Corn

This month’s USDA report did not usher in any major corn surprises, but ending stocks were forecast higher than the average trade guess. Food, seed and industrial use was raised 20 million bushels as corn for sweeteners and starch increased. Offsetting that increase was a 50 million bushel decrease in exports. Ending stocks were raised 30 million bushels from last month to 632 million bushels or a 5.6% stocks to use ratio. The trade was expecting stocks to increase to 615 million bushels.  The season average price was dropped 5 cents on the lower side and 35 cents on the top side with a range of $6.75 to $7.65 a bushel. Global stocks are projected at 4.647 billion bushels, 81 million bushels higher than last month. World production was raised 82 million bushels reflecting increases in foreign production while foreign consumption dropped slightly.  The global stocks to use ratio is 13.6%, up 0.2% from last month. May corn closed down 3 ¼ cents at $7.08 ¾ a bushel. September corn closed at $5.84 ¾, down 4 ½ cents. I would have 10% of 2013 production priced. The market appears somewhat oversold and could be due for a bounce up. To some extent, a weather premium will need to be kept in the market until further in the year. However, if U.S. weather cooperates with production, we could see a substantial drop in prices by fall. Over the past 31 years the average difference between the February projection for U.S. ending stocks and the final estimate has been 209 million bushels with 20 years below the final estimate and 11 years above.  The next USDA Supply & Demand report will be released March 8, 2013.

Supply and Demand Projections and Historical Data Source: USDA

Cotton

USDA offered a friendly report on the U.S numbers that saw exports increased 300,000 bales and ending stocks cut 300,000 bales to 4.5 million bales. The projected price for the 2012/13 marketing year is expected to range from 69 to 73 cents per pound, increased 3 cents on the bottom and 2 cents on the top. Global stocks were projected to increase 140,000 bales to 81.86 million bales. China holds 52% of the world stocks, but the quality of their cotton is uncertain.  Keep in contract with your cotton buyer on current quotes.  May cotton closed at 83.30 cents/pound, up 0.02 cents today. I would be 75% priced on 2012 cotton targeting the 85 – 87 cent range to price the remaining of the crop. Don’t let storage cost continue to eat into your value. December cotton closed at 82.92 cents per pound, up 0.54 cents. Over the past 31 years the average difference between the February projection for U.S. ending stocks and the final estimate has been 0.7 million bales with 10 years below the final estimate and 21 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 March 8, 2013.

Supply and Demand Projections and Historical Data Source: USDA

Soybeans

USDA’s February report for soybeans is considered neutral to friendly with the projection for U.S. ending stocks slightly lower than the average estimate of at least one poll of trade analysts. Crush was increased 10 million bushels reflecting both larger soybean meal exports and domestic use. Ending stocks were dropped a corresponding 10 million bushels from last month to 125 million bushels and a 4.1% stocks to use ratio. The average trade estimate was 129 million bushels. The season average price was raised 5 cents on the bottom side and 5 cents on the top side from last month and is projected to range from $13.55 to $15.05 a bushel. Global stocks are projected to increase 24 million bushels to 2.209 billion bushels with a stock to use ratio of 22.9%. The projected record South American crop is up 34.5 million bushels from last month with Brazilian production up and Argentine production unchanged. May soybeans closed at $14.36 ¾, down 36 ½ cents per bushel. November soybeans closed at $12.82 a bushel, down 42 cents today. There are still some uncertainties with South American production and when their crop will get into the international pipeline. Potential weather problems should keep a weather premium in the market. Like corn, the soybean market could be a little oversold for this time of year and maybe due a rally. I would be 10% priced on 2013 production, but watching closely.   Over the past 31 years the average difference between the February projection for U.S. ending stocks and the final estimate has been 62 million bushels with 9 years below the final estimate and 22 years above. The next USDA Supply & Demand report will be released March 8, 2013.

Supply and Demand Projections and Historical Data Source: USDA

Wheat

USDA’s February 8^th wheat supply and demand report was friendly in that it lowered U.S. ending stocks 25 million bushels. USDA 2012/13 projections estimate ending stocks at 691million bushels compared to the average pre-report guess of 728 million bushels and last month’s projection of 716 million bushels. Feed/residual use was again increased, this time by 25 million bushels as wheat use increased in livestock and poultry rations. The stock to use ratio was lowered 1.3% to 28.2%. The projected season average price of $7.70 to $8.10 a bushel was raised 5 cents on the bottom side and raised 5 cents on the top end. Global stocks are expected to decrease 3.3 million bushels from last month’s projection to 6.494 billion bushels. May wheat closed down ½ cent at $7.62 ½. July wheat closed down ¾ cent to $7.62 ¾. I am currently priced 10% on the 2013 crop. Price outlook will depend on how the wheat crop in the Plains breaks dormancy. I would look for pricing opportunities this spring. Over the past 31 years the average difference between the February projection for U.S. ending stocks and the final estimate has been 48 million bushels with 19 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 March 8, 2013.           

Supply and Demand Projections and Historical Data Source: USDA