Grain marketing commentary
Agriculture Business Specialist
University of Missouri Extension
April 8, 2015
Highlights from the March 31 USDA quarterly grain stocks and prospective plantings reports at the following link: http://extension.missouri.edu/scott/Marketing-Reports.aspx
2015-16 Supply and Demand Projections: http://extension.missouri.edu/scott/S&DTables.aspx
On March 31, USDA released their quarterly grain stocks and prospective plantings reports. The quarterly grain stocks were estimated at 7.745 billion bushels, 136 million bushels more than the trade guess. The acres were projected at 89.2 million acres, 333,000 greater than the trade estimate. USDA will use the quarterly stocks numbers to update their supply and demand estimates on April 9. It is uncertain if feed usage will be kept unchanged or cut slightly. Due to increased animal numbers, USDA may choose to leave feed use unchanged. USDA will include the planting intentions acres in their new crop supply and demand estimates on May 12.
Click here for new crop supply and demand tables. For this year, at 89.2 million planted acres, trend line yield of 164 bushels/acre, and a modest bump in demand to 13.74 billion bushels, ending stocks fall to 1.46 billion bushels. This gives a season average corn price in the $4.00 - $4.50 price range. However, if we bump up the yield to 166 bu/ac ending stocks drop only 100 million bushels to 1.62 billion bushels. Corn has a potentially a more bullish outlook compared to soybeans because of the fewer acres, steady to improving demand, and if yields come back closer to trend line.
Technically, the 200-day moving average continues to be major price resistance on the charts. For May, a close above $3.90 opens the door for a run up to $4.00, $4.15 and last December’s high of $4.25. Support is at $3.67. For December, prices are bumping up against the 200-day moving average at $4.12 and the next price targets are at $4.20, $4.30 and December’s high of $4.40. Support is at $4.00. However, for prices to rally up to these price levels we need bullish fundamentals such as planting delays, less acres, better exports, or a cut in the South America crop due to adverse weather. Use the above mentioned price targets for any old crop sales. For new crop sales that need to be made at harvest, I would suggest using the $4.30 and $4.40 price range.
Soybean stocks came in close to the trade estimate at 1.334 billion bushels and planted acres were 1.3 million less than the trade guess at 84.6 million acres.
There is a wide range of opinions on soybean acres this year from 84 million to 88 million acres. This past year planted acres were 83.7 million acres. With planted acres projected at 84.6 million, trend line yield of 44.6 bushels/ac, and no change in demand at 3.7 billion bushels, ending stocks would increase 30 million bushels to 398 million bushels. However, if acres are increased 1 million to 85.6 million with no change in yield, and a modest bump in demand, ending stocks jump to 416 million bushels. To get ending stocks below 300 million bushels, national average yield needs to be under 42 bushels/acre compared to this past year’s yield of 47.8. However, depending up on rainfall and planting progress of corn over the next few weeks, soybean acres could still go up additional 1 – 2 million acres. At 86.6 million acres, ending stocks are over 450 million bushels.
Technically, the May chart is finding resistance at $9.90 and price support at $9.50. In the November chart, $9.79 is resistance with support at the 50-day moving average at $9.69. The next support is at $9.35. With the outlook of increasing ending stocks, it will be difficult to get any major rally at this time. Because of the negative price outlook going forward, I would use any rallies to finish up old crop sales. For new crop, I would use any rallies to $10.00 to make some sales.
Wheat stocks came in close to the trade estimate at 1.124 billion bushels and acres were 281,000 less than the trade guess at 55.37 million acres.
For this year’s wheat crop, using trend line yields and a modest increase in demand, ending stocks will increase to 760 million bushels. This would put the national average price in the $5.00 to $5.50 range.
It is still dry in the western plains and some talk of production problems in Russia and other countries in that region. Again, it will take some weather problems to cut production, lower ending stocks, and increase prices significantly.
Technically, July futures are pulling back to the 50-day moving average at $5.20. If it can hold this support level, the next price targets are $5.45 and $6.00. Below $5.20, the next support levels are at $5.00 and $4.85. Rallies back above $5.45 would be a good place to add sales if needed.
Cotton acres were projected at 9.549 million. Back in February the National Cotton Council projected 9.43 million acres and the USDA Ag Forum 9.7 million.
With a trend line yield of 800 pounds/acre and demand at 14.3 million bales, ending stocks would decrease to 3.77 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 and December futures are rallying off their March lows and look to challenge the February highs in the 66 to 67 cents range. This would be a good target to make sales if needed.
Rice acres are projected to be down slightly at 2.915 million. Using University of Missouri FAPRI projections of 2.82 million acres, trend line yield, and modest increase in demand, ending stocks would be down slightly to 39.1 million cwt. However, at 2.915 acres and FAPRI’s yield, and demand, ending stock would increase to 46.7 million cwt.
For cash rice quotes, contact your rice buyer to get the most current price quotes and cash price outlook.
Technically, May and September futures are breaking the nearby support levels after the March 31 report. May has price support at $10.40 and September at $10.80. I was hoping we could get the September contract back to $12.00 to make some new crop sales. It is still possible if there are extended planting delays or fewer acres from the excessive rainfall.