Grain marketing commentary
Agriculture Business Specialist
University of Missouri Extension
January 31, 2017
University of Missouri Extension Upcoming Meetings
Cotton Meeting – February 7, 2017- Fisher Delta Research Center
Rice Meeting – February 15, 2017 – Rone Hall at Lee Farm, Fisher Delta Research Center
USDA Reports and Supply & Demand Tables
There is a lot of talk and discussion on the outlook for trade especially agriculture trade between the U.S. and the other countries in the world. Many times what is said and proposed and what actually happens can be quite different. In the short term, it can lead to uneasiness and uncertainty and many times leads to traders taking a risk off approach or lower prices. How all this plays out I am not sure. It seems to me it comes back to the availability of the agricultural products, the demand for the product, and the cost.
Going forward I will be watching exports, feed usage, South America weather for growing conditions, and U.S. weather and planted acres for 2017. Exports continues to be strong and feed use should also be strong with increased livestock numbers. The South American weather seems to have stabilized for now and they are on the path for a good corn crop. Approximately two-thirds of Brazil’s corn production comes from second crop plantings or Safrinha acres. The key to the Safrinha crop is to be planted early so pollination and grain fill is not during the dry season. It means the early soybeans need to be harvested quickly so the corn can be planted timely and so far soybean harvest is going according to schedule.
For the 2017 plantings, many are expecting acres to be down 2 – 4 million. This should provide some support for new crop prices.
Technically, March futures hit major resistance at the 200-day moving average at $3.70. Prices have fallen back to the first support area at $3.58 with $3.45 the next major support. If you need to make old crop sales, I would continue to scale in sales especially if we rally back to $3.65 or higher.
December futures rallied back to the top of the trading range at $3.96 but has pulled back to support at $3.86. From now through spring, I believe we are range bound between $3.96 to $3.75. If futures would rally back to the top of the range, getting a few bushels sold on the futures may not be a bad idea. However, at this time I would focus more of the sales into the summer when we get an idea on planted acres and weather.
Soybean prices also tumbled. The supply and demand fundamentals still point to larger ending stock in the U.S. and the World. While corn acres in the U.S. may be reduced 2- 4 million acres, soybean acres will pick up the bulk of those lost acres. With hard red winter wheat acres down three million, soybean acres may go even higher.
Most reports indicate South America is still on track for a big crop. Argentina’s production may be trimmed 2 – 3 mmt due to flooding, but production will still be large.
Technically, March futures stalled out at $10.80 and has fallen back to the 200-day moving average at $10.20. For November futures, support is at $9.80 and resistance at $10.30. With the outlook of larger ending stocks for this coming year, sustained rallies will be difficult unless there are weather problems. A farmer needs to be aggressive in making sales especially on rallies back to price resistance.
At this time, there are no major production problems in the U.S. and the world. Russia will be experiencing some very cold temperatures in their major wheat growing regions, but there should be adequate snow cover to protect the wheat. Right now, ending stocks in the United States and world remains large.
Technically, July 2017 futures ran into resistance just above the 100 ema at $4.65 and has fallen all the back to the 50 day moving average at $4.43. Next support levels are at $4.30 and $4.20 range.
Cotton prices held together well in the aftermath of the big drop in corn, soybean, and wheat prices.
It is important for a cotton producer to remain in close contact with his cotton buyer to get the most current price quotes.
Technically, March 2017 cotton futures has ran into resistance at 75 cents with support at 72 cents. Longer-term support is at the 100 ema at 71 cents. December futures ran into price resistance at 72 cents. December futures are forming an ascending triangle chart pattern. A breakout to the topside projects to 75 cents and a breakout to the downside to 69 cents.
Rice prices also broke hard this week.
For cash rice quotes, contact your rice buyer to get the most current price quotes and cash price outlook.
Technically, March rice futures ran into resistance in the $10.00 to $10.10 price range and support is at $9.60 and $9.40.