Corn

In today’s report, ending stocks were unchanged at 801 million bushels and a 6.3% stock to use ratio. The trade was expecting stocks of 785 million bushels on an increase in exports. The season average price is projected to range from $5.90 to $6.50 a bushel, up 10 cents on the lower side and down 10 cents on the upper side. Global corn stocks decreased 32 million bushels from last month to 4.903 billion bushels on mainly higher foreign feed use. Corn production in Argentina and Brazil was expected to be 98 million bushels lower than today’s USDA projection which was 39 million bushels higher than February. The global stocks to use ratio is projected to be 14.3%, the tightest since 1973/74. May corn at mid-day was up 10 ½ at $6.46 a bushel while technical indicators have a buy bias with support at $6.23 and resistance at $6.63 a bushel. At these levels, I would be priced out of corn in storage. September corn at mid-day was trading up 5 ½ cents at $5.95 ½ a bushel. Technicals have a sell bias with support at $5.74 and resistance at $6.10. In weekly comments, I have 25% forward priced for 2012 production. A potential large U.S. corn acreage with normal weather could drop prices sharply by fall. Over the past 30 years the average difference between the March projection for U.S. ending stocks and the final estimate has been 192 million bushels with 19 years below the final estimate and 11 years above.  

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 3.9 million bales on a 100,000 bale decrease in domestic mill use. The projected price range for 2011/12 was raised 1 cent on the lower end to 88 to 93 cents per pound. The stocks to use ratio is estimated at 27.1% up from February’s 26.2%. World projections reflect slightly higher beginning stocks, a small increase in world production of 300,000 bales, and a reduction in world consumption. Global ending stocks are forecast at 62.32 million bales, an increase of 1.55 million bales. The global stocks to use ratio is 57%, up 2% from last month. India officials earlier in the week announced a ban on cotton exports which was supportive of prices. However, the latest announcements will allow shipments registered before March 4, the day before the ban. The ban was put in place on concerns that with lower production they would not have enough cotton for their mills. This could be a changing story to watch both with the ban and cotton production in India. They are the 2^nd largest producer and the 2^nd largest exporter. May futures traded during the day at 90.04 cents per pound, up 0.48 cents.  Technical indicators have a sell bias with support at 87.43 cents and resistance at 91.85 cents. Keep in contact with your cotton buyer on current quotes. At this time, I am currently at 80% priced for 2011 production and am still looking for a rally back to the $1.00 – $1.05 level.  December 2012 cotton traded at 91.16 cents/pound, down 0.13 cents. Technical indicators have a sell bias with support at 89.15 cents and resistance at 92.73 cents. The increase in corn and soybean prices could take some acres away from cotton which would be supportive of cotton prices as would continued dry to drought conditions in Texas.  Over the past 30 years the average difference between the March projection for U.S. ending stocks and the final estimate has been 500,000 bales with 11 years below the final estimate and 19 years above. These numbers can and will change, but do reflect the best information and estimates at the time of the report.

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 260 million bushels for ending stocks. The season average price for 2011/12 is estimated to range from $11.40 to $12.60 a bushel, an increase of 30 cents on both ends. Stocks to use ratio is projected at 9.1%, unchanged from last month. Exports were left unchanged from March even as Brazil and Argentine production was 184 million bushels less than last month and 55 million bushels less than the average trade guess. Most likely, the assumption is that export sales will pick up the latter half of the marketing year to meet projections and offset some of the drop in South American production.  World ending stocks for 2011/12 are projected to again decrease to 2.105 billion bushels, 109 million bushels less than the February estimate. This is a 421 million bushel reduction from last year. May soybeans in early trading were at 13.52 ½, up 14 cents per bushel. Technical analysis has a strong buy bias with support at $13.26 and resistance at $13.65 a bushel.  Producers with soybeans in storage may want to use a $12.98 stop as a pricing point if nearby prices drop.  November soybeans were trading at $13.14 a bushel, up 14 ½ cents. Technical analysis has a strong buy bias with support at $12.88 and resistance at $13.23 a bushel. For new crop soybeans, I am currently priced 30% and would also use a $12.77 stop as a pricing point should prices drop back to that level. Over the past 30 years the average difference between the March projection for U.S. ending stocks and the final estimate has been 62.5 million bushels with 8 years below the final estimate and 22 years above.

Supply and Demand Projections and Historical Data Source: USDA

 Wheat

U.S. projections for 2011/12 lowered ending stocks 20 million bushels from last month to 825 million bushels compared to the average pre report trade guess of 836 million bushels. Exports are raised 25 million bushels based on shipments and sales. Food use is lowered 5 million bushels reflecting the latest data from the North American Miller’s Association. The season average price is estimated to range from $7.15 to $7.45 a bushel, unchanged from last month. World ending stocks are projected at 7.70 billion bushels, down 130 million bushels from the February estimate as lower beginning stocks and increased usage offset increased production. The average trade guess was 111 million bushels higher. July wheat in early trading was at $6.60, up 14 ½ cents. Technical analysis shows a strong sell bias with support at $6.41 and resistance at $6.65 a bushel. Overall, this report is neutral to friendly wheat as ending stock projections for the U.S. and World came in below the average pre report estimates. In my weekly comments, I am priced 20% on new crop and would watch closely on pricing more. One concern is that wheat prices will follow corn and if a large intended 2012 U.S. corn acreage is reported on March 30, wheat prices could be dragged down.  Over the past 30 years the average difference between the March projection for U.S. ending stocks and the final estimate has been 40.4 million bushels with 16 years below the final estimate and 14 years above. These numbers can and will change, but do reflect the best information and estimates at the time of the report. USDA will release the Prospective Plantings and Grain Stocks reports on March 30, 2012. The next USDA Supply & Demand report will be released April 10, 2012.

Supply and Demand Projections and Historical Data Source: USDA