Grain marketing commentary

David Reinbott
Agriculture Business Specialist
University of Missouri Extension

April 11, 2014

Corn

In the April 9 USDA WASDE report, corn ending stocks were cut 125 million bushels to 1.331billion bushels.  While it was in the pre-report range, it was 72 million bushels below the average trade guess.  The cut in ending stocks came from a 125 million bushel increase in exports.  Exports have rebounded over 1.0 billion bushels in just little over a year.    

World ending stocks were basically left unchanged from last month’s report.  Argentina’s corn crop was left unchanged at 24.0 million metric tons (mmt), but the Brazilian production was increased 2.0 mmt to 72.0 mmt.   Corn production in South Africa and FSU-12 were both increased 1.0 mmt, however, world domestic use was increased 7.0 mmt to keep the ending stocks unchanged.  World domestic use has rebounded over 82 mmt from last year.  

In the May WASDE report, USDA will give their first supply and demand estimate for the 2014-15 crop year which will incorporate the March planting intentions.   Using 91.7 million planted acres, trend line yield of 163.5 bushels/acre, and a small bump in demand would project ending stocks for 2014-15 at 1.5 billion bushels.  At this level, the season average price would be in the $4.25 - $4.50 price range.  However, we must keep in mind that the acres can still vary 1- 2 million depending upon spring planting weather.  If acres are up 1 million to 92.7 million acres, ending stocks would grow to 1.7 billion bushels, and the season average price would be closer to $4.00.   However, if planted acres are reduced 1.0 million acres due to unfavorable planting weather, ending stocks would be 1.4 billion bushel or less and the season average price over $4.50.  

Technically, initial price support in the May futures is at $4.90, and the next support levels are at $4.80 and $4.70.  If prices can hold $4.90, then a retest of $5.12 or higher is possible.  For old crop corn, I would recommend making some sales.  For December 2014 futures, initial support is at $4.95, and the next support level is at $4.85. The price resistance levels are at $5.17, $5.34 and $5.80.  Planting weather will be the major factor in price direction.  If you are under 50% sold, I would recommend getting to this level over the next few weeks.   

Soybeans

Soybean ending stocks were cut 10 million bushels from last month to 135 million bushels.  The average trade guess was 139 million bushels.  USDA increased imports 30 million bushels because of the tight stocks.  Crush was cut 5 million bushels, seed/residual was cut 4 million bushels, and exports were increased 50 million bushels.   World ending stocks were lowered 1.2 mmt from last month to 69.4 mmt.  The Brazilian soybean production was cut 1.0 mmt to 87.5 and the Argentina production was left unchanged.  

For the 2014-15 crop ending stocks could increase substantially.  Using the March planted acres of 81.5 million acres, trend line yields, and a slight bump in use ending stocks could grow to over 270 million bushels.  This would project a season average price in the $10.00 - $10.50 price range.  If acres are increased one million to 82.5 million acres, ending stocks could be over 300 million bushels and the season average price would fall below $10.00. 

Technically, initial price support in the May futures is at $14.60 and the next support levels are at $14.20 and $13.80.  If prices can hold the $14.60 price level, the next resistance levels would be in the $15.00 - $15.50 price range.  For old crop soybeans, I would recommend making some sales.  For November 2014 futures, initial support is at $12.00, and the next support levels are in the $11.80 to $11.70 price range.   I am concerned the final soybean acres could be up 1 – 2 million acres increasing ending stocks and putting pressure on prices.   Therefore getting some new crop soybean production priced over the next few weeks would be prudent. 

Wheat

 Wheat ending stocks were increased 25 million bushels to 558 million bushels.  The bump in ending stocks was the result of a 5 million bushel cut in imports and 30 million bushel cut in wheat for feed. World ending stocks were increased 2.87 mmt.  The increase in ending stocks was based on reductions in imports and wheat feeding.    

Technically, July futures continue to trade lower, and the next support level is at the 50 day moving average at $6.50.  Resistance is at $7.20.  I would use rallies back into the $6.90 - $7.00 price range to make some sales. .  

Cotton

Cotton ending stocks were cut 0.3 million bales to 2.5 million bales.  This was the result of a 20 pound per acre cut in the national average yield and a small adjustment in the unaccounted bales. World ending stocks were increased slightly increased from last month.  China’s imports were increased 1.0 million bales.  For this year’s United States cotton crop, ending stocks could jump to over 5.0 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, May futures has made a rounding top and the next support level is at 86 cents.  December futures has broken above the 80.5 cent resistance level.  The next resistance levels are in the 83 – 85 cent price range.    I would use rallies above 83 cents to scale in some sales or use a 1.0 to 1.5 cent trailing stop to trigger sales.  

