Corn, soybean, and wheat prices are up while cotton prices are down for the week. The Dow was down most of today, but managed to return back to its all-time high of 14,865.  USDA released their monthly supply and demand report April 10. The U.S. numbers for the most part were considered neutral to friendly while the world numbers were mostly bearish. The next USDA report will be on May 10 and will be a first real look at the new crop year.

Corn:

Nearby:

Weekly exports were above expectations with net sales of 18.7 million bushels (net sales of 7.3 million bushels for the 2012/13 marketing year and 11.4 million bushels of net sales for the 2013/14 year). Ethanol production increased 47,000 barrels per day to 854,000 barrels per day in the latest report. U.S. ending stocks in the April 10 report came in at 757 million bushels compared to the average trade estimate of 824 million bushels and last month’s report of 632 million bushels. Demand reductions were 150 million bushels in feed and residual use and 25 million bushels in exports. Corn for ethanol was increased 50 million bushels. The global numbers were bearish as world stocks increased 307 million bushels from March to 4.933 billion bushels.

New crop:

 Corn planting will start being reported next week in the weekly Crop Progress reports. Last year’s rapid planting pace makes this year seem behind, but in reality we are right around the average for this time of year. There are concerns that weather over the next 10 days may limit some planting and cause some corn acres to be switched to soybeans. I would be at least of 20% priced. From a price risk management standpoint, a $5.80 September Put Option costing 41 cents would set a $5.39 futures floor.

Cotton:

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All cotton weekly export net sales were 170,000 bales (147,100 bales of Upland cotton net sales for 2012/13; net sales of 17,300 bales of Upland cotton for 2013/14; and net sales of 5,600 bales of Pima cotton for 2012/13. USDA’s April 10 report was considered neutral to maybe even friendly as demand by the way of exports was increased 250,000 bales. The unaccounted category was also increased 30,000 bales. Offsetting these increases was an increase in 2012 production from the final Cotton Ginnings report. Ending stocks were left at 4.2 million bales compared to the average trade guess of 4.1 million bales. While global stocks were increased 710,000 bales to 82.45 million bales, cotton stocks outside of China decreased.

 New crop: 

Cotton planting has started, at least from the crop progress reports perspective with 5% of the crop nationwide planted as of April 7 compared to 9% last year and the five year average of 7%. On the average, planting is not far off track to date. Cotton prices will be watching the planting progress, but that won’t measure whether prices and weather have bought in additional cotton acres and how much if any of that acreage will be abandoned (mainly in Texas if dry weather continues). Implementing a floor price strategy would entail buying an 86 cent put option costing 5.76 cents and setting an 80.24 cent futures floor. Cotton equities on 2013 loan cotton are in the 27 cent range.

Soybeans:

Nearby:

Weekly exports were below expectations with net sales of 14.1 million bushels (net sales of 11.7 million bushels for 2012/13 and net sales of 2.4 million bushels for 2013/14). USDA’s monthly update left soybean ending stocks at 125 million bushels compared to the average trade guess of 137 million bushels. Crush was increased 20 million bushels while exports bumped up 5 million bushels. Offsetting those increases was a 25 million bushel reduction in residual use, based on the March 28 Grain Stocks report. Global numbers, however, were not quite as friendly as world ending stocks increased 89 million bushels to 2.301 billion bushels.

New crop:

Concerns on corn planting may be friendly for corn but will weigh heavy on soybean prices. Soybean acres may be up from the March 28 Prospective Plantings report if corn planting delays occur. However, given today’s planters, a lot of corn can get planted given the opportunity and that may limit the amount of acres switched. I would have up to 10% priced on 2013 production. I think there may be an opportunity for additional pricing at higher levels or an opportunity to put in place an option strategy. Currently, a $12.40 Put Option would cost 77 cents and set an $11.63 futures floor.

Wheat:

Nearby:

Weekly exports were within expectations at net sales of 12.5 million bushels (9.7 million bushels for 2012/13 and net sales of 2.8 million bushels for 2013/14). 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 28th USDA reports. Global stocks were increased 148 million bushels to 6.697 billion bushels on mainly an adjustment to beginning stocks and a decline in usage.

New Crop:

Crop condition ratings as of April 7 were 36% good to excellent compared to 34% last week and 61% last year. Poor to very poor ratings were 30% compared to 30% last week and 10% last year. There is concern about freeze damage in parts of the Plains states. This should help support prices at least until the level of damage is confirmed. Spring wheat planting may be delayed in the Northern Plains from heavy rain and snow.  I am currently priced 10% on the 2013 crop. A $7.10 Put Option would cost 36 cents and set a $6.74 futures floor.