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Corn: Demand, Exports, Ethanol Production Are Good News
DAVID REINBOTT
BENTON, MO.
Corn: The USDA’s supply and demand report on September 12 was negative. The corn yield was increase 2.9 bushels to a record 181.3 bu./acre. Trade was expecting a one-bushel yield drop to 177.6. Production was increased 241 million bushels from last month to 14.8 billion, second highest on record, and the ending stocks were increased 90 million bushels to 1.774 billion bushels. The good news was demand was increased 125 million bushels from last month with feed and exports up 50 million bushels each and corn for ethanol up 25 million bushels.
World ending stocks were increased 1.5 million metric tons (mmt) to 157.0. However, this is still the smallest ending stocks since 2012. Domestic use is projected at a record 1,100 mmt. Bottom line, U.S. stocks are increasing and may go up more in future reports while world stocks are getting tighter.
Technically, December futures are trading at the support level of $3.50. If this price does not hold, the next price levels are at $3.40, $3.30 and $3.20. Price resistance is at $3.70, $3.75 and then $3.90. At this time, there is more risk for lower prices than the opportunity for higher prices. Prices may not rally much until we get into October and/or at least one-half the corn crop is harvested. Strategy is to store and take advantage of better basis. With a smaller corn crop coming out of Argentina, basis should be stronger as we go into fall and winter.
Soybeans
Soybean ending stocks were increased to a whopping 845 million bushels, a record. Production was increased 107 million bushels to 4.7 billion also a record. The biggest surprise in the report was the 52.8 bu./ac. yield, a record, 1.2 bu. greater than the August report.
World ending stocks were increased 2.3 mmt from last month to 108.2 mmt, a record, and 14 mmt greater than last year. While domestic use is at a record, production is going up faster.
Technically, November soybean futures is trying to hold the low from the day of the report at $8.21. The next support level is $8.00. Resistance is at $8.50 and at the 50-day moving average at $8.66. Just as in corn, we may see increased yields in future reports, which will pressure prices. With the wide basis, take advantage of storage to capture the carry in the market and better basis.
Wheat
There were no changes in the U. S. wheat supply and demand for the 2017 or 2018. World ending stocks were increase 2.33 mmt from last month to 261.3 mmt. However, ending stocks are down 13 mmt from the record stocks of 2017.
Technically, July 2019 futures is trying to hold important support at $5.35. If broken, the next support is the summer low of $5.27 and then $5.00. The market continues to trade lower and is below the 8 exponential moving average (EMA or T-Line) and 50 day moving average. First resistance is at $5.65.
Cotton
Cotton saw small changes in the USDA report. Production was increased 440,000 bales on a small cut in yield and 410,000 increase in harvested acres. Beginning stocking were increased 110,000 bales and exports were increased 200,000 bales. Result, ending stocks were increased 100,000 bales to 4.7 million bales the largest since 2008. World ending stocks are projected to be down for the fourth year in a row to 77.5 million bales down from 110.2 million in 2014. This is the result of a reduction in Chinese stocks. Their domestic use has gone up 4 years in a row and stocks came down each of those years. Chinese stocks compared to the World have gone from 60 percent to 38 percent.
I would suggest reading Texas A&M cotton marketing specialist John Robinson’s cotton outlook for more detailed analysis.
https://cottonmarketing.tamu.edu/
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 are trying to hold support at 81 cents. The 200-day moving average is at 80.4 cents. Resistance is at 84 cents and the 50-day moving average at 85 cents.
Rice
Rice ending stocks are up 15.5 million cwt from 2017-18. In the USDA report, beginning stocks were cut 5.4 million cwt but the production was increased 8.6 million. Domestic use was increased 2.0 million and ending are projected to increase 1.2 million from last month to 44.8 million cwt.
World ending stocks have climbed steadily the past 10 years, but are projected to be down slightly this year.
For cash rice quotes, contact your rice buyer to get the most current price quotes and cash price outlook.
Technically, November futures are trading lower, support is at $10.00, and resistance is at $11.00. The next support level is in the $9.50 to $9.00 range. ∆
DAVID REINBOTT: Agriculture Business Specialist, University of Missouri
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