Grain marketing commentary

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

March 13, 2017

 

USDA Reports and Supply & Demand Tables

Corn

In the March 9 USDA report, corn saw only minor revisions from last month.  Feed was cut 50 million bushels and corn for ethanol was increased 50.  Ending stocks were left unchanged at 2.3 billion bushels and the national average corn price was left unchanged at $3.40.  World corn production was increased 9.0 mmt with 6.0 mmt from the larger crops in Brazil and Argentina.  World ending stocks jumped 3.0 mmt to 220.  One bright spots is a 6.0 mmt increase in world corn use.  Any problems with the U.S. production this year could give some good price rallies.

Most are estimating corn acres to be down 4.0 million in 2017.  A trendline yield of 169 bushels/acre with a slight decline in use due to fewer corn exports, projects ending stocks at 1.9 billion bushels. This is a 400 million bushel reduction from last year.   If the corn yield is the same as last year at 174.6 bushels/acre, ending stocks are unchanged.  At 162 bushels/acre, ending stocks drop to 1.3 billion.  It indicates price volatility as we go through the spring and summer on planted acres and summer weather.  However, the crop in South America still needs to be monitored closely on any production problems. Two-thirds of Brazil’s corn production is second crop and there is still a lot of uncertainty in their production.    

Technically, May futures is in a free fall after prices stalled out around $3.80.  Short-term price support is at $3.60 then in the $3.50 to $3.55 range.  With this big crop coming out of South America, it is going to be hard to get old crop prices to rally much at this time.  If you still have old crop corn, I would scale in sales and determine how many bushels you are willing to hold into spring and summer. 

December futures has also fallen hard and is trying to find support at $3.84.  As I mentioned before, as we move through the spring and summer, we will need to watch how many acres are planted and how the weather unfolds to give price direction and magnitude.   

Soybeans

In USDA’s supply and demand report crush was increased 10 million bushels and exports cut 25 million.  The result was ending stocks were increased 15 million to 436 million bushels.  World ending stocks were increased 2 mmt and production 4 mmt.  This was the result of a 4.0 mmt increase in Brazil’s soybean production. 

There is a wide range of projections on soybean acres for this year.  If acres are up 4.0 million to 87.4 with a trend line yield of 48.0 and modest increase in use, ending stocks remain unchanged.  If yields are a repeat of last year at 52.1, ending stocks go above 700 million.  However, a yield at 45 bushels/acre, and ending are below 200 million.  Just as in corn, it comes back to planted acres and yield, which is based on spring planting weather and summer growing weather. 

Technically, May futures is trying to find support at $10.00.  The next support is at $9.60.  November futures are also trying to find support at $10.00, which is also at the 100 EMA.  With big crops coming out of South America, I believe rallies will be limited.  New crop still has some potential for higher prices as we go into the summer especially if yields come in below trend. 

Wheat

Only change from USDA was a 10 million bushel decrease in imports.  Ending stocks were reduced the same amount to 1.13 billion bushels.  World ending stocks were increased 1.3 mmt based on larger crops in Argentina and Australia. 

Technically, July 2017 futures is also heading lower with support at $4.40.  Just like corn and soybeans, large ending stocks will keep prices under pressure. 

Cotton

Cotton ending stocks were cut 300,000 bales to 4.5 million.  Exports were increased 500,000 bales and production was increased 200,000 pounds on a bump yield.  No major changes in world supply and demand.   Projections are for cotton acres to go up 1.5 million to 11.57 million acres.  With a trendline yield, ending stocks would jump from 4.3 million to over 6.0 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 2017 cotton futures has trended higher since the first of the year.  On March 7, we had a bearing engulfing signal and a close below the 8EMA or T-lie.  Support is at 75 cents.  December futures ran into price resistance at 75 cents with a series of dojis.  Support is at 73.0 to 73.5 cents. 

Rice

No changes in the U.S. rice supply and demand and only small changes in the world numbers.      

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

Technically, May rice futures has had a nice bump in prices with resistance at the 50-day moving average at $9.80.  Key resistance is the 100 EMA at $10.04.