Soybean prices are up, corn and wheat prices are mixed and cotton prices are down for the week. The September U.S. Dollar Index before the close was 82.64 up 0.19 for the week. The Dow Jones Industrial Average before the close was 13,173, up 77 points since last Friday. Crude Oil before the close was 93.12 a barrel, up 1.72 a barrel for the week. USDA reported their monthly numbers today and while not containing any major surprises did have a few minor ones. On the whole this report is neutral for corn and wheat, friendly to soybeans and bearish cotton. However, soybeans are the only crop that finished up today so most of today’s news has been already factored into the market.
Corn:
Current Crop: September closed at $8.00 a bushel, down 10 cents a bushel for the week. It traded as high as $8.43 ¾ during the day. Technical indicators have a strong buy bias. Support is at $7.81 a bushel with resistance at $8.37 a bushel. Weekly exports were within expectations with net sales of 43.4 million bushels (net sales of 6.9 million bushels for the 2011/12 marketing year and net sales of 43.4 million bushels for the 2012/13 marketing year). Corn condition ratings this week were 23% rated good to excellent as compared to 24% last week and 60% a year ago. This was about expected. Poor to very poor were at 50% compared to 48% last week and 16% last year. Corn dented nationwide is 26% compared to 13% last week, 6% last year and the five year average of 7%. Corn in the mature stage is 6% nationwide compared to 2% last year and the five year average of 2%. USDA lowered yields on new crop production to 123.4 bushels per acre which would be the lowest since 1995. The trade was expecting 126.2 but this was within the range of expectations. As expected, demand was drastically cut 1.495 billion bushels to reflect lower supplies and the effects of higher prices. Ending stocks are now projected at 650 million bushels or 5.8% stock to use ratio. This was about expected. Global stocks are projected at 4.855 billion bushels, 424 million bushels lower than last month and mostly a reflection of lower U.S. stocks. I am currently priced at 50% of anticipated production, and 30% with Put Options. As harvest has started in Tennessee, I would be inclined to sell the remainder of un-priced corn at harvest. I would not store corn un-priced or at least without a floor price. A December $8.10 Put would cost 58 cents and set a $7.52 futures floor. This option expires November 23.
Deferred: March 2013 contract closed at $8.12 a bushel, up 3 ¼ cents a bushel since last Friday. Technical indicators have a strong buy bias. Support is at $7.85 a bushel with resistance at $8.58 a bushel. September 2013 corn closed at $6.82 a bushel, down 1 ¼ cents for the week. I would have 10% of 2013 production priced.
Cotton:
Current crop: December closed at 73.02 cents per pound, down 0.92 cents since last week. Support is at 70.83 cents with resistance at 77.25 cents per pound. Technical indicators have a buy bias. The Adjusted World Price for August 10– August 16 is 64.14 cents per pound, up 2.76 cents. All cotton weekly export net sales were 168,500 bales (109,900 bales of upland cotton net sales for 2012/13; net sales of 31,500 bales of upland cotton for 2013/14; and net sales of 27,100 bales of Pima cotton for 2012/13). Cotton equities for 2012 loan cotton have been quoted in the 14 ½ cent range. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. Cotton boll set is 74% nationwide compared to 59% last week, 74% last year and the five year average of 70%.Cotton bolls opening were 9% compared to 9% last year and the five year average of 7%. Cotton crop condition ratings were 41% good to excellent compared to 44% last week and 30% last year. Poor to very poor were reported at 27% compared to 22% last week and 41% last year. USDA offered a few surprises for cotton as old crop stocks were left unchanged at 3.3 million bales and new crop production was increased to 17.65 million bales (almost 1 million bales greater than the average pre report guess). The end result was new crop stocks projected at 5.5 million bales or 35.5% stocks to use ratio. The trade was looking for a 4.7 million bale number. World stocks were also increased 2.28 million bales to 72.67 million bales.
