|
Price |
Change |
|
| U.S. Dollar |
82.58 |
-0.27 |
| Crude Oil |
92.88 |
-0.06 |
| Dow |
14,741 |
+198 |
Soybean prices are mixed while corn, cotton, and wheat prices are down for the week. The U.S. 1st quarter Gross Domestic Products (GDP) released today was 2.5%, less than the 3.2% that economist expected. On the supply side, weather forecasts and weekly crop progress reports will influence market direction while demand for the most part will keep an eye on China.
This will be my last weekly crop marketing comments. Starting next week with the May 3rd report, Dr. Aaron Smith, Crop Marketing Specialist, with UT Extension will be making these reports. I have enjoyed the last 4 years and 4 months in filling in on an interim basis and providing these comments and I have appreciated the opportunity to do so. Please join with me in giving Dr. Smith a warm Tennessee welcome.
Corn:
Nearby:
| Corn |
Price |
Change |
| May |
$6.44 |
-$0.08 |
| Support |
$6.36 |
-$0.03 |
| Resistance |
$6.49 |
-$0.10 |
| Technical |
Strong Sell |
= |
| 20 Day MA |
$6.45 |
-$0.20 |
| 50 Day MA |
$6.83 |
-$0.06 |
| 100 Day MA |
$7.01 |
-$0.05 |
Weekly exports were within expectations with net sales of 13.2 million bushels (net sales of 12.4 million bushels for the 2012/13 marketing year and 835,000 bushels of net sales for the 2013/14 year).Reported next week will be new crop corn sales of 11.8 million bushels to China that showed up on the daily reporting system this week. This is supportive in the short run, but most likely sales will not be enough to stem the tide of rising stocks that are currently being bantered around. Ethanol production rose 21,000 barrels per day to 853,000 barrels per day in the latest report. Reports are that some shuttered ethanol plants are coming back online.
New crop:
| Corn |
Price |
Change |
| September |
$5.44 ¾ |
-$0.27 ¼ |
| Support |
$5.38 |
-$0.21 |
| Resistance |
$5.54 |
-$0.26 |
| Technical |
Strong Sell |
– |
| 20 Day MA |
$5.59 |
-$0.11 |
| 50 Day MA |
$5.73 |
-$0.04 |
| 100 Day MA |
$5.97 |
-$0.05 |
Corn planted as of April 21 was reported at 4% compared to 2% last week, 26% last year and the five year average of 16%. The trade was expecting 6- 7% planted. There is still time to get the majority of corn acres planted, but the first half of May will be the critical period. Although rainfall may delay planting, it is generally seen as positive for production in the long run as soil moisture gets recharged in previously deficit areas. We are still more or less looking at a weather market, but one for now that is trending sideways to down. I am currently 20% priced. Look for any rallies from planting delays to move up to 35% priced or to the level that crop insurance won’t cover. Due to weather uncertainty, put options should be a pricing tool to evaluate. From a price risk management standpoint, a $5.50 September Put Option costing 39 cents would set a $5.11 futures floor.
Cotton:
Nearby:
| Cotton |
Price(cents) |
Change |
| May |
82.25 |
-1.23 |
| Support |
80.62 |
-2.87 |
| Resistance |
83.24 |
-2.19 |
| Technical |
Sell |
= |
| 20 Day MA |
84.86 |
-1.25 |
| 50 Day MA |
85.90 |
-0.06 |
| 100 Day MA |
82.06 |
-0.43 |
| AWP |
70.90 |
-0.42 |
All cotton weekly export net sales were solid at 277,900 bales (237,700 bales of Upland cotton net sales for 2012/13; net sales of 29,000 bales of Upland cotton for 2013/14; net sales of 7,300 bales of Pima cotton for 2012/13 and net sales of 3,900 bales of Pima cotton for 2013/14).
New crop:
| Cotton |
Price(cents) |
Change |
| December |
83.58 |
-1.59 |
| Support |
82.59 |
-1.80 |
| Resistance |
84.39 |
-2.10 |
| Technical |
Sell |
— |
| 20 Day MA |
85.77 |
-0.64 |
| 50 Day MA |
85.85 |
+0.13 |
| 100 Day MA |
82.67 |
+0.38 |
Cotton planted was reported at 10% this week compared to 8% last week, 17% last year and the five year average of 14%. Producers without any new crop cotton priced may want to evaluate the 85 – 90 cent range as a place to price or look at put options. With concerns that China’s economy may be slowing and a sluggish U.S. economy, prices above 90 cents may be difficult to achieve without some unforeseen circumstance. Implementing a floor price strategy would entail buying an 84 cent put option costing 5.63 cents and setting a 78.37 cent futures floor. Cotton equities on 2013 loan cotton are in the 24.50 cent range.
