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USDA Reports All Crop Acreages Down, Except Soybeans
DAVID REINBOTT
BENTON, MO.
In USDA’s June 30 planted acres and stocks report, corn numbers came in on the negative side. Acres came in at 90.9 and the average trade guess was 89.8 million. The March planting estimate was 90.0 million. Past history indicates the acres could be down a few hundred thousand especially when failed and prevented planted acres are taken into account. Quarterly stocks came in 100 million more bushels the trade guess at 5.225 billion.
It indicates unless there is a weather or production problem, there will plenty of old crop and new crop corn. The latest estimate on corn yield is 170 bushels/acre, which projects to ending stock in the 2.1 – 2.3 billon bushel range. Unless acres go down significantly, it will take a yield of 166 bushels or less to get ending stocks below 2.0 billion. It is very possible, but as we all know it will take adverse weather to do it.
Technically, December futures broke out to the top of the trading range to $4.09 on hot, dry weather. Initial support is the top of the old trading range at $3.94 and at the 8 exponential moving average (EMA). A close below $3.94 opens the door for a 10 – 20 cent drop. If you were looking for a price to trigger new crop sales, I would use a close below $3.94 on the December futures.
Weather forecasts are projecting hotter and dryer, but they keep leaving the door open for chances of rain. The hottest weather is still projected for the central plains and the far western Corn Belt. I know many farmers are looking for December futures to rally into the $4.20 - $4.40 range to net out $4.00 plus cash corn at harvest. For the third week of the past five, December futures is trying to close above the 200-week moving average. If can get some help from the weather, I think there is a chance we can see prices rally into the $4.40 to $4.60 range.
Soybeans
The report was slightly bullish for soybeans. Acres came in 230,000 less than the trade estimate at 89.5 million, which is unchanged from the March report. Quarterly stocks were 20 million bushels less than the trade estimate. I still think corn acres could be going down a few hundred thousand but soybean acres going up.
Total stocks of old crop and new crop soybeans will be large unless we have some production problems or a smaller crop out of South America in 2017-18. For 2017-18, U.S. soybean ending stocks could easily jump from 435 million to over 650 million bushels. To get ending stocks below 300 million bushels, national yield need to be 44 bushels or less or a yield drop of 8.0 percent.
Technically, November futures continues to climb higher. Support is at $9.10 and resistance at $10.30. From the weekly continuation chart, if prices can clear $10.30 It opens the door for a rally to $11.00 or higher. Last summer’s highest close was $11.63 on the November futures. If you were looking at prices to trigger sales if prices do turn lower, I would use $9.80 and then $9.60 based on the November futures. Weather will determine prices and continue to expect big swings in the markets.
Wheat
All wheat acres were down over 400,000 from the trade estimate with spring acres accounting for 317,000 acres of the drop. Stocks came in 50 million less than the trade guess at 1.184 billion bushels.
Technically, the September and December 2017 futures have put in a potential candlestick evening star sell signal. A close below $5.30 on the September futures and $5.50 on the December futures would signal a sale. The new crop July 2018 futures contract also has put in a potential candlestick evening star sell signal. I would use a close below Thursday’s low of $5.80 to make a sale of new crop wheat.
Cotton
Cotton acres were cut 178,000 from the March planting intentions report to 12.05 million acres.
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 is trying to hold price support at 66.5 cents. Price resistance is back at the old support and now new resistance level at 72.0 cents.
Rice
Rice acres are projected at 1.884 million acres down 740,000 from the March estimate and 1.2 million from 2016.
For cash rice quotes, contact your rice buyer to get the most current price quotes and cash price outlook.
Technically, November futures continues to climb higher on less acres and declining ending stocks for new crop U.S. rice. Near term support is at $11.60 and the next resistance levels are at $12.50 and $13.50. Keeping a trailing stop 25 to 50 cents below the market would be a good idea. ∆
DAVID REINBOTT: Agriculture Business Specialist, University of Missouri
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