Soybean prices are up while corn, cotton and wheat prices are down for the week. The March U.S. Dollar Index before the close is at 80.06, up .60 for the week. The Dow Jones Industrial Average is currently down 35 points for the week at 12,943. Crude Oil was trading before the close at 107.32 a barrel, down .62 a barrel for the week. Greece took efforts to force compliance in its debt swap deal resulting in a sharply lower euro and strong dollar. Price held up quite well today in the face of a stronger dollar and a more or less neutral USDA report. Comments on the March 9th USDA Supply & Demand report have been posted at http://economics.ag.utk.edu/outlook.html .
Corn:
Nearby: May closed at $6.45 a bushel, down 10 cents a bushel for the week. Support is at $6.21 with resistance at $6.62 a bushel. Technical indicators have changed to a hold bias. Weekly exports were at the low end of expectations at 19.9 million bushels (17.5 million bushels for the 2011/12 marketing year and 2.4 million bushels for 2012/13). Ethanol production last week was up 10,000 barrels per day from the previous week with year to date production running 3% over last year. USDA did not make any changes in today’s report leaving U.S. ending stocks at 801 million bushels, 16 million bushels higher than the average trade guess. Global corn stocks decreased 32 million bushels from last month to 4.903 billion bushels on mainly higher foreign feed use. Production in Argentina and Brazil were expected to be lower in this month’s USDA report, but were actually raised 39 million bushels from February. At these levels, I would be priced out of corn in storage.
New Crop: September closed at $5.96 a bushel, down 8 ½ cents a bushel since last Friday. Technical indicators have changed to a strong sell bias. Support is at $5.74 with resistance at $6.10 a bushel. It is reported that Informa Economics has pegged 2012 corn acres at 95.5 million acres, up 3.6 million acres from 2011. This acreage would be a bearish number at trend yields and I would expect lower prices at harvest. USDA will release the Prospective Plantings report March 30. Although it won’t necessarily be reflected in that report, if soybeans prices stay strong or even strengthen some corn acres may shift to soybeans. That may depend on how much corn fertilizer has been put down. I would have up to 25% of the crop priced at this point. From a price risk management standpoint, a December $5.70 Put would cost 55 cents and set a $5.15 futures floor.
Cotton:
Nearby: May closed at 88.80 cents per pound, down 0.10 cents since last week. Support is at 86.96 cents per pound with resistance at 91.38 cents per pound. Technical indicators have a strong sell bias. The Adjusted World Price for March 9– March 15 is 78.85 cents per pound up 0.19 cents. All cotton weekly export sales were about expected at 138,800 bales (sales of 113,300 bales of upland cotton for 2011/12; sales of 16,500 bales of upland cotton for 2012/13; sales of 4,600 bales of Pima cotton for 2011/12 and sales of 4,400 bales of Pima cotton for 2012/13). India partially lifted their ban on cotton exports which had been responsible for a limit move up early in the week. Exports for which paperwork had been completed by March 4 can go ahead. Officials were fearful that their stocks were getting pulled down to low. This will most likely be a changing story to watch. USDA in today’s report estimated U.S ending stocks at 3.9 million bales, an increase of 100,000 bales from February. Domestic mill use was reduced by that same amount. The trade was looking for a reduction in ending stocks. Global stocks also increased 1.55 million bales to 62.32 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.
New Crop: December cotton closed at 90.36 cents per pound, down 0.42 cents for the week. Support is at 88.84 cents per pound with resistance at 92.42 cents per pound. Technical indicators have a sell bias. Loan equities have been quoted at 31 cents per pound. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. Informa Economics is reported to have currently projected 2012 U.S. cotton acreage at 13.698 million acres and in-line with the National Cotton Council survey released last month. As in corn, if soybean prices stay strong or strengthen relative to cotton prices then we could see some currently intended cotton acres shift to soybeans.
Soybeans:
Nearby: The May contract closed at $13.37 ¾ a bushel, up 4 ¾ cents a bushel since last Friday. Support is at $13.15 with resistance at $13.66 a bushel. Technical indicators have a strong buy bias. Weekly exports were way above expectations at 60.5 million bushels (37.3 million bushels for the 2011/12 marketing year and sales of 23.2 million bushels for 2012/13). China accounted for 58% of the sales. USDA left exports and ending stocks unchanged with ending stocks at 275 million bushels in this month’s report compared to the average trade guess of 260 million bushels. Global stocks were reduced 109 million bushels to 2.105 billion bushels. Brazil and Argentine production was 184 million bushels less than last month and 55 million bushels less than the average trade guess. The market may be pricing in additional exports because of the production issues in South America, but U.S. exports will need a strong pace in the latter half of this marketing year to meet USDA projections. Producers who continue to hold stored soybeans should at least use a $12.97 stop as a pricing point should prices drop back to that level.
New Crop: November soybeans closed today at $13.05 ¼ a bushel, up 7 ¼ cents since last week. Support is at $12.85 with resistance at $13.24 a bushel. Technical indicators have a strong buy bias. It is reported that Informa Economics currently estimates U.S. soybean acreage at 75.128 million acres, up 152,000 acres from 2011. If prices stay strong, additional acreage could be pulled from corn and cotton. Looking at the charts, the apparent inverted head and shoulders formation would predict that prices could move to the $13.40 – $13.50 range. I would have up to 30% of the crop priced at this point and price some more if it gets to that range. Alternately, if you are not ready to price I would use a $12.76 futures stop as a pricing point should prices drop back to that level. From a price risk management standpoint, a $13.00 Put would cost 83 cents and set a $12.17 futures floor.
Wheat:
Nearby: May futures contract closed at $6.43 a bushel, down 31 ½ cents a bushel since Friday. Support is at $6.26 with resistance at $6.58 a bushel. Technical indicators have changed to a sell bias. Weekly exports were better than expected at 21.2 million bushels (16.4 million bushels for 2011/12 and 4.8 million bushels for 2012/13). Based on the strength of exports, USDA lowered U.S. ending stocks 20 million bushels from last month to 825 million bushels. World stocks were also reduced 130 million bushels to 7.70 billion bushels. 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.
New Crop: July wheat closed at $6.53 ½ a bushel, down 32 ¾ cents since last week. Support is at $6.38 with resistance at $6.67 a bushel. Technical indicators have changed to a strong sell bias. Informa Economics is reported to have estimated all U.S. wheat acres at 57.745 million acres, up 3.336 million acres from 2011. 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. I am priced 20% on new crop and would watch closely on pricing more. A $6.50 Put option would cost 41 cents and set a $6.09 futures floor.
