Corn and wheat prices are up; cotton and soybean prices are down the week. The U.S. Dollar Index traded at 80.68 before the close, up 0.52 for the week. The Dow Jones Industrial Average before the close was 13,123 up 16 points for the shortened trading week. Crude Oil was trading at 84.80 a barrel, down 1.48 a barrel for the week. Today’s jobs report came in with stronger than expected payroll growth of 171,000 in October compared to the pre report estimate. The unemployment rate did tick up 0.1% to 7.9% as some people returned to searching for jobs. The initial reaction was positive to the jobs report at least from the economy’s standpoint, but it also had dollar strengthening implications. A recovering economy could mean less emphasis from the Federal Reserve to expand monetary stimulus and would keep inflation in check which generally is neutral to negative for commodity prices. Since there was not really a big ag news day, this seemed to influence the markets. USDA will release their November report on November 9. Crop revenue harvest prices for 2012 have been set and are $7.50 bushels for corn, $15.39 bushel for soybeans, and 73 cents for cotton. Weather in South America does seem to be guiding the corn and soybean markets. Too much rainfall in Argentina is perceived to have reduced their corn crop 20% while central and northeastern Brazil has been dry, possibly delaying soybean planting. That has now changed and dry weather is forecast for Argentina and rain for central and northern Brazil. This will be an on-going story to watch as with U.S. stocks of corn and soybeans tight, global end users will be looking to South America for supplies.
Corn:
Current Crop: December closed at $7.39 ½ a bushel, up 1 ¾ cents a bushel for the week. Technical indicators have a sell bias. Support is at $7.32 a bushel with resistance at $7.48 a bushel. Weekly exports were within expectations with net sales of 6.6 million bushels for the 2012/13 marketing year. Corn harvested nationwide on October 28 was 91% compared to 87% last week, 74% last year and the five year average of 60%. Ethanol production last week was 825,000 barrels per day, up 24,000 barrels from the previous week and 9.9% below a year ago. Ethanol stocks rose 2.3% on the week and were 11.7% higher than a year ago an indication of weak demand from blenders. Analyst’s guesses for the November 9th USDA report are just starting to be released and seem to indicate a slightly larger crop than USDA estimated in October. I am forward priced priced at 50% of anticipated production, 30% with Put Options with the remainder sold at harvest. I would not store corn un-priced or at least without a floor price in place. A December $7.40 Put would cost 15 cents and set a $7.25 futures floor. This option expires November 23. If more time is needed a March $7.40 Put costs 38 cents and would set a $7.02 futures floor.
Deferred: March 2013 contract closed at $7.42 ½ a bushel, up 2 ¾ cents a bushel since last Friday. Technical indicators have a sell bias. Support is at $7.36 a bushel with resistance at $7.48 a bushel. September 2013 corn closed at $6.57 ½ a bushel, down 1 cent for the week. I would have 10% of 2013 production priced.
Cotton:
Current crop: March closed at 71.44 cents per pound, down 1.55 cents since last week. Support is at 70.33 cents with resistance at 72.33 cents per pound. Technical indicators have changed to a strong sell bias. The Adjusted World Price for November 2 – November 8 is 61.10 cents per pound, down 2.33 cents. All cotton weekly export net sales were 103,400 bales (96,800 bales of Upland cotton net sales for 2012/13; net sales of 3,700 bales of Upland cotton for 2013/14 and net sales of 2,900 bales of Pima cotton for 2012/13). Keep in contact with your cotton buyer for current quotes on loan equities and pricing alternatives. Cotton harvested was 50% compared to 38% last week, 56% last year and the five year average of 47%. I would be 25% – 50% priced on cotton. Cotton has been trading in the low range of its sideways pattern. Look for any rallies as opportunities to add to pricing.
Deferred: July 2013 cotton closed at 73.79 cents per pound, down 1.37 cents for the week. Support is at 72.86 cents with resistance at 74.54 cents per pound. Technical indicators have changed to a sell bias. December 2013 cotton closed at 75.97 cents per pound, down 1.33 cents for the week.
Soybeans:
Current crop: The January contract closed at $15.26 ¾ a bushel, down 37 cents a bushel since last Friday. Technical indicators have changed to a sell bias. Support is at $15.01 a bushel with resistance at $15.72 a bushel. Weekly exports were above expectations at net sales of 27.9 million bushels (27.2 million bushels for 2012/13 and 713,000 bushels for 2013/14). Soybeans harvested were reported at 87% compared to 80% last week, 85% last year and the five year average of 78%. Analyst’s estimates for next week’s USDA report indicate that a larger soybean crop will be reported. If supplies are increased, there is a good possibility that exports and usage would also increase. I am currently 50% priced overall on anticipated production; with an additional 30% priced in Put Options. I would sell any un-priced soybeans at harvest. There appears to be a minimal return to storage just considering the basis. From a price risk management standpoint, a January $15.30 strike price put option will cost 43 cents and set a $14.87 futures floor. It expires on December 21.
Deferred: March 2013 soybeans closed today at $15.03 ¾ a bushel, down 33 ¼ cents a bushel since last week. Technical indicators have changed to a sell bias. Support is at $14.80 a bushel with resistance at $15.46 a bushel. November 2013 soybeans closed at $13.36 ½ down 3 ¼ cents for the week. Watch for 2013 opportunities.
Wheat:
Nearby: December futures contract closed at $8.64 ½ a bushel, down ¾ cents a bushel since Friday. Technical indicators have a sell bias. Support is at $8.50 a bushel with resistance at $8.80 a bushel. Weekly exports were at the low end of expectations at 13.3 million bushels of net sales for 2012/13. Analysts expect declines in both global production and U.S. ending stocks in next week’s USDA report.
New Crop: July 2013 wheat closed at $8.75 a bushel, up 10 ¼ cents since last week. Technical indicators have changed to a strong buy bias. Support is at $8.61 a bushel with resistance at $8.88 a bushel. Winter wheat planted nationwide is reported at 88% compared to 81% last week, 86% last year and the five year average of 85%. Emergence is reported at 63% compared to 49% last week, 64% last year and the five year average of 67%. Wheat crop condition ratings were reported with good to excellent at 40% compared to 46% last year. Poor to very poor were 15% compared to 13% last year. This is the lowest percentage of good to excellent for wheat since the ratings started in 1986. I would be 10% priced for 2013 production.
