Corn

In today’s reports, corn lead the bullish surprises mainly based on the Grain Stocks report. Stocks as of December 1, 2012 were estimated at 8.03 billion bushels which indicated a 300 million bushel higher feed and residual use than earlier projected. The trade on the average expected 8.21 billion bushels. Production was increased 55 million bushels in the annual production summary on a 1.1 bushel per acre bump in yield to 123.4 bushels per acre. Planted acreage in 2012 was increased 300,000 acres to 97.2 million acres while harvested acreage was cut 300,000 acres to 87.4 million acres. The average trade estimate for production was 10.626 billion bushels compared to USDA’s number of 10.78 billion bushels. Although feed and residual use was increased, exports were reduced 200 million bushels reflecting the slow pace of sales and shipments. Total usage was increased 100 million bushels from last month. Ending stocks were cut 45 million bushels from last month to 602 million bushels or a 5.3% stocks to use ratio. The trade was expecting stocks to increase to 667 million bushels.  The season average price was left unchanged at $6.80 to $8.00 a bushel. Global stocks are projected at 4.566 billion bushels, 63.8 million bushels lower than last month. World production was raised 126 million bushels reflecting increases in U.S. and foreign production while consumption was raised in the U.S but cut in the foreign numbers.  The global stocks to use ratio is 13.4%, down 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. Producers with corn in storage should use this rally to price out un-priced corn.  September 2013 corn closed at $6.02, down 5 ¼ cents with support at $5.84 and resistance at $6.22 with a strong sell bias.  I would have 10% of 2013 production priced. Target the $6.20 – $6.50 range for additional pricing but if prices start to drop back below $6.00, also be ready to price part of the crop. Over the past 31 years the average difference between the January projection for U.S. ending stocks and the final estimate has been 230 million bushels with 19 years below the final estimate and 12 years above.  The next USDA Supply & Demand report will be released February 8, 2013.

Supply and Demand Projections and Historical Data Source: USDA

 Cotton

USDA offered a somewhat bullish report on the U.S numbers that saw production drop 250,000 bales; exports increased 400,000 bales and ending stocks cut 600,000 bales to 4.8 million bales. Harvested acres were cut around 1 million acres as abandonment in Texas was more than earlier thought.  The overall yield was increased 73 pounds to 866 pounds per acre. Tennessee was estimated at 934 pounds per acre, the second highest on record.  The projected price for the 2012/13 marketing year is expected to range from 66 to 71 cents per pound, increased 1 cent on the bottom. Global stocks are projected to increase 2.08 million bales to 81.72 million bales. Globally, the stocks to use ratio is 77.1%, up 2.25% from last month. Keep in contact with your cotton buyer on current quotes.  March cotton closed at 75.62 cents/pound, up 0.42 cents today with support at 73.45 cents per pound and resistance at 76.96 cents per pound with a strong buy bias.  I would be 25% – 50% priced on cotton. Continued strength in the market will need to be rewarded with pricing. Don’t let storage cost continue to eat into your value. December cotton closed at 79.04 cents per pound, down 0.05 cents with support at 77.42 cents/pound and resistance at 80.06 cents/pound with a buy bias. Over the past 31 years the average difference between the January projection for U.S. ending stocks and the final estimate has been 0.9 million bales with 9 years below the final estimate and 22 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 February 8, 2013.

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. Grain stocks were estimated at 14 million bushels lower than the average trade estimate indicating higher domestic usage than earlier thought. Crush was increased 35 million bushels and residual use raised 4 million bushels. However, production was bumped up 44 million bushels from last month on a 400,000 acre increase in harvested acres to 76.1 million acres and a 0.3 bushel per acre increase in yield to 39.6 bushels per acre. Ending stocks were increased 5 million bushels from last month to 135 million bushels and a 4.4% stocks to use ratio. The season average price was lowered 5 cents on the bottom side and 55 cents on the top side from last month and is projected to range from $13.50 to $15.00 a bushel. Global stocks are projected to drop slightly 17 million bushels to 2.185 billion bushels with a stock to use ratio of 22.6%. The projected record South American crop is up 18 million bushels from last month with Brazilian production up and Argentine production down. March soybeans closed at $13.73 ¼, down 6 ½ cents per bushel with support at $13.38 and resistance at $13.99 with a strong sell bias. November soybeans closed at $12.66 ¼  a bushel, down 15 ¾ cents today. Support is at $12.42, resistance at $13.00 with a strong sell bias. Under current conditions, I would not expect 2013 prices to be at the level of 2012. We might should start pricing accordingly and look for rallies to $13 and above as pricing opportunities. As in corn, weather will be a major factor. I would be 5% priced on 2013 production, but watching closely.  Over the past 31 years the average difference between the January projection for U.S. ending stocks and the final estimate has been 62 million bushels with 7 years below the final estimate and 24 years above. The next USDA Supply & Demand report will be released February 8, 2013.

Supply and Demand Projections and Historical Data Source: USDA

Wheat

The wheat market has had a bullish reaction to USDA’s wheat supply and demand report that lowered U.S. ending stocks 38 million bushels. USDA 2012/13 projections estimate ending stocks at 716 million bushels compared to the average pre-report guess of 743 million bushels and last month’s projection of 754 million bushels. Based on the Grain Stocks report, feed/residual use was increased 35 million bushels. Seed use was also raised 2 million bushels. The stock to use ratio was lowered 2.1% to 29.5%. The projected season average price of $7.65 to $8.15 a bushel was lowered 5 cents on the bottom side and lowered 15 cents on the top end. Global stocks are expected to decrease 11 million bushels from last month’s projection to 6.490 billion bushels. March wheat closed up 10 ¼ cents at $7.54 ¾. July wheat closed up 6 ¾ cents to $7.67 with support at $7.34 and resistance at $8.03. There currently is a strong sell bias Winter wheat seedings were 800,000 acres less than expected at 41.8 million acres. This compares to last year’s seedings of 41.3 million acres. I am currently priced 10% on the 2013 crop. Over the past 31 years the average difference between the January projection for U.S. ending stocks and the final estimate has been 59 million bushels with 18 years below the final estimate and 12 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 February 8, 2013.       

Supply and Demand Projections and Historical Data Source: USDA