Soybeans:
Nearby:
| Soybeans |
Price |
Change |
| May |
$14.30 ¾ |
+$0.02 ½ |
| Support |
$14.12 |
+$0.01 |
| Resistance |
$14.41 |
-$0.08 |
| Technical |
Buy |
= |
| 20 Day MA |
$14.03 |
-$0.05 |
| 50 Day MA |
$14.28 |
-$0.01 |
| 100 Day MA |
$14.27 |
= |
Weekly exports were below expectations with net sales of 15.5 million bushels (net sales reductions of 7.6 million bushels for 2012/13 and net sales of 23.1 million bushels for 2013/14). Currently, U.S. soybeans are reported to be $1.70 bushel higher than soybean out of Brazil. China cancelled sales of 10.3 million bushels of old crop sales. However, it was reported this week on the USDA daily reporting system that China had purchased 20.8 million bushels of new crop soybeans. Bird flu cases in China continue to reflect the spread of this disease. This virus is expected to cost their poultry industry millions while lowering feed demand which could impact soybean imports from the U.S.
New crop:
| Soybeans |
Price |
Change |
| November |
$12.10 ¼ |
-$0.02 ¾ |
| Support |
$11.92 |
-$0.09 |
| Resistance |
$12.21 |
-$0.13 |
| Technical |
Strong Sell |
= |
| 20 Day MA |
$12.23 |
-$0.16 |
| 50 Day MA |
$12.49 |
-$0.09 |
| 100 Day MA |
$12.77 |
-$0.06 |
A perceived delay in corn planting and spring wheat planting concerns continues to overhang the new crop soybean market. Coupled with a potential slowdown in demand from China’s bird flu, it may be difficult for soybeans to mount a sustained rally. I currently have 10% priced on 2013 production and would suggest producers look any rallies to raise that another 10% – 25% or up to the level that crop insurance doesn’t cover. This coverage may also be accomplished through the use of put options. Currently, a $12.20 Put Option would cost 86 cents and set an $11.34 futures floor.
Wheat:
Nearby:
| Wheat |
Price |
Change |
| May |
$6.88 ¾ |
-$0.20 ¼ |
| Support |
$6.76 |
-$0.16 |
| Resistance |
$7.09 |
-$0.11 |
| Technical |
Strong Sell |
– |
| 20 Day MA |
$6.98 |
-$0.06 |
| 50 Day MA |
$7.10 |
-$0.10 |
| 100 Day MA |
$7.52 |
-$0.09 |
Weekly exports were below expectations at net sales of 11.2 million bushels (2.6 million bushels for 2012/13 and net sales of 8.6 million bushels for 2013/14).
New Crop:
| Wheat |
Price |
Change |
| July |
$6.92 ½ |
-$0.19 |
| Support |
$6.81 |
-$0.13 |
| Resistance |
$7.09 |
-$0.13 |
| Technical |
Sell |
= |
| 20 Day MA |
$7.01 |
-$0.07 |
| 50 Day MA |
$7.12 |
-$0.06 |
| 100 Day MA |
$7.55 |
-$0.09 |
Nationwide, winter wheat heading was reported at 8% compared to 4% last week, 42% last year and the five year average of 19%. Crop condition ratings for winter wheat as of April 21 were 35% good to excellent compared to 36% last week and 63% last year. Poor to very poor ratings were 33% compared to 31% last week and 10% last year. Some significant freeze damage has been reported in central and southern plains. Crop condition ratings over the next few weeks should reflect whether any actual damage has occurred. If it has this would be supportive to the wheat market. Spring wheat planting is at 7% compared to 6% last week, 52% last year and the five year average of 24%. Spring wheat planting intentions in Canada are expected to be up. I am currently priced 10% on the 2013 crop and on any rallies would look to move that up 10% – 25% or to the level not covered by revenue crop insurance. A $6.95 Put Option would cost 27 cents and set a $6.68 futures floor.
