- University of Missouri mid-September market commentary.
- Grains, cotton discussed.
Note: The following University of Missouri Extension market report was released on September 19.
In the September 12 USDA report, the 2010-11 corn ending stocks were projected at 920 million bushels. This was down 20 million bushels from the August report. Corn for food, seed and industrial use and exports were both increased 10 million bushels.
For the 2011-12 crop, ending stocks were cut 42 million bushels to 672 million. The crop yield was reduced almost five bushels/acre to 148.1 bushels per acre. Total corn supply was cut 422 million bushels. Use was cut 400 million bushels with cuts in feed of 200 million, ethanol 100 million, and exports 100 million bushels.
World corn ending stocks for 2011-12 were increased 3 million metric tons (mmt) from last month’s report. Argentina’s corn production was increased 1.5 mmt and Brazil’s 4 mmt.
The reduction in corn demand by USDA is based more on the lack of availability of corn that an actual slowdown in demand. That means corn prices will need to remain fairly strong at least into the spring to ration demand.
The contract high on the December corn futures is $7.79 and on the daily continuation chart it is $8.00. Price support is in the $6.70 to $6.80 price range. The daily price momentum indicator, slow stochastic, is in an extremely oversold position. This means any positive news such as poor yields or good exports should result in a rally in prices.
For corn you need to sell at harvest, I would continue to make sales at present price levels. For corn you plan to store, I would look for rallies back into the $7.50 to $8.00 price range.
In the September USDA report, the 2010-11 soybean ending stocks were projected at 225 million bushels down five million bushels from the August report. Crush was increased five million bushels.
The 2011 -12 soybean ending stocks were projected at 165 million bushels, 10 million bushels more than the August report. Total use was increased 15 million bushels due to an increase in exports. The soybean yield was increased 0.4 bushels per acre to 41.8.
World soybean ending stocks for 2011-12 are projected at 62.6 million metric tons (mmt), up 1.5 mmt from the August report.
November futures made a new contract high of $14.65 on August 31. Since then, prices have tumbled over $1.00 per bushel. Initial price support is at $13.50 with the next price support at $12.80.
Just as in corn, the daily price momentum indicator, slow stochastic, is extremely oversold, therefore, a bounce in prices could come at any time with news of poor yields or good exports.
$13.50 is an important price support level, and if prices fall below this level then prices could fall to $12.80. If you still need to make some sales, I would scale in some sales now. For soybeans that you plan to store, I would use rallies back into the $13.75 to $14.00 price range.
Wheat ending stocks for the 2011-12 crop year are projected at 761 million bushels, up 90 million bushels from the August supply and demand report.
Wheat use was cut 80 million bushels with a 75 million bushel reduction in exports and five million bushel cut in feed. Imports were increased 10 million bushels.
World wheat ending stocks for 2011-12 are projected at 194.6 mmt, up six mmt from the August report. The primary reason for the increase in the ending stocks are the projected larger wheat crops in Canada, EU-27, FSU-12, and the Ukraine.
The July 2012 futures contract rallied up to $8.45 on August 31, but has given back approximately $1.00 of that move. Price support is at $7.12 to $7.20 price range. Just as in corn and soybeans, the slow stochastics price momentum indicator is extremely oversold; therefore prices are due for a bounce.
Seasonally, the best time to make new crop wheat sales is at planting during October. I would suggest focusing your marketing during that time period. Some weather forecasts are still projecting continued dry conditions this fall for Kansas, Oklahoma and Texas. This could limit wheat seedings and result in higher prices.
Cotton ending stocks for the 2010-11 crop year were projected at 2.60 million bales, down 0.25 million bales from the August supply and demand report. Domestic use was increased 0.1 million bales.
For the 2011 -12 cotton crop, ending stocks were projected at 3.4 million bales. This is up 0.1 million bales from the August report. A combination of several supply and demand factors led to the change in the ending stocks. The big change was a 1.0 million increase in planted acres, but harvested acres were only increased 0.18 million acres. Exports were cut 0.3 million bales.
World cotton ending stocks for 2011-12 are projected at 51.9 million bales, down 0.7 million bales from the August report.
The December 2011 futures are in an uptrend since it made a low of $0.93 on August 9. Near-term resistance is at $1.15 with price support at $1.10 and $1.05.
It is important for a cotton producer to remain in close contact with his cotton buyer to get the most current price quotes.
In the near term, you may want to target sales if prices close above $1.15 or below $1.05.
The ending stocks for the 2010-11 crop were cut 2.7 million cwt to 48.4 million cwt.
For the 2011 -12 rice crop, ending stocks were increased 5.1 million cwt from the August report to 38.3 million cwt. Just as in cotton, several supply and demand factors were updated. Exports were cut four million cwt.
World rice ending stocks for 2011-12 are projected at 98.7 mmt up 0.8 mmt from the August report.
The November futures have ran into price resistance at $18.50. Support is at $17.60 and then at $17.00.
For cash rice quotes, contact your rice buyer to get the most current price quotes and cash price outlook.
If prices rally back to the $18.00 to $18.50 level you may want to add a few more sales. Also you may want to add sales if prices close below $17.00.