Corn, cotton and soybean prices are up with wheat prices down for the week. The September U.S. Dollar Index before the close was 81.51 down 1.15 for the week. The Dow Jones Industrial Average before the close was 13,145 down 130 points since last Friday. Crude Oil before the close was 96.22 a barrel, down 0.31 a barrel for the week. Results from the much watched Pro Farmer Crop Tour this week were released Friday afternoon with the national corn average yield pegged at 120.25 bushels per acre in a range of 119.05 to 121.45 bushels per acre. USDA in the August 10 report projected corn yields at 123.4 bushels per acre. Soybean yields were estimated at 34.8 bushels per acre nationwide in a range of 34.1 to 35.5 bushels per acre. This compares to the August 10 USDA estimate of 36.1 bushels per acre. Pro Farmer also noted that for soybeans to achieve that yield, rainfall is needed in an area from Ohio to Nebraska. The markets had just closed when this information was released so any reactions will come on the open during electronic trading Sunday night, August 26. Traders most likely won’t be surprised to the corn yields but may react bullishly to the soybean data. At some point, we will shift more to how demand will respond to the lower supply. Corn demand destruction seems to be occurring, but soybean usage is not showing much signs of slowing.
Corn:
Current Crop: September closed at $8.02 ¼ a bushel, up 3 ¾ cents a bushel for the week. Technical indicators have a buy bias. Support is at $7.89 a bushel with resistance at $8.23 a bushel. Weekly exports were within expectations with net sales of 12.8 million bushels (net sales of 4.3 million bushels for the 2011/12 marketing year and net sales of 8.5 million bushels for the 2012/13 marketing year). Corn condition ratings this week were 23% rated good to excellent as compared to 23% last week and 57% a year ago. Poor to very poor were at 51% compared to 51% last week and 17% last year. Corn in the mature stage is 17% nationwide compared to 10% last week and 4% last year and the five year average of 4%. Corn harvested nationwide on August 19 was 4% compared to 1% last year and the five year average of 1%. The Pro Farmer Crop Tour estimated corn production at 10.478 billion bushels, down 300 million bushels from the August 10 USDA report. If that production holds true, stocks could tighten further, but demand destruction may take up some of the slack. 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 or if storage is available contract for future delivery. There currently is a $0.61 – $0.80 cash spread depending on location from delivering now until December delivery. That could go a long way toward paying storage costs. I would not store corn un-priced or at least without a floor price. A December $8.00 Put would cost 49 cents and set a $7.51 futures floor. This option expires November 23.
Deferred: March 2013 contract closed at $8.05 ½ a bushel, up ¾ cent a bushel since last Friday. Technical indicators have changed to a buy bias. Support is at $7.96 a bushel with resistance at $8.28 a bushel. September 2013 corn closed at $6.80 ¾ a bushel, up 5 ½ cents for the week. I would have 10% of 2013 production priced.
Cotton:
Current crop: December closed at 75.21 cents per pound, up 1.91 cents since last week. Support is at 73.37 cents with resistance at 77.91 cents per pound. Technical indicators have a buy bias. The Adjusted World Price for August 24– August 30 is 64.68 cents per pound, up 1.54 cents. All cotton weekly export net sales were 103,800 bales (82,500 bales of upland cotton net sales for 2012/13; 11,600 bales of upland cotton net sales for 2013/14; net sales of 5,400 bales of Pima cotton for 2012/13 and net sales of 4,300 bales of pima cotton for 2013/14). Cotton equities for 2012 loan cotton have been quoted in the 15 – 16.75 cent range. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. Cotton bolls opening were 17% compared to 12% last week and 15% last year and the five year average of 14%. Cotton crop condition ratings were 41% good to excellent compared to 42% last week and 31% last year. Poor to very poor were reported at 30% compared to 28% last week and 41% last year. Still uncertain news out of India on whether their cotton exports will be curtailed from lower production has supported the market as has potential lower U.S. production. The market appears to be factoring in a drop in U.S. and World ending stocks in the September USDA report.
Deferred: March 2013 cotton closed at 75.94 cents per pound, up 1.95 cents for the week. Support is at 72.25 cents with resistance at 78.45 cents per pound. Technical indicators have a buy bias.
Soybeans:
Current crop: The November contract closed at $17.31 ½ a bushel, up 85 ¾ cents a bushel since last Friday. Traded as high this week as 17.44 ¾ a bushel. Technical indicators have a strong buy bias. Support is at $17.00 a bushel with resistance at $17.53 a bushel. Weekly exports were above expectations at 26.4 million bushels (4.9 million bushels for the 2011/12 marketing year and net sales of 21.5 million bushels for 2012/13). Soybean setting pods were 91% this week as compared to 83% last week, 79% last year and the five year average of 83%. Soybeans dropping leaves were 4% compared to 1% last year and the five year average of 1%. Soybean condition ratings were 31% good to excellent compared to 30% last week and 59% last year. Poor to very poor ratings were 37% compared to 38% last week, and 14% last year. The Pro Farmer Crop Tour estimates soybean production at 2.6 billion bushels, 92 million bushels lower the August 10 USDA report. Stocks do not have that much to give up so something will have to happen for demand to slow to the point that adequate stocks will be left at the end of the new crop marketing year. South America with favorable weather no doubt will take up the slack later in the new crop marketing year. This is a volatile market that can turn when it is perceived that prices have gone high enough to limit usage. No one knows when that will be. I am currently 50% priced overall on anticipated production; with an additional 30% priced in Put Options. From a price risk management standpoint, a $17.30 November Put option would cost 76 cents and set a $16.54 futures floor.
Deferred: January 2013 soybeans closed today at $17.24 ¼ a bushel, up 87 ¼ cents since last week. Technical indicators have a strong buy bias. Support is at $16.94 a bushel with resistance at $17.43 a bushel. November 2013 soybeans closed at $13.23 ½ up 40 cents for the week. Start watching for 2013 opportunities.
Wheat:
Nearby: September futures contract closed at $8.67 ½ a bushel, down 7 cents a bushel since Friday. Technical indicators have a buy bias. Support is at $8.51 a bushel with resistance at $9.14 a bushel. Weekly exports were about expected at 17.4 million bushels (17.2 million bushels of net sales for 2012/13 and 220,500 bushels for 2013/14). Winter wheat harvest is essentially done at 97% harvested.
Deferred: March 2013 wheat closed at $8.98 ½ a bushel, down 4 ¼ cents since last week. Technical indicators have changed to a buy bias. Support is at $8.85 a bushel with resistance at $9.22 a bushel. Spring wheat harvested is being reported at 79% compared to 65% last week, 25% last year and the five year average of 40%. July 2013 wheat closed at $8.52 a bushel, up 9 ½ cents for the week. I would be 10% priced for 2013 production.
