Corn, cotton, and wheat prices are all down while soybean prices are mixed for the week. The March U.S. Dollar Index traded before the close at 79.24, up .18 for the week. The Dow Jones Industrial Average before the close was down 107 points for the week at 12,755. Crude Oil closed at 98.82 a barrel, up .98 a barrel for the week. USDA updated their monthly Supply & Demand report on February 9 and for the most part was a neutral report with the exception of cotton where ending stocks increased rather than decrease. Globally, corn and soybean stocks tightened while cotton and wheat increased. Today’s market movement seems more a reaction to strength in the Dollar rather than fundamentals. The strength in the dollar is coming from the continued financial situation in Europe as concerns mount on whether an agreement can be reached in Greece on a financial bailout. Early in the week, newswires released a survey of 2012 U.S. acreage estimates from market analysts. Weather forecasts on the end of La Nina are mixed with one expecting dry conditions during the spring with a return to more normal rainfall patterns in the summer. Another forecast looks for La Nina to persist until July. A dry spring could see planters rolling while a return to normal rainfall would mean abundant crops in the Midwest and most likely lower prices in the fall. A Chinese trade delegation will be in the U.S. to sign agreements next week and while not expected to announce any surprises, it may bear watching.
Corn:
Nearby: March closed at $6.31 ¾ a bushel, down 12 ¾ cents a bushel for the week. Support is at $6.22 with resistance at $6.43 a bushel. Technical indicators have changed to a hold bias. Weekly exports were below expectations at 29.8 million bushels (27.3 million bushels for the 2011/12 marketing year and 2.5 million bushels for 2012/13). A 9.4 million bushel sale to Egypt should show up in next week’s report. USDA lowered corn ending stocks 45 million bushels to 801 million bushels as compared to the average pre report estimate of 797 million bushels. Exports were increased reflecting reduced supplies in Argentina and recent increases in both sales and shipments. Global stocks decreased 109.8 million bushels to 4.935 billion bushels and with a stock to use ratio of 14.5% is the tightest since 1973/74. For corn in storage, I would use the 50 day moving average price of $6.21 as a price stop.
New Crop: September closed at $5.84 ½ a bushel, down 20 ¼ cents a bushel since last Friday. Technical indicators have changed to a sell bias. Support is at $5.74 with resistance at $5.98 a bushel. A survey of market analysts expect 94.2 million acres of corn to be planted this year. At trend or close to trend line yields, more than adequate stocks should be seen. Prices dropped through my $5.85 a bushel stop, so I would price 10% at the current level.
Cotton:
Nearby: March closed at 90.61 cents per pound, down 5.73 cents since last week. Support is at 89.22 cents per pound with resistance at 92.16 cents per pound. Technical indicators have a sell bias. The Adjusted World Price for February 10– February 16 is 82.25 cents per pound up 1.68 cents. All cotton weekly export sales were 78,000 bales (sales of 35,700 bales of upland cotton for 2011/12; sales of 14,000 bales of upland cotton for 2012/13 and sales of 28,300 bales of Pima cotton for 2011/12). USDA in a slight surprise raised U.S. ending stocks 100,000 bales to 3.8 million bales on a 100,000 bales decrease in domestic use. World numbers were also bearish as global stocks were raised 2.4 million bales to 60.77 million bales. 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 although based on the latest report and prices moves I may have to adjust that target.
New Crop: December cotton closed at 92.97 cents per pound, down 3.41 cents for the week. Support is at 91.23 cents per pound with resistance at 95.37 cents per pound. Technical indicators have changed to a hold bias. Loan equities have been quoted at 33 cents per pound. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. Market analysts surveyed on the average expect 13.5 million acres of cotton planted in the U.S. this year. This would be a drop of 1.2 million acres from 2011. Conditions in Texas at planting time will have a bearing on acreage. The National Cotton Council will release the results of their producer acreage survey this weekend and look for information on it to be posted at https://news.utcrops.com/ .
Soybeans:
Nearby: The March contract closed at $12.29 a bushel, down 3 ½ cents a bushel since last Friday. Support is at $12.09 with resistance at $12.40 a bushel. Technical indicators have changed to a strong buy bias. Weekly exports were within expectations at 24.2 million bushels (22.2 million bushels for the 2011/12 marketing year and sales of 2 million bushels for 2012/13). On the daily reporting system, a 4.4 million bushel sale to China was reported. USDA estimated the current marketing year will end with 275 million bushels in stocks, unchanged from last month and just 6 million bushels greater than the average of pre report guesses. Although U.S. exports are below the current estimates pace, USDA is expecting that pace to pick up in the second half of the marketing year as the result of reduction in South American production. The World soybean ending stocks have tightened 317 million bushels from the previous marketing year. Global stocks are estimated at 2.215 billion bushels, 118 million bushels less than the January report. With tightened stocks, weather concerns in South America will give support to the market at least until actual production is known. Producers who continue to hold stored soybeans should not let prices get away from them and at least use a $12.00 stop as a pricing point should prices drop back to that level.
New Crop: November soybeans closed today at $12.39 ½ a bushel, up 2 ¼ cents since last week. Support is at $12.20 with resistance at $12.50 a bushel. Technical indicators have changed to a strong buy bias. The average acre guess of market analysts for 2012 soybeans is 75.3 million acres, 300,000 acres higher than last year. I am currently priced 5% at $11.94. 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.
Wheat:
Nearby: March futures contract closed at $6.30 a bushel, down 30 ¾ cents a bushel since Friday. Support is at $6.17 with resistance at $6.52 a bushel. Technical indicators have changed to a sell bias. Weekly exports were above expectations at 26 million bushels for 2011/12. USDA lowered ending stocks 25 million bushels from last month to 845 million bushels as compared to the average pre report guess of 868 million bushels. Exports were raised 25 million bushels based on the pace of sales. The World stocks number of 7.83 billion bushels is bearish on the market as this is 113 million bushels higher than January and if realized would beat the 1999/2000 record by 88 million bushels.
New Crop: July wheat closed at $6.48 ½ a bushel, down 40 ½ cents since last week. Support is at $6.32 with resistance at $6.76 a bushel. Technical indicators have changed to a strong sell bias. The average estimate from market analysts on wheat acres is 57.2 million acres, an increase of 2.8 million acres from last year. Prices dropped through my stop today so I would price 10% of the 2012 crop.
