Corn, cotton, soybean, and wheat prices are all down for the week. The June U.S. Dollar Index before the close was at 82.98, up 0.46 for the week and around a two year high. Strength in the Dollar or more appropriately the weakness of the Euro is tied directly to Europe’s financial instability. Weaker commodity prices have been a direct result. The Dow Jones Industrial Average traded before the close at 12,129, down 322 points since last Friday. Crude Oil before the close traded at 83.36 a barrel, down 8.17 a barrel for the week. Jobs data out today was negative as unemployment rose 0.1% to 8.2%. The Dollar has weakened slightly on this news and could indicate that another round of quantitative easing (QE) may be in the offering. This would be perceived as inflationary and most likely positive for commodity prices. Weather news has been mixed this week as showers moved throughout and while welcome were not necessarily drought busters. Extended drying is forecast over the next two weeks with crops facing weather stress without additional moisture by the middle of June.
Corn:
Nearby: July closed at $5.51 ½ a bushel, down 27 cents a bushel for the week. Technical indicators have a strong sell bias. Support is at $5.32 a bushel with resistance at $5.89 a bushel. Weekly exports were below expectations at 11.1 million bushels (7.4 million bushels for the 2011/12 marketing year and 3.7 million bushels for the 2012/13 marketing year).
Current Crop: September closed at $5.14 ¾ a bushel, down 11 ¾ cents a bushel since last Friday. Technical indicators have a strong sell bias. Support is at $5.03 a bushel with resistance at $5.38 a bushel. Corn emergence as of May 27 is 92% compared to 76% last week, 59% last year and the five year average of 69%. Corn condition ratings this week were 72% rated good to excellent as compared to 77% last week and 63% a year ago. Poor to very poor were at 5% compared to 3% last week and 6% last year. Price ranges could vary greatly depending on the weather; timely rains could see prices plunge to $4 – $4.50 while continued dryness could see a rally to $5.75 – $6.00. I am currently priced at 50% and will look closely at adding to it or using put options if prices rally back to $5.30 to $5.50. From a price risk management standpoint, a December $5.10 Put would cost 40 cents and set a $4.70 futures floor.
Cotton:
Nearby: July closed at 68.59 cents per pound, down 5.03 cents since last week. Support is at 66.36 cents per pound with resistance at 72.96 cents per pound. Technical indicators have a strong sell bias. The Adjusted World Price for June 1– June 7 is 62.52 cents per pound, down 1.26 cents. All cotton weekly export sales were 321,100 bales (113,100 bales of upland cotton for 2011/12; sales of 196,900 bales of upland cotton for 2012/13; and sales of 11,100 bales of Pima cotton for 2011/12. I am priced out for 2011 production and holding a December 78 cent call option on 20% of production to stay in the market.
Current Crop: December cotton closed at 67.61 cents per pound, down 3.28 cents for the week. Support is at 65.34 cents per pound with resistance at 71.62 cents per pound. Technical indicators have a strong sell bias. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. Cotton planting is at 76% compared to 62% last week, 68% last year and the five year average of 70%. Cotton squaring nationwide is at 7% compared to 6% last year and the five year average of 5%. Cotton crop condition ratings started this week and were 57% good to excellent with 3% reported poor. The cotton market appears oversold and due for a bounce but without any positive economic data it will be hard to sustain a rally. China is looking at a stimulus program for their economy and it could filter down and affect the cotton industry.
Soybeans:
Nearby: The July contract closed at $13.44 ¼ a bushel, down 37 ¾ cents a bushel since last Friday. Technical indicators have changed to a strong sell bias. Support is at $13.16 a bushel with resistance at $13.71 a bushel. Weekly exports were below expectations at 15.4 million bushels (8.8 million bushels for the 2011/12 marketing year and sales of 6.6 million bushels for 2012/13).
Current Crop: November soybeans closed today at $12.58 a bushel, down 31 ¼ cents since last week. Technical indicators have a strong sell bias. Support is at $12.46 a bushel with resistance at $12.77 a bushel. Soybean planting has progressed to 89% compared to 76% last week, 48% last year and the five year average of 61%. Soybean emergence is 61% compared to 35% last week, 22% last year and the five year average of 30%. In the last month, prices have dropped over $1 bushel. Although it is a little early in the season for weather concerns, we could see a bounce from continued dryness. Also the Dollar could be due for a downward correction, which should be positive for soybean prices. I am currently 50% priced overall and would look at additional pricing or option strategies if prices rally back to $13.00. From a price risk management standpoint, a $12.60 Put option would cost 74 cents and set an $11.86 futures floor.
Wheat:
Current crop: July futures contract closed at $6.12 ¼ a bushel, down 67 ¾ cents a bushel since Friday. Technical indicators have changed to a strong sell bias. Support is at $5.93 a bushel with resistance at $6.50 a bushel. Weekly exports were below expectations at 12.2 million bushels (235,000 bushels for 2011/12 and 12 million bushels for 2012/13). Overall, 85% of the winter wheat crop has headed compared to 79% last week, 69% last year and the five year average of 71%. Wheat harvest has progressed to 9% harvested on May 27 compared to 3% last week, 2% a year ago and the five year average of 1%. Although as we get into harvest they don’t mean as much, the winter wheat conditions as of May 27 were 54% good to excellent compared to 58% last week, and 32% last year. Poor to very poor conditions are estimated at 17% compared to 14% last week and 44% last year. I would be 70% priced as harvest starts and look to price the remainder as it is harvested. If wheat is stored, look at using a December put option to set a floor.
Deferred: December wheat closed at $6.56 ¾ a bushel, down 58 ¾ cents since last week. Technical indicators have changed to a strong sell bias. Support is at $6.42 a bushel with resistance at $6.82 a bushel. Spring wheat emergence is 96% compared to 86% last week, 36% last year and the five year average of 68%. Spring wheat condition ratings as of May 27 were 79% good to excellent compared to 74% last week. Poor to very poor were 2% compared to 5% last week.
