Grain marketing commentary

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

June 13, 2017

USDA Reports and Supply & Demand Tables  

Corn

USDA did not make any domestic supply or demand changes in the June 9 report.  Average corn price for 2016-17 was cut 10 cents to $3.35.  On June 30, USDA will release their quarterly stocks and planted acres survey.  Most expect a cut in acres of at least 1.0 million acres.  With a cut in acres and the national average yield trimmed 3.0 bushels from 170.7 to 167.7 bushels, ending stocks drop 400 million bushels to 1.7 billion.   Summer weather will have a big impact on prices.  Adverse growing weather could easily push new crop prices into the $4.20 to $4.40 price range. 

World ending stocks only saw small changes.  Argentina corn production was left unchanged at 40 mmt but Brail’s production was increased 1.0 mmt to 97.0.  The good crop in South America will pressure our new crop exports.   

Technically, December futures broke out to the top of the trading range to $4.09 on hot, dry weather.  Forecasts are projecting a little less heat and more chances of scattered showers for this week.  Prices will rise fall on weather forecasts.   The daily chart looks negative.  Initial support is the top of the old trading range at $3.94 and then at the 200 day moving average at $3.86.  On the weekly nearby continuation chart, prices hit the 200 weekly moving average last week.  It will be important that nearby futures do not close below $3.70.  Next resistance levels are at $4.10 and $4.40.   If you were looking for a price to trigger new crop sales if prices continue to fall, I would use a close below $3.94 on the December futures.

Soybeans

The only changes in the report was a 15 million bushel reduction in old crop crush which resulted in new crop ending stocks increased 15 million bushels to 496 million bushels.  The world ending stocks for 2016-17 were increased 3 mmt and 2017-18 increased 4.4 mmt.  This was due to a 3.2 mmt increase in Argentina and Brazil production. 

While corn acres may come down, soybean acres could be coming up 1 million or more.  A 1 million acre increase with trend line yield of 48 bushels/acre jumps ending stocks to 530 million bushels.  With the big soybean crop coming out of South America and our potential big crop, prices will stay under pressure until there is some adverse summer weather to cut U.S. production.    

Technically, November futures put in a key reversal at the 50-day moving average. Support is at $9.20 and resistance at the 200-day moving average at $9.80.   It will take some hot, dry weather to turn soybean prices around. 

Wheat

No major changes made in the USDA report.  Old and new crop world ending stocks were increased 1 and 3 mmts, respectively. 

Wheat has always been a fooler when trying to predict production.  I thought with all the adverse weather we had back in the spring winter wheat production would be down, but most reports indicate a good crop.  The spring wheat crop does have some problems, and it may give some opportunities at least on the basis in the future. 

Technically, July 2017 futures is in a $4.55 to $4.20 trading range.  Historically, if you are going to receive a positive return to storing wheat you will need to store until at least December.

Cotton

New crop cotton ending stocks were increased 0.5 million bales to 5.5 on a cut in exports.  Only minor changes in the World supply and demand numbers. 

It is important for a cotton producer to remain in close contact with his cotton buyer to get the most current price quotes.

Technically, July futures continue to fall and the next support is at the 200 day moving average at 74 cents.  December futures are in a 75 to 72 cent trading range.  The 200-day moving average is at 71.5 cents. 

Rice

Old and new crop rice exports were increased 2.0 million cwt.  This resulted in new crop ending stocks adjusted down 4.0 million cwt to 34.1. 

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

Technically, neither the July nor the November futures are signaling a sell signal yet.  Using the nearby weekly futures the next resistance levels are at $12.00 and $13.50.  Keeping a trailing stop 25 to 50 cents below the market would be a good idea.