Corn

In today’s report, ending stocks were lowered 45 million bushels to 801 million bushels and a 6.3% stock to use ratio. The trade was expecting stocks of 797 million bushels. Adjustments were a 5 million bushel increase in imports and a 50 million bushel increase in exports with reduced supplies in Argentina and recent increases in both sales and shipments. The season average price is projected to range from $5.80 to $6.60 a bushel, narrowed 10 cents on both ends. Global corn stocks decreased 109.8 million bushels from last month to 4.935 billion bushels on mainly lower production in Argentina and Paraguay. The global stocks to use ratio is projected to be 14.5%, the tightest since 1973/74. March corn closed down 5 ½ at $6.37 a bushel while technical indicators have a buy bias with support at $6.21 and resistance at $6.60 a bushel. For corn in storage, I would use the 50 day moving average price of $6.21 as a price stop. September corn closed down 3 ¾ cents at $5.93 a bushel. Technicals have a hold bias with support at $5.80 and resistance at $6.07. With the potential for a large 2012 U.S. corn crop looming, I would use a tight stop of $5.89 as a pricing point. If September futures drop back to $5.89, then price a portion of the 2012 crop. Over the past 30 years the average difference between the February projection for U.S. ending stocks and the final estimate has been 210 million bushels with 19 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 March 9, 2012.

Supply and Demand Projections and Historical Data Source: USDA

Cotton

USDA’s projection for the 2011/12 marketing year reflects a 100,000 bale increase in ending stocks at 3.8 million bales on a 100,000 bale decrease in domestic mill use. The projected price range for 2011/12 was narrowed 1 cent on each end to 87 to 93 cents per pound. The stocks to use ratio is estimated at 26.2% up from January’s 25.3%. World projections reflect higher beginning stocks based on revisions in India, increase in world production of 505,000 bales, and a very slight reduction in world consumption. Global ending stocks are forecast at 60.77 million bales, an increase of 2.4 million bales. The global stocks to use ratio is 55%, about equal to 2008/09 level.  March futures closed at 90.38 cents per pound, down 3.24 cents.  Technical indicators have a sell bias with support at 87.47 cents and resistance at 95.89 cents. Keep in contact with your cotton buyer on current quotes. At this time, I am currently at 80% priced for 2011 production and would target the $1.00 – $1.05 level as a pricing point.  December 2012 cotton closed at 92.88 cents/pound, down 3.04 cents. Technical indicators have a hold bias with support at 89.61 cents and resistance at 98.29 cents. New crop cotton should have some support from expected reduction in China’s cotton acres, lower U.S. acres, and the drought in Texas. Over the past 30 years the average difference between the February projection for U.S. ending stocks and the final estimate has been 700,000 bales with 10 years below the final estimate and 20 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 March 9, 2012.

Supply and Demand Projections and Historical Data Source: USDA

Soybeans

Ending stocks for 2011/12 are unchanged from last month at 275 million bushels. The average trade guess was 269 million bushels for ending stocks. The season average price for 2011/12 is estimated to range from $11.10 to $12.30 a bushel, narrowed 15 cents on both ends. Stocks to use ratio is projected at 9.1%, unchanged from last month. Exports are projected 226 million bushels less than last year and currently are not up even to the pace to meet those commitments. However, the second half of the marketing year is expected to see U.S. exports offset the reduction in South American productions and by extension their reduced exports.   World ending stocks for 2011/12 are projected to decrease 118 million bushels from the January estimate to 2.215 billion bushels on mainly lower production in South America. This is a 317 million bushel reduction from last year. Due to excessive heat and dry conditions, Brazilian production was lowered 73.5 million bushels while Argentina was cut 92 million bushels from the January estimate. March soybeans closed at 12.27 ½, down 4 cents per bushel. Technical analysis has a strong buy bias with support at $12.07 and resistance at $12.57 a bushel.  This recent rally could be a good point to sell out of stored crop. I would at least use a $12.00 stop so if nearby prices drop to $12.00, then sell otherwise watch the market. November soybeans closed at $12.38 ½ a bushel, down 1 ½ cents. Technical analysis has a strong buy bias with support at $12.20 and resistance at $12.62 a bushel. For new crop soybeans, I would also use a $12.00 stop and otherwise watch the market. I would note that if soybean prices are at a level where profit on the average can be booked then I would look closely at pricing part of the crop. Over the past 30 years the average difference between the February projection for U.S. ending stocks and the final estimate has been 62.5 million bushels 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 March 9, 2012.

Supply and Demand Projections and Historical Data Source: USDA

Wheat

U.S. projections for 2011/12 lowered ending stocks 25 million bushels from last month to 845 million bushels compared to the average pre report trade guess of 868 million bushels. Exports are raised 25 million bushels based on the pace of sales. The season average price is estimated to range from $7.15 to $7.45 a bushel, up 20 cents on the bottom side. World ending stocks are projected at 7.83 billion bushels, up 113 million bushels from the January estimate as beginning stocks and production are increased. World stocks if realized would be a record surpassing the 1999/2000 stock level by 88 million bushels. July wheat closed at $6.68, down 11 cents. Technical analysis shows a sell bias with support at $6.48 and resistance at $6.93 a bushel. Overall, this report is neutral wheat as ending stock projections came in below the average pre report estimates while global stocks are projected to be a record. I would use a $6.50 – $6.60 stop as a point that if the market dropped back to, I would price some of the crop. Wheat will tend to follow corn, but may look to garner support with weather issues in the U.S. Plains, Ukraine, and Russia. Over the past 30 years the average difference between the February projection for U.S. ending stocks and the final estimate has been 48 million bushels with 19 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 March 9, 2012.

Supply and Demand Projections and Historical Data Source: USDA