Grain marketing commentary
Agriculture Business Specialist
University of Missouri Extension
October 10, 2014
No major surprises in the October 10 USDA supply and demand report. Most of the U.S. and world production and ending stocks estimates were within the trade ranges. The reports confirmed big crops and prices will continue to be under pressure without any production disruptions. USDA made adjustments to the 2013-14 balance sheets for corn, soybeans and wheat based on the September 30 quarterly stocks report.
Supply and demand tables for corn, soybeans, and wheat can be found at the following link: http://extension.missouri.edu/scott/S&DTables.aspx
Update of the USDA October 10, Supply and Demand Report can be found at the following link: http://extension.missouri.edu/scott/USDA-Report.aspx
In the October 10 report, the new crop corn yield estimate came in a little lower than the pre-trade estimate. The trade guess was 174.7 bushels per acre and the USDA’s estimate was 174.2. Many in the trade believe this yield projection is still too low and could climb to 178.0 in future reports.
For the new crop, USDA trimmed planted and harvested acres 700,000 acres. Some in the trade believe acres are still 1 – 2 million too high. Production was increased 80 million bushels and total supply was increased 129 million. The increase in supply included a 55 million bushel increase in beginning stocks based on a 50 million bushel cut in old crop feed and residual. Total Use went up 50 million bushels from an equal increase in feed and residual. The season average price was trimmed 10 cents from $3.50 to $3.40. No major changes in world ending stocks.
Technically, December corn futures has price support at $3.10 and resistance at $3.48. From the continuation charts, $3.00 is an important price support level to hold and if broken $2.60 is the next support level. If we can hold the price support around $3.00, then rallies back into the $3.50 to $3.80 range is possible. At best we are looking at a sideways trading range.
Keep a watch on the weather in South America especially in Brazil. Presently it is getting a little dry and could delay soybean planting which would delay their second crop corn plantings. Based on elevator cash bids, net returns to on-farm storage is around 22 cents per bushel for corn delivered after the first of the year. Based on 10 year average basis, the returns increase to 35 – 38 cents for late spring deliveries.
Old crop ending stocks were cut 38 million bushels to 92 million bushels based on adjustments from the quarterly stocks report. For the new crop 2014-15, the yield was increased 0.5 bushels to 47.1 bushels/acre. Production was increased 14 million bushels and demand was left unchanged. Ending stocks were cut 25 million bushels to 450 million bushels. No major changes in world ending stocks.
Technically, November soybean futures has price support at $9.04 and resistance at $9.55. From the continuation charts, $9.04 needs to hold or the low of $7.75 comes into play. If the price support around $9.00 can hold, rallies back into the $9.50 to $9.70 price range is possible. As in corn, we are looking at a sideways trading range at best unless we have a major production problems in South America or extended harvest delays.
The 2013-14 crop had several minor adjustments based on the September quarterly stocks update. For the 2014-15 crop, planted and harvested acres were increased 300,000. Feed and exports were each increased 25 million bushels and ending stocks were cut 44 million bushels to 654 million. The national average price was left unchanged at $5.90.
World ending stocks for 2013-14 were cut less than 1.0 mmt and the 2014-15 was cut just under 4.0 mmt.
Technically, December futures has price support at $4.75 and resistance at $5.10. For July 2015, price support is at $5.00 and resistance at $5.40.
Cotton ending stocks for 2014-15 were trimmed 300,000 bales to 4.9 million bales. The national average yield was lowered 13 pounds/acre to 790 and production was cut 280,000 bales to 16.26 million bales. 2014-15 world ending stocks were increased slightly to 107.11 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 cotton futures are in a trading range of 62 and 69 cents. Some of the cotton experts believe we have a shot at 72 cents and that would be their target for more sales.
For 2014-15, the yield was increased 83 pounds per acre. Total production, supply, and ending stocks were each increased 2.4 million cwt. World ending stocks had only minor changes.
For cash rice quotes, contact your rice buyer to get the most current price quotes and cash price outlook.
Technically, November futures has support at $12.50 and $12.20 and resistance at $12.90. If you are willing to take some risk, I would see if prices can rally over $12.90 before you make any additional sales. I would keep a trailing stop 30 – 40 cents below the futures in case prices turn lower.