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Grain Marketing Commentary
DAVID REINBOTT
BENTON, MO.
We are in a weather market. It is not too little rainfall but too much. NASS will release their Crop Progress. Last week corn was 49 percent planted and the guess is plantings will be at 65 percent. There are still a lot of wet fields and more rain on the way. This looks like a year where we not have a good idea of both acres and yields for several months after the crop is harvested.
For now, I am using acres as unchanged from last year at 89.1 million and a yield of 170 bu./ac which is down 6 bushels from the trendline yield. This results in ending stocks just below 1.4 billion. We can easily see a range in ending stocks of 1.0 – 1.3 billion bushels depending upon acres and yields.
As I mentioned in my crop insurance newsletter on Prevented Planting, last week information came out on a second market facilitation payment (MFP). At this time, there would be no MFP payments if you take 100 percent PP. In other words, you need to plant a crop that produces bushels and pounds to get a payment. However, this could all change as we get more details on the program. So stay tuned.
The negatives in the market are the African swine fever and its impact on corn use, the large corn crop from South American in 2019, and the continued trade uncertainty with China.
Technically, December futures has rallied up to the May 2018 high of $4.30. The next target would be the June 2016 high of $4.49. The May 2014 high was $5.17. The stochastics which measure price momentum, is getting very over bought on the daily contract and getting close to that level on the weekly. At the time of this writing, there are no sell signals on the daily chart. The 8 Exponential moving average or T-Line as I call it is at $4.1l at this time. I have found over time closes below and above the T-Line are good buy, and sell signals.
Price will be driven by weather. If the weather forecasts changes or any other bearish news enters the market, we could easily have a sell signal which will lead to at least a setback in prices. Prices gapped up overnight and we have not closed the gap. If prices do retreat to fill this, gap between $4.22 and $4.20 you could use this price area as place to make a new crop sale or buy a put option. Most weather rallies usually last 2 – 6 weeks. At this time, I do not see this market rally going past the second week in June.
Soybeans
Even with the wet fields and more rainfall forecasted for soaked fields, the market fundamentals are still not that bullish for soybeans. Right now, we are still looking at 1.0 billion bushel carry over. The second market facilitation payment (MFP) will encourage soybean acres.
Technically, November futures gapped higher overnight on slow planting progress. The first resistance level is the 50-day moving average at $8.96 followed by $9.23 at the 200-day moving average. If prices do clear the 200-day moving average, the next price levels are at the $9.40 to $9.60 price range from last winter. Soybean prices will continue to rally as long as corn price keep going up. At this time, I would use the moving averages I mentioned as price targets needed. If prices do turn lower, use a 15 – 20 cent trailing stop to make cash sales or buy a put option at this time.
Wheat
Wheat ending stocks for 2019-20 are projected at 1.14 billion bushels approximately the same as last year.
Technically, July 2019 futures is still rallying. Price support is at $4.70 and first resistance is at the 200-day moving at $5.14. The next price target from last winter is $5.45. Seasonally, it is not unusual for wheat to rally in the month of May before turning lower into June and harvest.
Cotton
New crop cotton ending stocks were projected at 6.4 million bales compare to 4.65 million bales from last year. There is still a lot of uncertainty in cotton acres for 2019.
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 2019 futures is trading above the 8 EMA or T-Line this morning. First resistance is at the 50-day moving average at $73.60. Price support is at $66.00. Right now, I see the cotton market like the soybean market. It needs help from the corn market and weather problems in planting and growing conditions this summer.
Rice
Rice ending stocks are expected to be 4.0 million cwt greater than last year at 58.8 million cwt.
For cash rice quotes, contact your rice buyer to get the most current price quotes and cash price outlook.
Technically, July and September futures have had nice rallies the past two weeks. However, both contracts are looking toppy this morning with dojis and stochastics overbought. For the July contract, I would put in a sell order if prices close below $11.40 and for September a close below $11.50. ∆
DAVID REINBOTT: Agriculture Business Specialist, University of Missouri Extension
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