Comments and prices are through Thursday, February 2, 2012. Corn and wheat prices are up while cotton and soybean prices are mixed for the week. The March U.S. Dollar Index closed on Thursday at 79.11, up .10 for the week. The Dow Jones Industrial Average closed Thursday up 47 points for the week at 12,707. Crude Oil closed at 96.60 a barrel, down 2.96 a barrel for the week. The market continues to watch the weather and production prospects in South America while the U.S. Dollar ebbs and flows with Europe’s latest financial news. Look for Bloomberg to release survey results of market analysts 2012 U.S. acreage guesses. USDA will update their monthly Supply & Demand report on February 9.
Corn:
Nearby: March closed at $6.43 a bushel, up 1 ¼ cents a bushel for the week. Support is at $6.28 with resistance at $6.54 a bushel. Technical indicators have a buy bias. Weekly exports were above expectations at 38.4 million bushels (35.9 million bushels for the 2011/12 marketing year and 2.5 million bushels for 2012/13). Export sales are ahead of the pace to meet USDA projections which may lead to upward adjustments in future reports. An anticipation of a large 2012 corn crop could limit sales later this summer when the marketing year winds down. Ethanol production was up by 5,000 barrels per day last week to 939,000 barrels per day. Production is still running 3% above last year’s pace. However, ethanol stocks increased 5% on the week to a new all-time high. I would use the 50 day moving average price of $6.16 as a price stop.
New Crop: September closed at $6.01 ½ a bushel, up 7 ½ cents a bushel since last Friday. Technical indicators have changed to a buy bias. Support is at $5.88 with resistance at $6.08 a bushel. I would target $6.30 futures as a place to start although producers should evaluate their own profitability to assess a starting point. With the potential for a large 2012 U.S. corn crop looming, I would use a tight stop of $5.85 as a pricing point. If September futures drop back to $5.85, then price a portion of the 2012 crop.
Cotton:
Nearby: March closed at 94.21 cents per pound, down 1.40 cents since last week. Support is at 91.74 cents per pound with resistance at 96.12 cents per pound. Technical indicators have a sell bias. The Adjusted World Price for February 3– February 9 is 80.57 cents per pound down 1.72 cents. All cotton weekly export sales were a reduction of 143,400 bales (reduction of 164,000 bales of upland cotton for 2011/12; sales of 17,800 bales of upland cotton for 2012/13; sales of 11,600 bales of Pima cotton for 2011/12 and a reduction of 8,800 bales of Pima cotton for 2012/13). Prices held up well considering the export reductions, shipments this week were reported at a marketing year high of 386,700 running bales. Total bales shipped stand at 3.853 million running bales, 36% of USDA’s projection for the year. Loan equities have been quoted at 27 – 31 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 95.06 cents per pound, up 0.47 cents for the week. Support is at 93.59 cents per pound with resistance at 95.89 cents per pound. Technical indicators have a strong buy bias. Wet conditions and flooding could reduce cotton production in Australia, the world’s 3rd largest cotton shipper. Acreage in the U.S. is expected to drop with the first producer survey estimates to be released by the National Cotton Council on February 11. Drought conditions continue in Texas, but have improved slightly.
Soybeans:
Nearby: The March contract closed at $12.17 a bushel, down 2 cents a bushel since last Friday. Support is at $11.97 with resistance at $12.34 a bushel. Technical indicators have a buy bias. Weekly exports were at the low end of expectations at 13.5 million bushels (11.3 million bushels for the 2011/12 marketing year and sales of 2.2 million bushels for 2012/13). Export sales commitments are running behind the pace to meet USDA projections, a reduction may be in future USDA reports. Weather and production in Argentina will have an influence. Producers who continue to hold stored soybeans should not let prices get away from them and at least use an $11.75 – $12.00 mental stop as a pricing point should prices drop back to that level.
New Crop: November soybeans closed today at $12.23 ¾ a bushel, up 1½ cents since last week. Support is at $12.05 with resistance at $12.34 a bushel. Technical indicators have changed to a buy bias. During the week, prices closed below my $12.00 stop so I would have priced 5% at $11.94 for 2012 crop. Continue to use a $12.00 futures stop as a pricing point should prices drop back to that level. If prices move up, I would move my stop up. At this point, there appears to be more downside risk than upside.
Wheat:
Nearby: March futures contract closed at $6.62 ¾ a bushel, up 15 ½ cents a bushel since Friday. Support is at $6.47 with resistance at $6.81 a bushel. Technical indicators have changed to a strong buy bias. Weekly exports were about expected at 20.4 million bushels (19.1 million bushels for 2011/12 and 1.3 million bushels for 2012/13). Supportive of the wheat market has been weather conditions in Europe and the Black Sea region as there have been concerns on the extent of winter kill from bitter cold. An announcement Friday, February 3, is expected from Russia on export duties on wheat and other grains and whether export caps will be placed.
New Crop: July wheat closed at $6.91 ¾ a bushel, up 17 cents since last week. Support is at $6.80 with resistance at $7.03 a bushel. Technical indicators have changed to a strong buy bias. I would use a $6.65 stop as a pricing point should wheat prices drop back to that level.
