Grain marketing commentary

David Reinbott
Agriculture Business Specialist
University of Missouri Extension
573-545-3516
reinbottd@missouri.edu
 

July 21, 2015

Updated USDA tables

June 30 Acres and Quarterly Stocks:
http://extension.missouri.edu/scott/Marketing-Reports.aspx

 

July 10 USDA Report Key Statistics:

http://extension.missouri.edu/scott/USDA-Report.aspx

 

July 10 Supply & Demand Tables:

http://extension.missouri.edu/scott/USDA-BS.aspx

2015-16 Supply and Demand Projections: http://extension.missouri.edu/scott/S&DTables.aspx

Corn

Corn prices have rallied on better demand and less production.  The June 30 stocks report were smaller than anticipated which indicated better demand for feed and ethanol.  The flooding and excessive rain has resulted in less acres and potentially lower yields.  Also contributing to the rally was commodity funds buying back their short futures positons based on the positive fundamental news.    

 

USDA is projecting new crop ending stocks at 1.59 billion bushels, down 172 from last month and down 180 million bushels from 2014.  The yield is projected at 166.8 bushels/ac unchanged from last month and down from 171 bushels/ac from 2014.   Harvested acres and yield will be the main driver of prices going forward.  In August, USDA will update corn yields based on field surveys.  However, I believe there will be continual updates on acres and yields right into the January final report.  

 

The condition of the U.S. corn crop is a mixed bag.  The Western Corn Belt, especially Minneola, Iowa, and the Dakotas generally look good.  However, the Eastern Corn Belt of Illinois, Indiana, and Ohio, the conditions are mixed.  If acres are left unchanged but the yield is dropped to 162 bushels/ac, ending stocks fall to 1.2 billion and the national average prices jumps to the mid $4’s.   If acres are trimmed 1.0 million with a 162 bushels, ending stocks fall to 1.0 billion and the national price moves closer to $5.00.   

 

Technically, futures prices have pulled back the past few trading sessions.  Weather forecasts of no excessive heat over the Corn Belt for the next few weeks and profit taking have resulted in the pull back in prices.  The December futures should find support at the 200 day moving average at $4.06.  Resistance is at $4.55.  Until some additional bullish news enters the market, prices will probably trend sideways to lower for the next few weeks.  To catch up on any sales, I would use a rally back into the $4.30 to $4.40 range.  Using a put option to establish a price floor would also be a good strategy.     

 

 Soybeans

 

Soybean prices have also rallied on better demand prospects, uncertainty of acres and yields, and short covering by commodity funds.   New crop ending stocks are projected at 425 million bushels, down 50 million bushels from last month.  However if acres are trimmed 1.0 million and the yield is cut 1.0 bushel to 45.0,  ending stocks drop below 300 million bushels. 

 

Technically, November soybean futures has resistance at $10.40 and support at $9.80.  Just as in corn, market is in a sideways to lower trend for the next few weeks unless some bullish news enters the market.  For soybean you need to sell at harvest making some sales may not be a bad idea or buy some put options to establish a price floor.

 

Wheat

For right now, the fundamentals for wheat are not as bullish as corn or soybeans.  Ending stocks in the U.S. and world are going up and the prospective of a good U.S. spring wheat crop.  For right now, the only positive would be adverse weather event in the southern hemisphere wheat crops. 

 

Technically, December wheat futures has support at the old resistance level at $5.00.    Resistance is at $6.20. 

 

Cotton

 

Cotton like corn and soybeans still have unanswered questions about acres.  In the July report, planted acres were cut 550,000 but harvested acres only 100,000.  USDA is estimating harvested acres at 94% of planted.  The long term average is 85% harvested.  If planted acres are kept unchanged at 9.0 million but harvested acres are dropped to 90% or 8.1 million acres, ending stocks drop to 3.5 million bales down 0.7 million bales.  At 85% harvested, acres fall to 7.65 million and ending stocks are below 3.0 million bales.   

 

It is important for a cotton producer to remain in close contact with his cotton buyer to get the most current price quotes.

 

Technically, December futures are in a trading range between 68 cents and 63 cents.  For right now I would be targeting any new crop sales above 67 cents.

 

Rice

In the July report, ending stocks were cut 10 million cwt to 38.4.  This is a result of a cut in planted and harvested acres and a cut in yield 

 

For cash rice quotes, contact your rice buyer to get the most current price quotes and cash price outlook.  

 

Technically, September rice futures are trying to hold support at $10.80.  The next support level is $10.00.  Upside resistance is at $11.40 and $10.70.