Soybean and wheat prices are up; corn and cotton prices down for the week. The September U.S. Dollar Index before the close was 78.86 down 1.37 for the week. The Dow Jones Industrial Average before the close was 13,592 up 285 points since last Friday. Crude Oil before the close was 98.97 a barrel, up 2.55 a barrel for the week. The USDA monthly report took center stage on September 12 but since has been replaced by the Fed’s action as well as other reports released since then. The Fed’s round of a combination of QE3 (quantitative easing) where they pledged to buy $40 billion in mortgage debt a month until the economy improved, a continuation of Operation Twist (buying long term treasury bonds and selling short term treasury bills) and a push back on the amount of time they expect to keep interest rates low (mid-2015) was unexpected. Any one of those three measures was expected but not all three. The Dollar weakened on this news and commodity prices have risen on what some may consider being a pretense to inflation down the road. The weaker dollar has given support to commodity prices as crops march on into harvest and what we normally see as a period of weaker prices even in times of tight stocks.
Corn:
Current Crop: December closed at $7.82 a bushel, down 17 ½ cent a bushel for the week. Technical indicators have changed to a sell bias. Support is at $7.64 a bushel with resistance at $7.98 a bushel. Weekly exports were within expectations with net sales of 16.8 million bushels (net sales of 8.4 million bushels for the 2012/13 marketing year and net sales of 8.4 million bushels for the 2013/14 marketing year). Corn in the mature stage is 58% nationwide compared to 41% last week, 25% last year and the five year average of 27%. Corn harvested nationwide on September 9 was 15% compared to 10% last week, 5% last year and the five year average of 5%. USDA’s September 12th crop report raised ending stocks 83 million bushels from August to 733 million bushels for the 2012/13 marketing year. Supply was increased 108 million bushels on higher beginning stocks and a less than expected cut in production. Usage was actually increased 25 million bushels as an increase of 75 million bushels in feed and residual use was partially offset by a 50 million bushel reduction in exports. An acreage adjustment most likely will come in the October report and may reflect more abandoned acres. Global stocks were only slightly adjusted downward in what was considered a bearish report. Prices have bounced up since the mid-week report on historically tight stocks and a reaction to the weaker dollar. 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 $7.85 Put would cost 42 cents and set a $7.43 futures floor. This option expires November 23.
Deferred: March 2013 contract closed at $7.86 a bushel, down 16 ½ cents a bushel since last Friday. Technical indicators have changed to a sell bias. Support is at $7.68 a bushel with resistance at $8.02 a bushel. September 2013 corn closed at $6.89 ¼ a bushel, down 4 ½ cents for the week. I would have 10% of 2013 production priced.
Cotton:
Current crop: December closed at 75.90 cents per pound, down 0.40 cents since last week but up 2.37 cents today. Support is at 72.71 cents with resistance at 77.55 cents per pound. Technical indicators have changed to a buy bias. Cotton equities for the 2012 loan cotton have been quoted in the 17.50 cent range. The Adjusted World Price for September 14– September 20 is 64.53 cents per pound, down 1.29 cents. All cotton weekly export net sales were 338,400 bales (317,500 bales of upland cotton net sales for 2012/13 and net sales of 20,900 bales of Pima cotton for 2012/13). Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. Cotton bolls opening were 46% compared to 36% last week and 52% last year and the five year average of 41%. Cotton crop condition ratings were 41% good to excellent compared to 42% last week and 28% last year. Poor to very poor were reported at 30% compared to 28% last week and 44% last year. USDA didn’t wait for the October report to adjust cotton acres as recently released Farm Service Agency (FSA) certified acres made a compelling argument that acreage was less than had been expected. U.S. production was lowered 540,000 bales from the August report and exports reduced 300,000 bales with an end result of ending stocks of 5.2 million bales for the 2012/13 marketing year. Global stocks of 76.52 million bales kept a bearish tone to the market. Strong weekly exports added support to the cotton market as did higher grain prices.
Deferred: March 2013 cotton closed at 76.79 cents per pound, down 0.39 cents for the week. Support is at 73.86 cents with resistance at 78.32 cents per pound. Technical indicators have changed to a buy bias.
Soybeans:
Current crop: The November contract closed at $17.39 a bushel, up 2 ½ cents a bushel since last Friday. It traded as high as $17.65 ¾ before fading at the close. Support is at $17.19 a bushel with resistance at $17.75 a bushel. Weekly exports were about expected at 23.1 million bushel for 2012/13). A total of 74.1 million bushels in sales were outstanding on August 31(end of the 2011/12 marketing year) and carried over to the 2012/13 marketing year. Old crop crush for August reported by the National Oilseed Processing Association (NOPA) estimated 124.773 million bushels were crushed compared to expectations of 128.3 million bushels. Soybeans dropping leaves were 36% compared to 19% last week, 12% last year and the five year average of 20%. Soybeans harvested were reported at 4% compared to 1% last year and the five year average of 2%. Soybean condition ratings were 32% good to excellent compared to 30% last week and 56% last year. Poor to very poor ratings were 36% compared to 37% last week, and 17% last year. USDA lowered old crop stocks 15 million bushels to 130 million bushels and projected new crop (2012/13) ending stocks at a tight 115 million bushels, unchanged from last month. This compared to the average trade guess of 106 million bushels. Yields were lowered 0.8 bushels per acre to 35.3, just under the trade guess of 35.5 bushels per acre. Demand for 2012/13 was reduced 72 million bushels as crush was lowered 15 million bushels, exports cut 55 million bushels and residual use reduced 2 million bushels. Global stocks for 2012/13 are projected to drop 10 million bushels from the August report to 1.951 billion bushels. A friendly soybean report has probably led to some profit taking and sell off here at the end of the week. 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 52 cents and set a $16.88 futures floor. This option expires October 26, 2012.
Deferred: January 2013 soybeans closed today at $17.40 a bushel, up 4 ¼ cents since last week. Technical indicators have a strong buy bias. Support is at $17.20 a bushel with resistance at $17.75 a bushel. November 2013 soybeans closed at $13.97 ¾ up 12 ¾ cents for the week having traded as high as $14.09 ¾ today. Watch for 2013 opportunities. The best prices for 2013 may be this fall.
Wheat:
Nearby: December futures contract closed at $9.24 ¼ a bushel, up 19 ¼ cents a bushel since Friday. Technical indicators have a strong buy bias. Support is at $8.85 a bushel with resistance at $9.50 a bushel. Weekly exports were below expectations at 14 million bushels of net sales for 2012/13. There were no changes to USDA wheat numbers as 2012/13 ending stocks were left at 698 million bushels. Global stocks were marginally lowered, not as much as the trade expected. Wheat production problems in Australia and the Black Seas region as well as dry weather concerns in U.S. wheat growing areas have supported the wheat market as it continues to trade sideways to up.
New Crop: July 2013 wheat closed at $8.92 ¾ a bushel, up 24 cents since last week. Technical indicators have a strong buy bias. Support is at $8.65 a bushel with resistance at $9.08 a bushel. I would be 10% priced for 2013 production.
