Corn, soybean and wheat prices are up while cotton prices are down for the week. The June U.S. Dollar Index before the close is at 80.07, down .44 for the week. The Dow Jones Industrial Average is closed up 311 points for the week at 13,233. Crude Oil was trading before the close at 107.31 a barrel, down 0.09 a barrel for the week. Private 2012 U.S. acreage estimates based on producer surveys indicate higher corn acres, slightly lower soybean acres and wheat acres while higher than last year, not quite as high as earlier thought. Additional private survey results will be released as we move toward the March 30 date when USDA will release their Prospective Plantings report.
Corn:
Nearby: May closed at $6.73 a bushel, up 28 cents a bushel for the week. Support is at $6.62 with resistance at $6.78 a bushel. Technical indicators have changed to a strong buy bias. Weekly exports were at the high end of expectations at 32.9 million bushels for the 2011/12 marketing year. Ethanol production last week dropped 14,000 barrels per day from the previous week to 892,000 barrels per day; however, year to date production is running 2.9% over last year. Rumors that China will be in the market to buy corn continue to be supportive of the market. It is speculated that a portion of the large corn crop produced last year by China that is in storage is in poor shape and rapidly deteriorating. Producers still hanging on to corn in storage may want to take some price protection in the form of a May put option. This option expires on April 20 but will give some protection through the March 30 Grain Stocks and Prospective Plantings reports. A at the money May $6.75 put would cost 29 cents and set a $6.46 futures floor. Cheaper out of the money puts could be used such as a May $6.50 Put which would cost 16 cents per bushel and set a $6.34 futures floor.
New Crop: September closed at $6.05 ¼ a bushel, up 9 ¼ cents a bushel since last Friday. Technical indicators have changed to a strong buy bias. Support is at $5.96 with resistance at $6.12 a bushel. Two private estimates based on producer surveys put 2012 U.S. corn acres at 95.012 and 96 million acres, as compared to 91.9 million acres last year and 94 million acres at USDA’s Outlook Forum. Either number, if realized, could result in a large supply of corn and unless demand keeps up with the production increase a buildup in stocks. The USDA number on March 30 will be the base number the market looks at and if in this range, there would be quite a bit of downside price risk. Between now and March 30, look to make catch up sales and or add to what is forward priced. I would have up to 25% of the crop priced at this point. From a price risk management standpoint, a December $5.80 Put would cost 58 cents and set a $5.22 futures floor.
Cotton:
Nearby: May closed at 87.48 cents per pound, down 1.32 cents since last week. Support is at 86.38 cents per pound with resistance at 88.72 cents per pound. Technical indicators have a strong sell bias. Equities for 2011 cotton in the loan have been quoted in the 20 – 25 cent range. The Adjusted World Price for March 16– March 22 is 77.20 cents per pound up 1.65 cents. All cotton weekly export sales were 366.600 bales (sales of 239,900 bales of upland cotton for 2011/12; sales of 118,800 bales of upland cotton for 2012/13; and sales of 7,900 bales of Pima cotton for 2011/12. India’s on and off export policy continues to create uncertainty about their supplies and whether USDA has overestimated them. 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 88.28 cents per pound, down 2.08 cents for the week. Support is at 86.85 cents per pound with resistance at 89.59 cents per pound. Technical indicators have changed to a strong sell bias. Equities for 2012 cotton have been quoted in the 28.75 cent range. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives.
Soybeans:
Nearby: The May contract closed at $13.74 a bushel, up 36 ¼ cents a bushel since last Friday. Support is at $13.58 with resistance at $13.86 a bushel. Technical indicators have a strong buy bias. Weekly exports were again above expectations at 51.2 million bushels (22.4 million bushels for the 2011/12 marketing year and sales of 28.8 million bushels for 2012/13). China accounted for 74% of the sales. Supportive of the market are Brazilian soybean production estimates 55 million bushels lower than USDA’s latest projection. February soybean crush reported by the National Oilseed Processors Association was 136.35 million bushels, 3.75 million bushels greater than expected. Producers who continue to hold stored soybeans should at least use a $13.21 stop as a pricing point should prices drop back to that level. Alternately, May Put options should be considered. A at the money May $13.80 Put would cost 40 cents and set a $13.40 futures floor. An out of the money May $13.30 Put would cost 18 cents and set a $13.12 futures floor.
New Crop: November soybeans closed today at $13.28 ¼ a bushel, up 23 cents since last week. Support is at $13.16 with resistance at $13.38 a bushel. Technical indicators have a strong buy bias. Two private producer based survey estimates on acreage released today pegged U.S. soybean acres for 2012 at 74.495 million acres and 74.2 million acres compared to 74.976 million acres in 2011 and 75 million acres at last month’s USDA Outlook forum. This is supportive of the market. As mentioned last week, the apparent inverted head and shoulders formation in the November soybean chart 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 $12.91 futures stop as a pricing point should prices drop back to that level. From a price risk management standpoint, a $13.20 Put would cost 83 cents and set a $12.37 futures floor.
Wheat:
Nearby: May futures contract closed at $6.72 a bushel, up 29 cents a bushel since Friday. Support is at $6.55 with resistance at $6.81 a bushel. Technical indicators have changed to a strong buy bias. Weekly exports were slightly below expectations at 13.2 million bushels (11.1 million bushels for 2011/12 and 2.1 million bushels for 2012/13). Reports of reductions in the European Union’s production have been supportive of the market.
New Crop: July wheat closed at $6.77 ¼ a bushel, up 23 ¾ cents since last week. Support is at $6.62 with resistance at $6.85 a bushel. Technical indicators have changed to a buy bias. Private estimates out today placed all wheat acres at 56.609 million acres and 55.5 million acres, compared to last year’s acreage of 54.409 and the USDA‘s Outlook Forum number of 58 million acres. In light of other estimates, these are supportive of the market but still would produce a more than adequate crop. Wheat prices should continue to trend with corn. I am priced 20% on new crop and would watch closely on pricing more. A $6.80 Put option would cost 49 cents and set a $6.31 futures floor.
