Wheat prices are up; corn about even with cotton and soybean prices down for the week. The September U.S. Dollar Index before the close was 80.24 down 0.98 for the week. The Dow Jones Industrial Average before the close was 13,286 up 195 points since last Friday. Crude Oil before the close was 96.34 a barrel, down 0.23 a barrel for the week. A weak jobs report has led to some speculation that the Fed may come in with another round of some form of a stimulus program to bolster the economy. The unemployment rate was reduced from 8.3% to 8.1% as the labor force participation rate fell to 63.5%, the lowest in over 30 years. The Dollar was weaker on this news. USDA will release the monthly Supply & Demand reports on Wednesday, September 12.
Corn:
Current Crop: December closed at $7.99 ½ a bushel, down ¼ cent a bushel for the week. Technical indicators have a buy bias. Support is at $7.82 a bushel with resistance at $8.10 a bushel. Weekly exports were below expectations with net sales of 1 million bushels (net sales reductions of 4.1 million bushels for the 2011/12 marketing year and net sales of 5.1 million bushels for the 2012/13 marketing year). Corn in the mature stage is 41% nationwide compared to 26% last week, 15% last year and the five year average of 16%. Corn harvested nationwide on September 2 was 10% compared to 6% last week, 3% last year and the five year average of 3%. Weekly ethanol production improved 10,000 barrels per day in the latest weekly numbers to 829,000 barrels per day. Based on weekly reports, ethanol production in the just ended 2011/12 marketing year totaled 1.8% less than the 2010/11 marketing year which might shave off around 40 million bushels of corn for ethanol in the 2011/12 year. Trade estimates for next week’s USDA report are just starting to come in and seem to indicate a lower yield and overall corn production. There is some speculation that most of the drop in corn production will be matched with a drop in projected usage. There have been signs of price rationing among corn users. I am currently priced at 50% of anticipated production, and 30% with Put Options. I would sell the remainder of un-priced corn at harvest or if storage is available contract for future delivery taking advantage of basis improvement. I would not store corn un-priced or at least without a floor price. A December $8.00 Put would cost 41 cents and set a $7.59 futures floor. This option expires November 23.
Deferred: March 2013 contract closed at $8.02 ½ a bushel, up ½ cents a bushel since last Friday. Technical indicators have a buy bias. Support is at $7.86 a bushel with resistance at $8.12 a bushel. September 2013 corn closed at $6.93 ½ a bushel, up 11 ½ cents for the week. I would have 10% of 2013 production priced.
Cotton:
Current crop: December closed at 76.30 cents per pound, down 0.96 cents since last week. Support is at 74.83 cents with resistance at 77.73 cents per pound. Technical indicators have a strong buy bias. The Adjusted World Price for September 7– September 13 is 65.82 cents per pound, up 0.09 cents. All cotton weekly export net sales were 114,000 bales (83,900 bales of upland cotton net sales for 2012/13; and net sales of 30,100 bales of Pima cotton for 2012/13). Cotton equities for 2012 loan cotton have been quoted in the 18.00 cent range. Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. Cotton bolls opening were 36% compared to 24% last week and 37% last year and the five year average of 30%. Cotton crop condition ratings were 42% good to excellent compared to 43% last week and 28% last year. Poor to very poor were reported at 28% compared to 28% last week and 41% last year. Less damage than expected from Hurricane Isaac and sales of reserve stocks by China have put pressure on the cotton market this week as cotton has traded in a narrow band.
Deferred: March 2013 cotton closed at 77.18 cents per pound, down 0.80 cents for the week. Support is at 75.85 cents with resistance at 78.55 cents per pound. Technical indicators have a strong buy bias.
Soybeans:
Current crop: The November contract closed at $17.36 ½ a bushel, down 20 cents a bushel since last Friday. Prices traded as high this week as $17.89 a bushel. Technical indicators have a strong buy bias. Support is at $17.12 a bushel with resistance at $17.64 a bushel. Weekly exports were below expectations at 19.3 million bushels (net sales of 200,000 bushels for the 2011/12 marketing year and net sales of 19.1 million bushels for 2012/13). Soybeans dropping leaves were 19% compared to 8% last week, 5% last year and the five year average of 9%. Soybean condition ratings were 30% good to excellent compared to 30% last week and 56% last year. Poor to very poor ratings were 37% compared to 38% last week, and 16% last year. As in corn, yield guesses for next week’s USDA report are estimated less than last month’s 36.1 bushels per acre. What is different than corn is that demand does continue to appear strong and trade guesses are looking for stocks to be cut further. It is still dry in some areas of South America which could delay the start of their planting season this fall. Without weather issues in Brazil and Argentina, a large soybean crop will be planted and we could see some foreign end users who can wait defer to the South American crop. However, that will affect more the 2013 U.S. soybean crop prices. I am currently 50% priced overall on anticipated production; with an additional 30% priced in Put Options. At current price levels, storage should be used for possible basis appreciation and not necessarily futures price speculation. From a price risk management standpoint, a $17.40 November Put option would cost 64 cents and set a $16.76 futures floor. This option expires October 26, 2012.
Deferred: January 2013 soybeans closed today at $17.35 ¾ a bushel, down 15 ¼ cents since last week. Technical indicators have a strong buy bias. Support is at $17.12 a bushel with resistance at $17.62 a bushel. November 2013 soybeans closed at $13.67 ¾ up 12 ¾ cents for the week. Watch for 2013 opportunities.
Wheat:
Nearby: December futures contract closed at $9.05 a bushel, up 15 ½ cents a bushel since Friday. Technical indicators have changed to a strong buy bias. Support is at $8.73 a bushel with resistance at $9.28 a bushel. Weekly exports were about expected at 21.1 million bushels (20.4 million bushels of net sales for 2012/13 and 700,000 bushels for 2013/14). Wheat has led the grain complex this week as the Food and Agricultural Organization of the UN (FAO) lowered its global outlook for cereal grain production this year. Speculation has surfaced that Russia may be selling wheat out of its reserve to keep from putting on an export ban.
New Crop: July 2013 wheat closed at $8.68 ¾ a bushel, up 11 cents since last week. Technical indicators have a strong buy bias. Support is at $8.53 a bushel with resistance at $8.81 a bushel. I would be 10% priced for 2013 production.
