Cotton prices are up while corn, soybean, and wheat prices are down for the week. The June U.S. Dollar Index before the close was at 81.59, down 0.97 for the week. The Dow Jones Industrial Average traded before the close at 12,759, up 205 points since last Friday. Crude Oil before the close traded at 83.99 a barrel, down 0.35 a barrel for the week. Although USDA released their monthly report June 12, most of this week’s market focus has been on weather forecasts, the European financial situation and whether the Federal Reserve will take action in the coming week or weeks to stimulate the economy. Elections are in Greece on Sunday, June 17 and will no doubt have an impact or maybe a perceived impact on the European Union financial direction. This and other non-agricultural influences such as the weakness or strength of the Dollar and what the Fed does will certainty move the market. Will it lead the way, offset, or take a back seat to the weather and growing conditions in the Midwest remains to be seen. They all bear watching.
Corn:
Nearby: July closed at $5.79 ½ a bushel, down 18 ½ cents a bushel for the week. Technical indicators have changed to a strong sell bias. Support is at $5.63 a bushel with resistance at $6.11 a bushel. Weekly exports were well below expectations at a marketing year low of 6.7 million bushels (3.6 million bushels for the 2011/12 marketing year and 3.1 million bushels for the 2012/13 marketing year). USDA in the June 12 report left old crop ending stocks at 851 million bushels as corn for ethanol was bumped up 50 million bushels while exports were decreased 50 million bushels. The trade was expecting stocks to be cut to 828 million bushels.
Current Crop: September closed at $5.09 ½ a bushel, down 41 ½ cents a bushel since last Friday. Technical indicators have changed to a strong sell bias. Support is at $4.98 a bushel with resistance at $5.31 a bushel. Corn condition ratings this week were 66% rated good to excellent as compared to 72% last week and 69% a year ago. The trade was expecting a 68% good to excellent rating. Poor to very poor were at 8% compared to 5% last week and 6% last year. USDA projected new crop ending stocks as unchanged from last month at 1.881 billion bushels. The July report may reflect a lower yield projection, but that will most likely depend on how crop condition ratings go between now and then which will be a reflection on weather conditions. It is almost a given that acreage will change in the June 29 Acreage Report and a projection out from one private company today estimates corn planted acreage at 96.759 million acres, up 895,000 from USDA’s March estimate. Until the June 29 report, look for weather and crop condition ratings to dominate market direction. Non-agricultural influences mentioned earlier could also be market movers. I am currently priced at 50% of anticipated production. 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 79.98 cents per pound, up 7.08 cents since last week. Support is at 73.52 cents per pound with resistance at 80.38 cents per pound. Technical indicators have a sell bias. The Adjusted World Price for June 15– June 21 is 62.00 cents per pound, up 2.35 cents. All cotton weekly export sales were 1,019,100 bales (795,700 bales of upland cotton for 2011/12; sales of 219,600 bales of upland cotton for 2012/13; and sales of 3,800 bales of Pima cotton for 2011/12. China accounted for 744,200 bales of old crop Upland cotton and 180,500 bales of new crop Upland cotton. USDA did lower U.S. old crop ending stocks 200,000 bales to 3.2 million bales on the strength of exports. It could be lowered further, but I imagine USDA will closely be watching to see if any sales cancellations occur as the marketing year winds down. World stocks were increased 440,000 bales to 67.32 million bales. 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 71.02 cents per pound, up 1.14 cents for the week. Support is at 68.16 cents per pound with resistance at 74.30 cents per pound. Technical indicators have a sell bias. Equities have been quoted in the 11– 12 cent range. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. Cotton planting is at 96% compared to 88% last week, 93% last year and the five year average of 92%. Cotton squaring nationwide is at 19% compared to 11% last week, 11% last year and the five year average of 11%. Cotton crop condition ratings were 51% good to excellent compared to 54% last week and 28% last year. Poor to very poor were reported at 13% compared to 9% last week and 34% last year. New crop U.S. ending stocks were left unchanged in USDA’s latest report reflecting beginning stocks 200,000 bales less and a 200,000 cut in exports. World stocks were increased 760,000 bales to 74.51 million bales. A private acreage estimate out today projects cotton acres at 12.97 million acres, down 185,000 from USDA’s March number.
Soybeans:
Nearby: The July contract closed at $13.76 a bushel, down 50 ¼ cents a bushel since last Friday. Technical indicators have changed to a sell bias. Support is at $13.63 a bushel with resistance at $14.27 a bushel. Weekly exports were above expectations at 36.9 million bushels (15.6 million bushels for the 2011/12 marketing year and sales of 21.3 million bushels for 2012/13). USDA offered a friendly report as U.S. ending stocks 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 National Oilseed Processors Association reported 138.3 million bushels crushed in May compared to the trade guess of 135.1 million bushels. This is 15% higher than a year ago and if the pace continues will necessitate a bump up in the yearly crush estimates.
Current Crop: November soybeans closed today at $13.16 ½ a bushel, down 16 cents since last week. Technical indicators have a buy bias. Support is at $12.89 a bushel with resistance at $13.34 a bushel. Soybean planting has progressed to 97% compared to 94% last week, 81% last year and the five year average of 85%. Soybean emergence is 90% compared to 79% last week, 58% last year and the five year average of 67%. Soybean condition ratings were 60% good to excellent compared to the trade expectations of 63%; 65% last week and 67% last year. Poor to very poor ratings were 10% compared to 6% last week, and 5% last year. New crop soybean stocks were projected at 140 million bushels in the June 12 USDA report, 5 million bushels less than in May and about expected. The market is most likely expecting a 2 million acre increase in planted acreage as what will be reported in the June 29 Acreage Report. Today, a private estimate of 75.959 million acres or 2.057 million acres higher than the USDA March estimate was released. As in corn, weather, particularly as we get further into the summer will be a market mover. I am currently 50% priced overall on anticipated production. From a price risk management standpoint, a $13.20 November Put option would cost 80 cents and set a $12.40 futures floor.
Wheat:
Current crop: July futures contract closed at $6.09 ½ a bushel, down 20 ¾ cents a bushel since Friday. Technical indicators have changed to a strong sell bias. Support is at $6.08 a bushel with resistance at $6.36 a bushel. Weekly exports were above expectations at 15.9 million bushels for 2012/13. Wheat harvest has progressed to 35% harvested on June 10 compared to 20% last week, 16% a year ago and the five year average of 9%. Old crop wheat stocks were lowered 40 million bushels from last month to 728 million bushels, 29 million bushels lower than the average trade guess. New crop stocks were lowered 41 million bushels to 694 million bushels compared 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.
Deferred: December wheat closed at $6.51 ¼ a bushel, down 21 ½ cents since last week. Technical indicators have changed to a strong sell bias. Support is at $6.42 a bushel with resistance at $6.64 a bushel. Spring wheat is 15% headed compared 3% last week and the five year average of 2%. Spring wheat condition ratings as of June 10 were 75% good to excellent compared to 78% last week and 68% last year. Poor to very poor were 4% compared to 2% last week and 2% a year ago. A private estimate puts spring wheat acreage at 13.476 million acres, up 1.5 million acres higher than USDA’s March projection.
