Corn

This is somewhat an historic day in the annuls of USDA reports and the futures market as today marked the first day that the markets were trading as the USDA Supply & Demand reports were released. Trading opened up at the CME Group at 7:20 a.m. in anticipation of the 7:30 a.m. report release. There were not a lot of surprises in today’s report, so this probably was a good day for it to start. In today’s report, old crop corn ending stocks were left unchanged from last month at 851 million bushels as corn for ethanol was increased 50 million bushels, but offset by a 50 million bushel decrease in exports. The trade average guess for ending stocks was 828 million bushels. It was expected that feed and residual use would not be updated until the July 11 report which will reflect the June 30 Quarterly Stocks report. The stocks to use ratio is unchanged at 6.7%.  The season average price is unchanged from last month and is projected to range from $5.95 to $6.25 a bushel. Global old crop corn stocks increased 64 million bushels from last month to 5.1 billion bushels. New crop projected ending stocks for the 2012/13 marketing year are unchanged from May at 1.881 billion bushels, 140 million bushels higher than the average trade guess. The new crop numbers were left unchanged with USDA essentially opting to wait until the July report to update acreage and most likely yields. At that time the trade will mostly likely anticipate a drop in the yield due to weather conditions since planting. The new crop season average price is unchanged and is projected to range from $4.20 to $5.00 a bushel. Global stocks are projected at 6.13 billion bushels, 134 million bushels higher than last month. At least until the June 30 Acreage and Stocks report, the market will be focusing on the weather and weekly crop progress condition ratings. September corn closed down 14 cents at $5.26 ½ a bushel. Technical analysis has a sell bias with support at $5.13 and resistance at $5.41. In weekly comments, I am 50% priced over all. Over the past 31 years the average difference between the June projection for U.S. ending stocks and the final estimate has been 615 million bushels with 16 years below the final estimate and 15 years above.  The next USDA Supply & Demand report will be released July 11, 2012.

Supply and Demand Projections and Historical Data Source: USDA

Cotton

USDA’s lowered old crop ending stocks 200,000 bales to 3.2 million bales on a like increase in exports. It is possible future reports could see higher exports, but most likely USDA is waiting to see if cancellations occur as the marketing year winds down in July. The projected price range for 2011/12 was also unchanged at 91 cents per pound. The stocks to use ratio was lowered to 21.3%. World projections for old crop ending stocks were projected 440,000 bales higher at 67.32 million bales. New crop production was left unchanged from May as it awaits the June 30 Acreage report and an update on yields in the July 11 USDA report. New crop ending stocks were unchanged from May at 4.90 million bales as the drop in beginning stocks was offset by a 200,000 bale drop in exports. The season average price for new crop is projected to range from 60 to 80 cents per pound, 5 cents lower on each end. Global stocks are projected  to increase 760,000 bales to 74.51 million bales, which would be another record stock. Keep in contact with your cotton buyer on current quotes.  December cotton closed at 68.84 cents/pound, down 0.45 cents. Technical analysis has a strong sell with support at 67.23 and resistance at 70.31. Over the past 31 years the average difference between the June projection for U.S. ending stocks and the final estimate has been 1.6 million bales with 16 years below the final estimate and 15 years above. These numbers can and will change, but do reflect the best information and estimates at the time of the report. The next USDA Supply & Demand report will be released July 11, 2012.

 Supply and Demand Projections and Historical Data Source: USDA

Soybeans

In a friendly USDA report, ending stocks for 2011/12 were lowered 35 million bushels to 175 million bushels compared to the average trade guess of 197 million bushels. Crush was increased 15 million bushels while exports were raised 20 million bushels. The season average price for 2011/12 was lowered 5 cents to $12.30 a bushel. Stocks to use ratio was projected at 5.6%, down from 6.8% last month.  World ending stocks for 2011/12 are projected to increase slightly to 1.961 billion bushels, 5 million bushels more than the May estimate.  In the new crop year, ending stocks are projected at 140 million bushels, 5 million bushels less than in May and about expected by the trade. As with the other crops, acreage and yields will not be adjusted until the July 11 report. It is anticipated that acreage will increase based on the June 30 Acreage report. Crush was lowered 10 million bushels from the May report while exports were lowered 20 million bushels mainly on the prospects of lower supplies. The season average price is unchanged and is estimated to range from $12.00 to $14.00 a bushel. Global new crop stocks are projected to increase slightly 17 million bushels to 2.151 billion bushels. November soybeans closed at $13.37, up 5 ¾ cents per bushel. Technical analysis has a buy bias with support at $13.18 and resistance at $13.49 a bushel. I am currently priced at 50% for the 2012 crop.  From a price risk management standpoint, a $13.40 Put would cost 77 cents and set a $12.63 futures floor. Over the past 31 years the average difference between the June projection for U.S. ending stocks and the final estimate has been 107 million bushels with 9 years below the final estimate and 22 years above. The next USDA Supply & Demand report will be released July 11, 2012.

Supply and Demand Projections and Historical Data Source: USDA

Wheat

USDA offered a friendly to bullish wheat supply and demand report today as ending stocks for both old and new crop wheat are lower than the average trade guess. Projections for 2011/12 marketing year which ended on May 31 for wheat are for ending stocks of 728 million bushels, 40 million bushels lower than last month and 29 million bushels lower than the average trade guess. A 10 million bushel increase in food use and a 30 million bushel increase in exports accounted for the change from May. The stocks to use ratio was lowered from 34.7% to 32.3%. The estimated season average price was unchanged at $7.25 a bushel. World ending stocks are projected at 7.185 billion bushels, down 54 million bushels from May. USDA new crop projections estimate ending stocks at 694 million bushels compared to the average pre-report guess of 728 million bushels and May’s projection of 735 million bushels. Production was lowered 11 million bushels on a 0.3 bushel decline in yield. Feed and residual use is projected 10 million bushels less than in May. Stocks to use are expected to drop to 29.1% with a season average price of $5.60 to $6.80 a bushel. Global stocks are expected to decrease 87 million bushels to 6.825 billion bushels. Despite a friendly report, wheat prices have followed corn as July wheat closed at $6.16 down 14 ½ cents. Technical analysis shows a sell bias with support at $6.02 with resistance at $6.42 a bushel. In my weekly comments, I am currently priced 70% on the current crop and would sell the remainder as it is harvested. If storage is an option, I would consider looking at a December Put option to set a futures floor. Over the past 31 years the average difference between the June projection for U.S. ending stocks and the final estimate has been 3.7 million bushels with 17 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. The next USDA Supply & Demand report will be released June 12, 2012.    

Supply and Demand Projections and Historical Data Source: USDA