 

Rice

Rice ending stocks were cut 1.0 million cwt to 27.3 cwts.  The domestic and residual use was increased 4.0 million cwt, and exports were cut 3.0 million cwt.  World ending stocks were cut slightly.  

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

Technically, May futures is in a trading range of $15.20 to $15.90.  If you need to make old crop sales, I would use rallies over $15.80 to make sales.  September futures has also made a nice rally off the support at $13.90 to rally up to $14.40, with the next resistance at $15.00 and then $16.50.  I would look to make some sales, if prices can rally back to $15.00. 

 

 

 

April 9, 2014 USDA Reports
               
USDA United States Grain Carryout (Billion Bushels)    
  USDA April 2013-14 Average Trade Estimate Range of Trade Estimates Actual Minus  Trade Estimate USDA March 2013-14 April Minus March   2013-14  
Corn 1.331 1.403 1.306-1.478 -0.072 1.456 -0.125  
Soybeans 0.135 0.139 0.125-0.147 -0.004 0.145 -0.010  
Wheat 0.583 0.583 0.553-0.629 0.000 0.558 0.025  
Cotton 2.500       2.800 -0.300  
Rice 27.300       28.300 -1.000  
               
               
USDA World Carryout (Million Metric Tons)    
  USDA April 2013-14 Average Trade Estimate Range of Trade Estimates Actual Minus  Trade Estimate USDA March 2013-14 April Minus March   2013-14  
Corn 158.00 157.72 156.5-159.16 0.280 158.470 -0.470  
Soybeans 69.42 70.14 68.5-71.9 -0.720 70.640 -1.220  
Wheat 186.68 183.65 182.5-185.3 3.030 183.810 2.870  
Cotton 96.92       96.750 0.170  
Rice 111.19       111.710 -0.520  
               
               
2013-14 USDA South American Production (Million Metric Tons)  
  USDA April 2013-14 Average Trade Estimate Range of Trade Estimates Actual Minus  Trade Estimate USDA March      2013-14 April Minus March   2013-14  
Argentina Corn 24.00 23.95 21.80-25.70 0.050 24.00 0.000  
Argentina Soybeans 54.00 54.15 53.0-57.1 -0.150 54.00 0.000  
Brazil Corn 72.00 69.66 68.0-71.2 2.340 70.00 2.000  
Brazil Soybeans 87.50 87.43 86.5-89.5 0.070 88.50 -1.000  
               
               
USDA World Grain Production (Million Metric Tons)    
    USDA April 2013-14 USDA March 2013-14 April     Minus March       2013-14 USDA April 2012-13 Apr 13-14 Minus     Apr 12-13  
Argentina Corn 24.00 24.00 0.000 27.00 -3.000  
Brazil Corn   72.00 70.00 2.000 81.50 -9.500  
China Corn   217.73 217.13 0.600 205.61 12.120  
South Africa  Corn 14.00 13.00 1.000 12.37 1.630  
Ukraine  Corn 30.90 30.90 0.000 20.92 9.980  
Argentina Soybeans 54.00 54.00 0.000 49.30 4.700  
Brazil Soybeans 87.50 88.50 -1.000 82.00 5.500  
Argentina Wheat 10.50 10.50 0.000 9.30 1.200  
Australia Wheat 27.00 27.00 0.000 22.46 4.540  
Canada Wheat 37.50 37.50 0.000 27.21 10.290  
China Wheat 121.72 121.72 0.000 121.02 0.700  
India Wheat 93.51 93.51 0.000 94.88 -1.370  
EU Wheat   142.89 142.89 0.000 133.88 9.010  
FSU-12 Wheat 103.83 103.83 0.000 77.35 26.480  
Russia Wheat 52.09 52.07 0.020 37.72 14.370  
Ukraine Wheat 22.28 22.28 0.000 15.76 6.520  
FSU-12 Coarse Grains 88.95 87.62 1.330 69.14 19.810  
China Cotton 32.00 32.00 0.000 35.00 -3.000  
India Cotton 29.00 29.00 0.000 28.50 0.500  
Brazil Cotton 7.50 7.40 0.100 6.00 1.500  
Pakistan Cotton 9.50 9.50 0.000 9.30 0.200  
Turkey Cotton 2.30 2.25 0.050 2.65 -0.350  
Australia Cotton 4.10 4.10 0.000 4.60 -0.500  
China Rice   142.30 142.30 0.000 143.00 -0.700  
India Rice   105.00 105.00 0.000 105.24 -0.240  
Thailand Rice 20.50 20.50 0.000 20.20 0.300  
Vietnam Rice 27.80 27.70 0.100 27.52 0.280  
Indonesia Rice 37.36 37.36 0.000 36.55 0.810