Grain marketing commentary
Agriculture Business Specialist
University of Missouri Extension
October 12, 2015
Updated USDA tables
September 30, Quarterly Stocks:
October 9, USDA Report Key Statistics:
October 9, Supply & Demand Tables:
2015-16 Supply and Demand Projections Matrix Tables:
USDA’s October 9 report was neutral to slightly bearish for corn. Old crop ending stocks were left unchanged at 1.732 billion bushels. The new crop yield was increased 0.5 bushels to 168.0 bushels/acre while the trade expected a cut to 167.1 bushels. Harvested acres were trimmed 400,000 to 80.7 million acres. Demand was left unchanged. The end result the ending stocks were lowered 30 million bushels to 1.561 billion bushels. The national average price was increased 5 cents to $3.80.
It is good to see ending stocks going down and not up. The 1.56 billion ending indicates stocks are adequate but not burdensome. The Illinois corn yield was cut 3 bushels/acre to 170; however, Iowa, South Dakota, and Indiana corn yields were increased 2 bushels per acre. Additional adjustments in yield and harvested acres will be watched going forward. Any additional reductions in the ending stocks, may have to come from the demand side and not supply. At this time, I do not expect any major reductions in yields or harvested acres in future reports.
Technically, December futures hit price resistant at the 200 day moving average at $3.97 and now may try to test support at $3.75. The next support level is $3.60. Until we have a major positive change in the supply and demand, corn prices will trade in a sideways trading range. If you need to make some fall sales, I would use price rallies in the $3.90 to $4.00 price range.
The USDA report was a mixed bag for soybeans. Old crop ending stocks were cut 19 million bushels to 191 million based on the September 30 quarterly stocks that indicated last year’s soybean crop was overestimated. For new crop, harvested acres were cut 1.1 million, 500,000 more than the trade guess. The yield was increased slightly to 47.2 bu/ac. Crush was increased 10 million bushels but experts were cut 50 million. Bottom line, ending stocks for 2015-16 was cut 25 million bushels to 425 million. I would consider this still a burdensome stocks number especially with the potential big South American soybean crop.
Technically, November soybean futures continue to trade in a sideways trading range between $9.00 and $8.60. If prices do break $9.00 the next target is at the 200-day moving average at $9.50. As I outlined above, the fundamentals are not bullish at least at this time. However the technicals are showing bottoming action that may indicate we are putting in our fall low.
The wheat report was neutral. Production was cut 84 million bushels based on a 1.4 million acre cut in harvested acres and a 0.5 bushel cut in the yield. However, exports were cut 50 million bushels and feed was cut 20 million. Ending stocks were trimmed 14 million to 860 million bushels.
Technically, July 2016 wheat futures hit resistance at $5.40 and has pulled back to support at $5.23. The next resistance is at $5.60 and price support at $5.00.
No major changes in the cotton fundamentals. Production was cut slightly based on a 5 pound cut in the national average yield. Demand was unchanged and ending stocks were reduced from 3.2 to 3.1 million bales. The midpoint price from USDA was lowered 3 cents to 59 cents.
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 60 and 62.5 cents. I keep thinking that cotton will have a bullish price recovery, but rallies are short lived and prices fall back to the support levels.
In the September report, ending stocks were cut 0.7 million cwt to 39.8. This is a result of a 0.7 million cwt reduction in production from a cut in yield.
For cash rice quotes, contact your rice buyer to get the most current price quotes and cash price outlook.
Technically, rice futures has ran into resistance at $13.40 and has pulled back to the 34-day exponential moving average at $12.70.