/13; and sales of 6,700 bales of Pima cotton for 2011/12). China led the way at 91,200 bales with Mexico at 91,000 bales. These numbers were the largest in eight weeks. Loan equities today were quoted at 28 – 35 cents per pound. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. I am currently at 80% priced for 2011 production and would be willing to hold the remainder for an additional rally. I would target the $1 to $1.05 range as a pricing point.
New Crop: December cotton closed at 93.91 cents per pound, up 1.96 cents for the week. Support is at 92.50 cents per pound with resistance at 94.70 cents per pound. Technical indicators have changed to a strong buy bias. According to the China Cotton Association, China’s planted cotton area is expected to decline 10.5%. A private estimate projects U.S. cotton acreage at 13.59 million acres, down 836,000 from 2011. Over half of that acreage would be in Texas which is still suffering drought conditions.
Soybeans:
Nearby: The March contract closed at $11.87 a bushel, up 28 ¾ cents a bushel since last Friday. Support is at $11.70 with resistance at $12.12 a bushel. Technical indicators have changed to a sell bias. Weekly exports were above expectations at 36.4 million bushels for the 2011/12 marketing year and up noticeably from last week. China accounted for 13.5 million bushels with rumors that another 19.1 million bushels were purchased this week. The National Oilseed Processors Association (NOPA) reported their members crushed 145.4 million bushels in December, 4 million bushels higher than expected. Oil World cut 140 million bushels from their estimate of South American soybean production while another private analyst estimated Argentina’s and Brazil’s production 128.6 million bushels lower than USDA’s estimate. I would hold any stored soybeans for a rebound in price.
New Crop: November soybeans closed today at $11.83 ¾ a bushel, up 13 ¾ cents since last week. Support is at $11.67 with resistance at $12.08 a bushel. Technical indicators have a sell bias. Private sources project 2012 U.S. soybean acres at 74.568 million acres, 408,000 acres less than last year and lower than earlier estimates.
Wheat:
Nearby: March futures contract closed at $6.10 ½ a bushel, up 8 ¼ cents a bushel since Friday. Support is at $5.91 with resistance at $6.21 a bushel. Technical indicators have a strong sell bias. Weekly exports were above expectations at 21.5 million bushels (21.6 million bushels for 2011/12 and reductions of 110,000 bushels for 2012/13).
New Crop: July wheat closed at $6.43 ¾ a bushel, down 2 cents since last week. Support is at $6.22 with resistance at $6.55 a bushel. Technical indicators have a strong sell bias. In the Ukraine, 33% of the winter wheat crop is rated poor to very poor as their drought worsens. Canadian wheat acres are expected to increase 2.6 million acres from last year. All wheat acres for the U.S. are estimated by one private firm at 55.44 million acres, up 2.4 million acres from last year. An increase in acreage here and in Canada doesn’t bode well for stocks, which are at more than adequate levels. Keys will be the crop condition on winter wheat acres after breaking dormancy.
