Corn

In today’s report, no adjustments for the current marketing year of 2012/13 U.S. supply and demand numbers were made. The trade was expecting on the average a 16 million bushel increase in ending stocks. It is somewhat expected that harvested acreage will be reduced in the January 11, 2013 report. However, there is a good possibility that reductions in supplies will be met and maybe surpassed by reduction in usage with higher ending stocks the result. For now, the December numbers are what are available and since the trade was expecting an increase in stocks, no change might be considered bullish. The 2012/13 ending stocks were projected at 647 million bushels with a season average price as compared to last month down 15 cents on the lower end and down 25 cents on the top side in a range from $6.80 to $8.00 a bushel. The stocks to use ratio is unchanged at 5.8%.  Global stocks are projected at 4.630 billion bushels, 11.4 million bushels lower than last month. Foreign production was raised 370 million bushels with increases in China and Canada and reductions in Argentina and the Ukraine. China’s consumption accounted for all on its increase. The global stocks to use ratio is 13.6%, up 0.2% from last month. March corn closed down 2 cents at $7.28 a bushel with support at $7.19 and resistance at $7.41 with a strong sell bias. I would be priced out of 2012 corn at this time. However, for producers with corn in storage I would not store un-priced or without a floor price in place.  A March $7.30 Put costs 30 cents and would set a $7.00 futures floor.  September 2013 corn closed at $6.48 ¾, down 6 ¾ cents with support at $6.44 and resistance at $6.64 with a strong sell bias. I am currently priced 10% for 2013 production and will look for additional opportunities to price more. Over the past 31 years the average difference between the December projection for U.S. ending stocks and the final estimate has been 296 million bushels with 18 years below the final estimate and 13 years above.  The next USDA Supply & Demand report will be released January 11, 2013.

Supply and Demand Projections and Historical Data Source: USDA

Cotton

USDA offered a somewhat bullish report that saw production drop 190,000 bales; exports increased 200,000 bales and ending stocks cut 400,000 bales to 5.4 million bales. Production decreases in Texas were partially offset by increases in the Southeast and Delta including Tennessee where the reported yield is 922 pounds per acre the 2^nd highest Tennessee state average yield. Nationwide, the yield is estimated at 793 pounds per acre a drop of 9 pounds from previous USDA reports. Exports were boosted 200,000 bales to 11.8 million bales, reflecting strong sales in November.   The projected price for the 2012/13 marketing year is expected to range from 65 to 71 cents per pound, narrowed 1 cent on each end. Global stocks are projected to decrease 630,000 bales to 79.64 million bales. China appears to have purchased 2/3 of their cotton crop for their national reserves, limiting supplies available to mills and sending some export business to the U.S.  Globally, the stocks to use ratio is 74.8%, down 0.70% from last month. Keep in contact with your cotton buyer on current quotes.  March cotton closed at 74.90 cents/pound, up 1.50 cents today with support at 72.80 cents per pound and resistance at 76.04 cents per pound with a strong buy bias.  I would be 25% – 50% priced on cotton. Cotton prices are starting to garner interest on additional pricing. December 2013 cotton closed at 78.13 cents per pound, up 0.86 cents with support at 76.88 cents/pound and resistance at 78.98 cents/pound with a strong buy bias. Over the past 31 years the average difference between the December projection for U.S. ending stocks and the final estimate has been 1.1 million bales with 11 years below the final estimate and 20 years above. These numbers can and will change, but do reflect the best information and estimates at the time of the report. The next USDA Supply & Demand report will be released January 11, 2012.

Supply and Demand Projections and Historical Data Source: USDA

Soybeans

USDA’s report for soybeans is considered neutral with the projection for U.S. ending stocks the same as the average estimate of at least one poll of trade analysts. For the 2012/13 crop year, the only adjustment to the balance sheet was a 10 million bushel increase in crush with a corresponding decrease in ending stocks to 130 million bushels. The season average price was lowered 35 cents on both ends from last month and is projected to range from $13.55 to $15.55 a bushel. The stocks to use ratio dropped 0.35% to 4.3%.  Global new crop stocks are projected to drop slightly 3.3 million bushels to 2.202 billion bushels with a stock to use ratio of 22.9%. The projected record South American crop is unchanged from last month. January soybeans closed at $14.72, down 2 ¾ cents per bushel with support at $14.44 and resistance at $14.92 with a sell bias. I am currently priced out of 2012 production.  There does not appear to be any advantage to storing other than price speculation. That may be better served by selling soybeans and buying an out of the money March or May call option. A $15.20 March Call would cost 33 cents. I would not store un-priced without setting a floor price. A March $14.70 Put would cost 48 cents and set a $14.22 futures floor.  This option expires February 22, 2013.  November 2013 soybeans closed at $13.21 ½ a bushel, down 13 cents today. Support is at $13.10, resistance at $13.48 with a buy bias. Watch for 2013 opportunities for pricing. I would be 5% priced on 2013 production.  Over the past 31 years the average difference between the December projection for U.S. ending stocks and the final estimate has been 70 million bushels with 9 years below the final estimate and 22 years above. The next USDA Supply & Demand report will be released January 11, 2013.

Supply and Demand Projections and Historical Data Source: USDA

Wheat

The wheat market has had a bearish reaction to USDA’s wheat supply and demand report that raised U.S. ending stocks 50 million bushels and world stocks 1.5%. USDA 2012/13 projections estimate ending stocks at 754 million bushels compared to the average pre-report guess of 712 million bushels and last month’s projection of 704 million bushels. The only change was made on the demand side where exports were lowered 50 million bushels reflecting the slow pace of sales and shipments and higher expected competition from foreign supplies. The stock to use ratio was raised 2.7% to 31.6%. The projected season average price of $7.70 to $8.30 a bushel was lowered 5 cents on the bottom side and lowered 15 cents on the top end. Global stocks are expected to increase 102 million bushels from last month’s projection to 6.502 billion bushels on lower beginning stocks, higher production and lower usage. March wheat closed down 27 ¼ cents at $8.21 ½. July 2013 wheat closed down 24 ½ cents to $8.42 ¼ with support at $8.19 and resistance at $8.78. There currently is a sell bias.  In my weekly comments, I am currently priced 10% on the 2013 crop and would put serious consideration to pricing more as the wheat crop develops. Over the past 31 years the average difference between the December projection for U.S. ending stocks and the final estimate has been 66 million bushels with 20 years below the final estimate and 11 years above. These numbers can and will change, but do reflect the best information and estimates at the time of the report. The next USDA Supply & Demand report will be released January 11, 2013.

Supply and Demand Projections and Historical Data Source: USDA