Grain marketing commentary

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

August 14, 2017

USDA Reports and Supply & Demand Tables  

University of Missouri Extension Meetings in Southeast Missouri
Missouri Rice Field Day - August 24, 2017, Rice Research Farm Hwy J, west of Malden
Fisher Delta Research Center Field Day - August 31, 2017, Rone Hall, Portageville
Corn Meeting - December 13, 2017 at the Miner Convention Center, Miner, MO
Soybean Meeting - January 17, 2018 at the Miner Convention Center, Miner, MO (Updated Date!!!)

 

Corn

The August 10 USDA report was negative for corn.  The corn yield came in 3.3 bushels above the average trade guess at 169.5 bu./ac. Production was 300 million bushels about the trade guess at 14.2 billion bushels.  Finally, ending stocks was 270 million bushels above the trade estimate at 2.273 billion bushels.  Bottom line, plenty of corn and no threat of running out at this time. 

While we can second-guess the yield, this is the number the trade will use.  Pro Farmer tour next week could give a bounce in prices if there yield estimate comes in significantly lower than USDA.  World ending stocks for 2016-17 were increased 1.1 mmt.  The Brazilian corn production was increased 1.5 mmt to 98.5.   

To get a significant rally, corn-ending stocks needs to go below 2.0 billion bushels.  This will require the yield to fall below 167 bushels/ac. with no change in harvested acres or use.    For ending stocks to fall below 1.5 billion bushels, the yield will need to be 160.0 bushels per acre or less.

Technically, December futures has support at $3.60. There is a lot price resistance from $3.80 to $4.15.  Seasonally, December corn futures has an average rally from August to September based on closing prices of 30 cents/bu.  If the price support at $3.60 holds, $3.90 would be a price target.  To rally to $3.90, the yield needs to fall to at least 167 and lower. 

Soybeans
The USDA report was also negative to soybeans.  The yield was projected at 49.4 bu,/ac, 2 bushels above the average trade guess and 1.2 bushels above the July trend line estimate.  Production was estimated at 4.38 billion, 169 million bushels above the average trade estimate.  Ending stocks were projected at 475 million bushels, 50 million above the average trade guess and 15 million bushels above the July USDA estimate.  Just as in corn, there is no treat of running out of soybeans at this time. 

August weather has a big impact on yields.  So far, no major weather problems and present forecasts do not indicate any adverse yield robbing weather.    To get ending stocks below 300 million bushels, national yield needs to be 47.4 bushels or less.  World ending stocks of soybeans were also up.  For the 2016-17, ending stocks were up 2.2 mmt to 97.0 and 2017-18 ending stocks were increased 4.25 mmt to 97.8 mmt.       

Technically, November futures has important support at $9.10, and the next support level is at $8.60.  Resistance is in the $9.70 to $9.90 price range.  Seasonally, November soybean futures has an average rally from August to September based on the closing prices of 80 cents/bu.  If the price support at $9.10 holds, $9.90 would be a price target.  However to get a chance for a rally to $9.90, the yield needs to fall to at least 1.5 bushels. 

Wheat
In the report, wheat ending stocks came in at 933 million bushels.  This is down 5.0 million bushels from last month but was 26 million bushels larger than the trade guess.  World wheat stock were increased 4.0 mmt.  While we may have a shortage of some grades of wheat, wheat in general is plentiful.    

Technically, July 2018 wheat futures are down $1.10 after peaking at $6.10 on July 11.  Price support is at $4.90. 

Cotton
Cotton ending stocks were increased 500,000 bales to 5.8 million.  This was based on a combination of increased production and increased exports.   World ending stocks increased 1.36 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 has support at 66.5 cents.  Price resistance is at 71.5. 

Rice
Rice ending stocks keep going down.  In the report, ending stocks were cut 2.5 million cwt 30.1.  However, world-ending stocks are still large. 

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

Technically, November futures continues to climb higher on less acres and declining ending stocks for new crop U.S. rice. Near term support is at $12.20 and the next resistance levels is at $13.50.  Keeping a trailing stop 25 to 50 cents below the market would be a good idea.