Deferred: March 2013 cotton closed at 73.81 cents per pound, down 1.13 cents for the week. Support is at 71.50 cents with resistance at 78.12 cents per pound. Technical indicators have a buy bias.
Soybeans:
Current crop: The November contract closed at $16.43 ¾ a bushel, up 15 cents a bushel since last Friday. It traded as high as $16.68 today. Technical indicators have changed to a strong buy bias. Support is at $15.97 a bushel with resistance at $16.91 a bushel. Weekly exports were below expectations at 11.1 million bushels (3.9 million bushels for the 2011/12 marketing year and net sales of 7.2 million bushels for 2012/13). Soybeans blooming this week were reported at 93% compared to 88% last week, 84% last year and the five year average of 85%. Soybean setting pods were 71% this week as compared to 55% last week, 46% last year and the five year average of 53%. Soybean condition ratings were 29% good to excellent compared to 29% last week and 61% last year. Poor to very poor ratings were 39% compared to 37% last week, and 13% last year. Although most of today’s USDA numbers came in as expected, the market has been friendly to this report. Old crop stocks were reduced 25 million bushels to 145 million bushels. New crop yields were dropped more than expected to 36.1 bushels per acre as compared to the average pre report guess of 37.2 bushels per acre. Demand for the new crop soybean marketing year was reduced 363 million bushels due to lower supplies, higher prices and a larger projected South American crop in 2013. Crush was lowered 95 million bushels from the July report while exports were lowered 260 million bushels. Ending stocks were reduced to 115 million bushels, on target with the average pre report guess. The season average price is increased $2.00 a bushel on both ends from last month and is projected to range from $15.00 to $17.00 a bushel. The stocks to use ratio was left unchanged at 4.2%. Global new crop stocks are projected to decrease 84 million bushels to 1.961 billion bushels. The drop in U.S. production was somewhat offset by a projected increase in Brazilian production which would put Brazil as the number one soybean producing country. The market will remain uncertain until this large South American crop can be confirmed later this year and early in 2013. I am currently 50% priced overall on anticipated production; with an additional 30% priced in Put Options. Soybean yields do have the potential to improve if beneficial rains are received this month so there is some downside risk in the market. From a price risk management standpoint, a $16.50 November Put option would cost 93 cents and set a $15.57 futures floor.
Deferred: January 2013 soybeans closed today at $16.35 ½ a bushel, up 10 ½ cents since last week. Technical indicators have a strong buy bias. Support is at $15.85 a bushel with resistance at $16.79 a bushel. November 2013 soybeans closed at $13.02 ¾ up 11 ½ cents for the week. Start watching for 2013 opportunities.
Wheat:
Nearby: September futures contract closed at $8.85 ¼ a bushel, down 6 cents a bushel since Friday. Technical indicators have a buy bias. Support is at $8.47 a bushel with resistance at $9.50 a bushel. Weekly exports were better than expected at 24.4 million bushels for 2012/13. Winter wheat harvest has progressed to 88% harvested on August 5 compared to 85% last week, 85% a year ago and the five year average of 87%. USDA reported 2012/13 ending stocks at 698 million bushels, higher than the average pre report guess of 681 million bushels. Stocks to use increased slightly to 28.6% with a season average price of $7.60 to $9.00 a bushel. Global stocks are expected to decrease 194 million bushels from last month’s projection to 6.510 billion bushels on mostly a reduction in foreign production coupled with an increase in consumption from a shift of corn to wheat for feed.
Deferred: March 2013 wheat closed at $9.10 ¾ a bushel, up 5 ¾ cents since last week. Technical indicators have a strong buy bias. Support is at $8.63 a bushel with resistance at $9.39 a bushel. Spring wheat harvested is being reported at 47% compared to 28% last week, 4% last year and the five year average of 12%. July 2013 wheat closed at $8.52 a bushel, up 3 ¾ cents for the week. I would be 10% priced for 2013 production.
