Corn, cotton, soybean, and wheat prices are all up for the week. The June U.S. Dollar Index before the close was at 82.58, down 0.40 for the week but up 0.46 for the day. The Dow Jones Industrial Average traded before the close at 12,526, up 407 points since last Friday. Crude Oil before the close traded at 84.39 a barrel, up 1.15 a barrel for the week. Contributing to the markets rally this week has been weather concerns in the Midwest, mixed financial news from Europe, interest rate drop in China , and most likely positioning ahead of the June 12 USDA Supply & Demand report. The CME Group announced that starting June 25 they will extend the close of open outcry or pit trading to 2 p.m. to coincide with electronic trading.
Corn:
Nearby: July closed at $5.98 a bushel, up 46 ½ cents a bushel for the week. Technical indicators have changed to a sell bias. Support is at $5.76 a bushel with resistance at $6.10 a bushel. Weekly exports were below expectations at 15.7 million bushels (9.9 million bushels for the 2011/12 marketing year and 5.8 million bushels for the 2012/13 marketing year). Pre report guesses for the June 12 report put old crop corn stocks at 828 million bushels compared to the May USDA estimate of 851 million bushels.
Current Crop: September closed at $5.51 a bushel, up 36 ¼ cents a bushel since last Friday. Technical indicators have changed to a buy bias. Support is at $5.19 a bushel with resistance at $5.56 a bushel. Corn emergence as of June 3 is 97% compared to 92% last week, 75% last year and the five year average of 83%. Corn condition ratings this week were 72% rated good to excellent as compared to 72% last week and 67% a year ago. Poor to very poor were at 5% compared to 5% last week and 6% last year. Markets don’t appear to be overly concerned with the weather yet as crop conditions ratings hold, but as we know that can change. If dryness continues and heat returns, a weather premium could be built into the market. The average trade guess for new crop ending stocks is 1.74 billion bushels compared to last month USDA number of 1.881 billion bushels. I am currently priced at 50% and would use this recent rally to make catch up sales. From a price risk management standpoint, a December $5.50 Put would cost 52 cents and set a $4.98 futures floor.
Cotton:
Nearby: July closed at 72.90 cents per pound, up 4.31 cents since last week. Support is at 69.28 cents per pound with resistance at 76.20 cents per pound. Technical indicators have changed to a sell bias. The Adjusted World Price for June 8– June 14 is 59.65 cents per pound, down 2.87 cents. All cotton weekly export sales were 205,800 bales (129,900 bales of upland cotton for 2011/12; sales of 69,300 bales of upland cotton for 2012/13; sales of 6,200 bales of Pima cotton for 2011/12 and sales of 400 bales of Pima cotton for 2012/13. It is somewhat anticipated that USDA will lower old crop ending stocks on the strength of exports, however, it is not a given as USDA may wait to see if there are any cancellations as the marketing year starts to wind down. World stocks could also be lowered in next week’s report as adjustment may be made to India’s numbers. 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 69.88 cents per pound, up 2.27 cents for the week. Support is at 65.34 cents per pound with resistance at 71.62 cents per pound. Technical indicators have changed to a sell bias. Equities have been quoted in the 10 – 10 ½ cent range. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. Cotton planting is at 87% compared to 76% last week, 83% last year and the five year average of 83%. Cotton squaring nationwide is at 11% compared to 7% last week, 8% last year and the five year average of 7%. Cotton crop condition ratings were 54% good to excellent compared to 57% last week. Poor to very poor were reported at 9% compared to 3% last week. The cotton market will closely be watching the release of Chinese economic data over the weekend.
Soybeans:
Nearby: The July contract closed at $14.26 ¼ a bushel, up 82 cents a bushel since last Friday. Technical indicators have changed to a buy bias. Support is at $13.67 a bushel with resistance at $14.60 a bushel. Weekly exports were below expectations at 18.2 million bushels (8.1 million bushels for the 2011/12 marketing year and sales of 10.1 million bushels for 2012/13). USDA announced on its daily reporting system that China had purchased 12.9 million bushels of old crop soybeans and 2.2 million bushels of new crop soybeans. These sales will show up in next week’s export report and give some thought that Brazil may be about sold out of soybeans. A farmer selling strike in Argentina has brought grain markets to a near stop. Old crop soybean stocks are expected to be lowered to 197 million bushels from last month’s 210 million bushels.
Current Crop: November soybeans closed today at $13.32 ½ a bushel, up 74 ½ cents since last week. Technical indicators have changed to a buy bias. Support is at $12.79 a bushel with resistance at $13.75 a bushel. Soybean planting has progressed to 94% compared to 89% last week, 63% last year and the five year average of 75%. Soybean emergence is 79% compared to 61% last week, 39% last year and the five year average of 50%. Soybean condition ratings were 65% good to excellent compared to the trade expectations of 69%. Poor to very poor ratings were 6%. New crop soybean stock guesses on the average expect USDA to project 147 Million bushels compared to May’s 145 million bushels. USDA is expected to leave acreage at the May number although it will probably be bumped up in the June 30 Acreage report. Some of that acreage increase will come from double crop acres that are struggling for moisture. I am currently 50% priced overall and would use this rally to make catch up sales. From a price risk management standpoint, a $13.40 Put option would cost 83 cents and set a $12.57 futures floor.
Wheat:
Current crop: July futures contract closed at $6.30 ¼ a bushel, up 18 cents a bushel since Friday. Technical indicators have changed to a sell bias. Support is at $6.11 a bushel with resistance at $6.60 a bushel. Weekly exports were below expectations at 6.1 million bushels for 2012/13. Wheat harvest has progressed to 20% harvested on June 3 compared to 9% last week, 7% a year ago and the five year average of 3%. Old crop wheat stocks are expected to be lowered slightly from 768 million bushels to 757 million bushels. New crop stocks are expected to see little change going from 735 million bushels to the average trade guess of 728 million bushels. I would be 70% priced 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.
