Corn

In light of the March 28 Grain Stock’s report, this month’s USDA report was neutral to friendly for U.S. corn stocks but bearish on the world numbers. U.S. corn ending stocks increased 125 million bushels to 757 million bushels, but the trade was expecting on the average 824 million bushels. Feed and residual use was cut 150 million bushels based on the Grain Stocks report while exports were dropped 25 million bushels reflecting slow sales and shipments. Improving profit margins for producing and blending ethanol led to a 50 million bushels increase in corn for ethanol.  The stocks to use ratio increased to 6.8%. The season average price was lowered 10 cents on the bottom side and 30 cents on the top side with a range of $6.65 to $7.15 a bushel. The bearish numbers came when global stocks were projected at 4.933 billion bushels, 307 million bushels higher than last month. An increase in projected world production coupled with a reduction in consumption accounted for the difference. May corn closed at $6.49 a bushel, up

4 ¾ cents. September corn closed at $5.66 ¾, up 4 ½.  I would have 20% of 2013 production priced. Planting weather and progress will start to be the driving factor in new crop pricing. Then the focus will shift to growing conditions, particularly in the Western Corn Belt. Over the past 31 years the average difference between the April projection for U.S. ending stocks and the final estimate has been 163 million bushels with 17 years below the final estimate and 14 years above.  USDA will release the next USDA Supply & Demand report released on May 10, 2013. This will be a first real look at new crop projections.

Supply and Demand Projections and Historical Data Source: USDA

Cotton

USDA offered a neutral report on the U.S numbers that saw 2012 production raised 280,000 bales based on the final Cotton Ginnings report. Nationwide yields increased 14 pounds per acre to 880 pounds per acre.  Offsetting the production increase were a 250,000 bale increase in exports and a 30,000 bale increase in the unaccounted category. Ending stocks were left unchanged at 4.2 million bales compared to trade estimates of 4.1 million bales. The projected price for the 2012/13 marketing year is expected to range from 70.50 to 73.50 cents per pound, increased 0.50 cents on both sides. The slightly larger supply and strong shipments accounted for the export increase. World stocks at first glance are considered bearish as stocks are projected to increase 710,000 bales to 82.45 million bales. China’s stocks increased 1.5 million bales to 45.61 million bales while the rest of the world’s stocks dropped 790,000 bales to 36.84 million bales. It should somewhat be considered positive for prices that outside of China, cotton stocks decreased. Keep in contract with your cotton buyer on current quotes.  May cotton closed at 85.31 cents/pound, up 0.73 cents/pound. December cotton closed at 86.57 cents per pound, up 0.78 cents/pound. Equities for 2013 loan cotton were in the 27 – 28 cent range. I would continue to monitor new crop prices and be ready to price part of the crop or implement an option strategy if prices look to break. It is encouraging that demand is increasing. Coupled with a potential drop in production, then stocks in the new crop year will be reduced. Over the past 31 years the average difference between the April projection for U.S. ending stocks and the final estimate has been 0.4 million bales with 13 years below the final estimate and 18 years above. These numbers can and will change, but do reflect the best information and estimates at the time of the report. USDA will release the next USDA Supply & Demand report released on May 10, 2013. This will be a first real look at new crop projections.

Supply and Demand Projections and Historical Data Source: USDA

Soybeans

Like corn, USDA’s April report for soybeans was friendly with the projection for U.S. ending stocks at 125 million bushels, unchanged from last month. The world numbers with an increase in ending stocks are considered bearish. Based on the March 28 Grain Stocks report the trade on the average was expecting an increase to 137 million bushels. Crush was increased 20 million bushels to reflect increased soybean meal exports; exports increased 5 million bushels based on stronger than expected shipments; and residual use is reduced 25 million bushels based on the Grain Stocks report. The stocks to use ratio is unchanged from last month at 4.1%. The season average price was unchanged from last month and is projected to range from $13.80 to $14.80 a bushel. Global stocks are projected to increase 89 million bushels to 2.301 billion bushels. World production is expected to be up slightly from last month while consumption is decreased. Chinese imports were dropped 73.5 million bushels. May soybeans closed at $13.92 ¾, down

 2 ¾ cents. November soybeans closed at $12.37 ½ a bushel, down 4 ¼ cents. I would have up to 10% priced on 2013 production. At this point going into planting season, price targets may have to be lowered. There is some concern that some intended corn acres may switch to soybeans, depending on the weather. After planting, growing conditions, particularly in August will be the key to prices. Over the past 31 years the average difference between the April projection for U.S. ending stocks and the final estimate has been 51 million bushels with 11 years below the final estimate and 20 years above. USDA will release the next USDA Supply & Demand report released on May 10, 2013. This will be a first real look at new crop projections.

Supply and Demand Projections and Historical Data Source: USDA

Wheat

USDA increased old crop ending stocks 15 million bushels from last month to 731 million bushels. The trade on the average was expecting stocks of 737 million bushels. Seed use was bumped up slightly while feed and residual use dropped 15 million bushels based on the March 28^th USDA reports. The stocks to use ratio increased to 30.3%.  The projected season average price of $7.70 to $7.90 a bushel was raised 5 cents on the bottom side and dropped 5 cents on the top end. Global stocks were increased 148 million bushels to 6.697 billion bushels on mainly an adjustment to beginning stocks and a decline in usage. May wheat closed at $6.96 ¾, down 12 cents. July wheat closed at $7.03, down 11 cents. Crop condition ratings are just now being released on a weekly basis and will closely be watched as an indicator for price movement. I am currently priced 10% on the 2013 crop. Over the past 31 years the average difference between the April projection for U.S. ending stocks and the final estimate has been 37 million bushels with 21 years below the final estimate and 10 years above. These numbers can and will change, but do reflect the best information and estimates at the time of the report. USDA will release the next USDA Supply & Demand report released on May 10, 2013. This will be a first real look at new crop projections.

Supply and Demand Projections and Historical Data Source: USDA