Cotton prices are up, corn and wheat prices are down while soybean prices are mixed for the week. The June U.S. Dollar Index is trading midday at 80.04, down .04 for the week. The Dow Jones Industrial Average at midday was down 126 points for the week at 12,934. Crude Oil traded before the close at 103.00 a barrel, down 0.31 a barrel for the week. Financial concerns in Europe have shifted from Greece to Spain and have been behind today’s strength in the Dollar which has put pressure on commodity prices. China’s first quarter Gross Domestic Product showed growth at 8.1% compared to guesses of 8.4% to 9% and at least for today has also put pressure on commodity prices. USDA updated its monthly Supply & Demand report on Tuesday, April 10 and has seen it relevance reduce during the week. The corn soybean ratio (November soybeans/December corn) looks to close the week again edging toward favoring soybeans at 2.57, up from 2.51 last week. I would note that both corn and soybean prices are lower and that the prices are just part of the equation. Yields are the other part so if you are looking at making a last minute switch in crops don’t do it just on a change in price alone. This year could be the year where the best prices are offered before or right after planting. Don’t let this market catch you looking without locking in profitable prices and it may warrant looking at prices for 2013.
Corn:
Nearby: May closed at $6.29 ¼ a bushel, down 29 cents a bushel for the week. Technical indicators have changed to a sell bias. Support is at $6.14 a bushel with resistance at $6.49 a bushel. Weekly exports were above expectations at 38.4 million bushels (37.8 million bushels for the 2011/12 marketing year and 650,000 bushels for the 2012/13 marketing year). If there were any surprises in the April 10 USDA report it was in corn as ending stocks were left at 801 million bushels, the same as in March and 84 million bushels higher than the average trade guess. Global corn stocks decreased 72 million bushels from last month to 4.831 billion bushels on lower beginning stocks, unchanged production, and lower feed use. The global stocks to use ratio tightened up slightly to 14.2%.
New Crop: September closed at $5.55 ½ a bushel, down 13 ¾ cents a bushel since last Friday. Technical indicators have a strong sell bias. Support is at $5.41 a bushel with resistance at $5.72 a bushel. Corn planted as of April 8 was 7% nationwide as compared to 3% last week, 3% last year and the five year average of 2%. I would have up to 25% of the crop priced at this point and would use a stop loss point of $5.43 to price more. From a price risk management standpoint, a December $5.40 Put would cost 48 cents and set a $4.95 futures floor.
Cotton:
Nearby: May closed at 92.08 cents per pound, up 3.54 cents since last week. Support is at 89.54 cents per pound with resistance at 95.02 cents per pound. Technical indicators have changed to a buy bias. The Adjusted World Price for April 13– April 19 is 77.19 cents per pound down 3.52 cents. All cotton weekly export sales were a reduction of 36,200 bales (reduction of 53,600 bales of upland cotton for 2011/12; sales of 13,800 bales of upland cotton for 2012/13; and sales of 3,600 bales of Pima cotton for 2011/12. USDA’s projection for the 2011/12 marketing year reflects a 500,000 bale decrease in ending stocks at 3.4 million bales on an 119,000 bale decrease in 2011 production and a 400,000 bale increase in exports. Although the U.S. numbers were positive, the world numbers would have to be considered bearish as record large ending stocks of 66.07 million bales are forecast. A burdensome number for sure, but 35% of the carryover is in China and as they build back their reserves may not necessarily be available for use. This along with India’s uncertain policies could keep prices on edge. 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 88.68 cents per pound, up 1.14 cents for the week. Support is at 86.12 cents per pound with resistance at 90.14 cents per pound. Technical indicators have a strong sell bias. Equities for 2012 cotton have been quoted in the 28-29 cent range. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. Cotton planting is pegged at 9% compared to 7% last week, 7% last year and the five year average of 6%. Look at prices in the mid 90s as a pricing point to price a portion of the 2012 crop.
Soybeans:
Nearby: The May contract closed at $14.36 ¾ a bushel, up 2 ¾ cents a bushel since last Friday. Technical indicators have a strong buy bias. Support is at $14.10 a bushel with resistance at 14.59 a bushel. Weekly exports were below expectations at 23.4 million bushels (16.9 million bushels for the 2011/12 marketing year and sales of 6.5 million bushels for 2012/13). USDA lowered old crop ending stocks 25 million bushels to 250 million bushels which was about expected by the trade. Crush was raised 15 million bushels due to stronger than expected domestic soybean disappearance. Exports were raised 15 million bushels to partly offset reduced export prospects for South America from drought–reduced soybean crops. Seed and residual use was lowered 5 million bushels reflecting acres in the March 30 Prospective Plantings report and soybean stocks in the Grain Stocks report. World ending stocks for 2011/12 are projected to again decrease to 2.040 billion bushels, 65 million bushels less than the March estimate. Overall, this was considered to be a friendly report.
New Crop: November soybeans closed today at $13.61 ¾ a bushel, down 19 ¾ cents since last week. Technical indicators have a strong buy bias. Support is at $13.45 a bushel with resistance at 13.89 a bushel. I would be priced at 40% of estimated 2012 production and use a $13.45 futures stop as a pricing point to add to it if should prices drop back to that level. From a price risk management standpoint, a $13.60 Put would cost 73 cents and set a $12.87 futures floor.
Wheat:
Nearby: May futures contract closed at $6.23 ½ a bushel, down 15 cents a bushel since Friday. Technical indicators have changed to a strong sell bias. Support is at $6.03 a bushel with resistance at $6.53 a bushel. Weekly exports met expectations at 19.9 million bushels (16.6 million bushels for 2011/12 and 3.3 million bushels for 2012/13). USDA projections for 2011/12 lowered ending stocks 32 million bushels from last month to 793 million bushels in-line with pre report expectations. Projected seed use was lowered 3 million bushels based on seedings as reported in the March 30 Prospective Plantings report. Projected feed and residual use was raised 35 million bushels reflecting stock disappearance as indicated by the March 1 stocks. World ending stocks are projected at 7.58 billion bushels, down 122 million bushels from the March estimate as lower beginning stocks and increased usage offset slightly increased production.
New Crop: July wheat closed at $6.30 ¼ a bushel, down 16 cents since last week. Technical indicators have a strong sell bias. Support is at $6.12 a bushel with resistance at $6.57 a bushel. Spring wheat planted is at 21% compared to 8% last week, 3% last year and the five year average of 5%. Winter wheat conditions as of April 8 were 61% good to excellent compared to 58% last week, and 36% last year. Poor to very poor are estimated at 10% compared to 12% last week and 36% last year. I am priced 20% on new crop and would target any rallies to the $6.65 to $7.00 range as a point to price more. Wheat on its own will have trouble rallying and will need help from corn or maybe soybeans. A $6.35 Put option would cost 34 cents and set a $6.01 futures floor.
