Market Situation
Prospective Plantings and Grain Stocks. Corn plantings will be down 4% in 2014 compared to 2013 according to today’s Prospective Plantings report from USDA. The annual planting survey indicates U.S. farmers intend to plant 91.7 million acres to corn, down from 95.365 million last year. This is about a million acres less than the average trade guess ahead of the report of 92.7 million acres. If realized, this would be the fewest corn acres since 88.2 million were planted in 2010.
Soybean planting intentions are a record high, 81.5 million, about 400,000 more than the average trade estimate. All wheat plantings of 55.815 million are down from last year and below what the trade expected.
U.S. corn stocks held in all positions are reported at 7.006 billion bushels, below the average trade estimate of 7.099 billion. Corn consumption in the December 1 to March 1 quarter ran above the average pace of consumption for that time period. Stocks are well above the drought lowered levels of a year ago, but the gap between this year’s stocks and the five year average is narrowing.
Today’s planting intentions and stocks reports combine with livestock inventory numbers that are bullish for corn: stocks are tighter, plantings lower, and cattle and hog numbers higher than expected.
Outside Markets. From IHS Global (http://www.ihs.com/index.aspx), this week’s key U.S. economic data releases:
Fourth-quarter GDP growth was revised up from 2.4% to 2.6%. The upward revision came from higher consumer spending on healthcare and utilities than previously reported. Final sales (GDP excluding inventories) were revised up from 2.3% to 2.7% growth. However, 2.6% GDP growth is still on the weak side compared to pre-crisis growth rates. But the clear progression from the fourth quarter of 2012, when GDP growth stalled to just 0.1%, along with an improved, albeit not entirely supportive, fiscal environment gives us confidence that growth will be stronger in 2014.
Home price appreciation continues, but the pace has likely peaked. The S&P/Case-Shiller Home Price Index advanced 0.85% in January. But year-on-year gains softened to 13.2%, from 13.4% in December. Distressed sales, which have driven advances in a variety of repeat-sales indexes since the recovery began, are drying up. As a result, price growth in cities like Phoenix, Las Vegas, Miami, and Tampa is moderating. The slowdown, which was expected, is in line with underlying fundamentals and will help empower buyers to purchase existing homes.
February’s durable goods orders fell flat. While the headline looked good (up 2.2%), the details were disheartening. The gain was entirely in transportation and defense; core capital goods orders dropped 1.3%, more than reversing January’s gain. Taken together, January and February were bland, but we need more data to determine just how much of this blandness was weather-related.
The big item this coming week is the March jobs report. We anticipate a gain of 185,000 payroll jobs. But the gains could be larger, even above 200,000, depending on the size of the weather bounce. At a minimum, we expect a sizeable boost in hours-worked, after they fell in February. Meanwhile, the unemployment rate likely fell from 6.7% to 6.6%. The other critical piece of data this coming week is March light-vehicle sales. We expect them to rise to 15.9 million units, from 15.3 million in February. Sales were expected to rise to 16 million units starting in January, before the severe winter weather held them to just above 15 million for two months. With the weather much improved in March, vehicle sales should rebound. A weaker-than-expected result, however, could suggest that weather hasn’t been the only headwind for spending lately.
Marketing Strategies
2014 Corn Marketing Plan. I have priced the first 20% of 2014 production. I will price the next 20% on this price move, using technical indicators to time the sale: simple trendlines; tools like moving averages and MACD as long as the market is in an upward trend; stochastics, relative strength index, or Bollinger bands if the market levels off into a sideways pattern.
Upcoming Reports/Events.
April 7 – Crop Progress reports resume
April 8 – Short-term Energy Outlook, EIA
April 9 – WASDE
April 25 – Cattle on Feed
