Grain marketing commentary
Agriculture Business Specialist
University of Missouri Extension
June 29, 2015
On Tuesday June 30, USDA will release an updated planted acres and quarterly stocks report. The trade guess for corn stocks is 4.55 billion bushels. I would not be surprised if the stocks were a little larger than expected because of slower exports and feed use. Corn acres are projected at 89.3 million up slightly from the March 30 estimate. The range of estimates are from 88.5 to 91.7 million acres. I am not sure if USDA will take in account all the flooded and prevented planted acres in this report. The condition of the U.S. corn crop is a mixed bag. The Western Corn Belt, especially Minneola, Iowa, and the Dakotas generally look good. However, the Eastern Corn Belt of Illinois, Indiana, and Ohio, the conditions are mixed.
The updated supply and demand tables will be released on July 10. If the final acres come in 1 million less at 88.2 and the yield is 162, the ending stocks would fall to 1.2 billion bushels from the present 1.76 billion bushel projection.
Technically, futures prices have had a nice rally the past two weeks. December futures have rallied up to the 200 day moving average at $4.04. The next potential price targets are $4.20 and $4.40. I think making a few sales or at least establishing a price floor with a put option may not be a bad idea before the report on Tuesday. Also having some call option on priced corn would also be a good strategy.
Going forward, weather will continue to be important. Do we continue to get excess rainfall which leads to more flooding and fewer harvested acres and how much leaching of nitrogen from the rain? The latest forecasts through mid-July are calling for above normal rainfall in the eastern Corn Belt.
2015-16 Supply and Demand Projections: http://extension.missouri.edu/scott/S&DTables.aspx
The average trade guess for soybean stocks is 670 million bushels. Unlike corn, soybean stocks may come in a little smaller due to good demand and exports. Acres are projected at 85.2 million approximately 500,000 more than the March 30 report. Historically, soybean acres go up from the March 30 to the June 30 report. However, with all the rain and flooding, the acreage number is still an unknown. If the final soybean acres are unchanged and the national average yield is 42 bushels/acre, ending stocks would be below 200 million and prices would be excessive $11.
Technically, soybean futures have broken above the 200 day moving average and is presently trading at $9.80. Next major resistance is at $10.50. As I outlined in the corn strategy, establishing a price floor at this time is very important. But equally important is keeping the upside open if weather continues to be adverse.
Wheat prices have finally taken off after all the averse growing conditions this season. Technically, December wheat futures have rallied to $5.76 with the next major resistance level at $6.80. If you double the past trading range, this would give a price target of $6.20.
If you are planning to store wheat after harvest, click on the following link Wheat Marketing Strategies for more details on post-harvest strategies. The most consistent returns come from an on-farm storage hedge until December to capture the improvement in basis.
Cotton planted acres and yields are still uncertain. If acres are cut 1.0 million with no change in yield and use, ending stocks fall below 3.0 million bales and should project prices on a season average at 70 cents or greater.
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 have rallied to 67.5 cents the past few trading sessions. If you double the past trading range of 62 – 67 cents, it would project to a price target of 72 cents. As I pointed out in corn and soybeans, establishing a price floor but leaving the upside open is a good strategy.
Technically, September rice futures are trying to hold support at $10.00. The next support level is $9.60. Upside resistance is at $10.40 and $10.70. Rice prices are going to have a hard time making a major rally unless there is a production problem either in the U.S. or in the World.
For cash rice quotes, contact your rice buyer to get the most current price quotes and cash price outlook.