Corn
In their monthly supply and demand report on May 9, USDA gave their first U.S. and world balance sheet projections for the 2014-15 crops. For corn, there were surprises in both the old crop and new crop balance sheets. For the old crop, the ending stocks were cut 185 million bushels to 1.146 billion bushels. The pre-report estimate was for only a 20 million bushel cut.
Exports were increased 150 million bushels to 1.9 billion bushels, and corn for ethanol was increased 50 million bushels to 5.05 billion bushels. The season average price was increased 5 cents to $4.65. USDA’s export projection will be the important demand number to watch for the remainder of this marketing year which ends Aug. 31.
For 2014-15, ending stocks are projected at 1.726 billion bushels a 580 million bushel increase over last year. The corn yield was projected at 165.3 bushels per acre based on USDA’s weather adjusted trend model that assumes normal mid-May planting progress and summer weather. The pre-trade guess was 163 bushels per acre with the expectation of a smaller yield due to the slow planting progress. The season average corn price is projected at $4.20 with a wide price range of $3.85 to $4.55.
From the demand side, USDA is projecting a 250 million bushel drop in total use to 13.385 billion bushels. The reason given by USDA for the reduction in use is a combination of fewer animal units, so less corn fed, and larger supplies of foreign corn and coarse grains which will lower the need to import corn from the U.S. Going forward, USDA expects both U.S. and foreign corn production to grow. This will result in growing ending stocks which will pressure corn prices lower.
Technically, both old and new crop future contracts look very toppy. Unless we have some additional planting problems or adverse growing conditions this summer prices may have put in a top and prices will trend lower. Price support for the July futures is at the 200 day moving average at $4.75 and resistance is $5.20. Price support for the December contract is also at the 200 day moving average at $4.80. Resistance is at $5.15. I believe a corn farmer needs to be focusing on making sales and/or buying put options to lock in price floors.
Soybeans
Soybean ending stocks for 2013-14 were cut 5 million bushels from last month to 130 million bushels the same as the average trade guess. USDA increased imports 25 million bushels to 90 million bushels because of the tight stocks. Crush was increased 10 million bushels, and exports were increased 20 million bushels. The season average price was increased 10 cents to $13.10 per bushel.
For the new crop 2014-15 crop, the production was projected at 3.635 billion bushels based on 81.5 million acres and a trend line yield of 45.2 bushels per acre. Use was modestly increased 60 million bushels to 3.45 billion bushels and resulted in a 200 million bushel increase in ending stocks to 330 million bushels. The season average price was projected at $10.75 per bushel with a price range of $9.75 to $11.75.
World ending stocks for 2013-14 were cut 2.4 mmt from last month to 66.98 mmt. However, the ending stocks for 2014-15 are projected at a record 82.23 mmt. Just as in corn, the outlook for production and ending stocks are to grow in the U.S. and world and will pressure prices lower.
Technically, unlike corn futures, soybean prices have held together and are trading in a sideways trading range. The July futures has support at $14.60 and resistance at the contract high of $15.20. For November 2014 futures, initial support is at $12.10, and the resistance levels are at $12.30 and $12.49. Just as in corn, if the soybeans are planted in timely manner over the next few weeks and with no major adverse weather problems this summer, prices will move significantly lower. Therefore getting some new crop soybean production priced over the next few weeks would be prudent.
Wheat
Wheat ending stocks for 2013-14 were left unchanged at 583 million bushels. For 2014-15, production is projected to be down 167 million bushels due to few acres and lower yield due to the drought and April freeze. Use is projected to be down 273 million bushels due to a cut in exports and feed. Ending stocks are projected at 540 million bushels with a season average price of $7.30 with a price range of $6.65 to $7.95. Unlike corn and soybeans, new crop wheat stocks are tightening up. World ending stocks for 2013-14 were left basically unchanged at 186.53 mmt and for 2014-15 ending stocks are projected at 187.53 mmt.
Technically, July futures continue to be under pressure and have broken the major moving averages. The next support level is at $6.60. Part of the reason for the break in the Chicago wheat contracts is the soft red winter wheat being overpriced compared to the hard red winter and spring wheat. Seasonally, wheat will make a spring high in May and then prices will trend lower into late July. I would expect this will be the price pattern for wheat for the next few months as long as there is no major production problems this summer in the corn and soybean crop. I would use rallies to make sales.
Cotton
Cotton ending stocks for 2013-14 were increased 0.3 million bales to 2.8 million bales. For 2014-15, acres, yield, and production are projected to be up. Production is projected to increase 1.6 million bales to 14.5 million bales. Use is expected to be down 0.6 million bales to 13.4 million bales and ending stocks are projected to increase to 3.9 million bales. The season average price is projected at 73 cents with a range of 63 to 83 cents.
World ending stocks for 2013-14 were up 1.0 million bales to 97.91 million. For 2014-15, ending stocks are projected at 101.7 million bales. While world cotton demand continues to slowly rebound, world production continues to grow faster.
It is important for a cotton producer to remain in close contact with his cotton buyer to get the most current price quotes.
Technically, July futures have broken the 50 day moving average and the next support level is at 90 cents. Price resistance is at 95 cents. December futures looks toppy and support is at the 34 day exponential moving average at 82 cents. Price resistance is at 84.5 cents. I would recommend making some sales at this price level.
Rice
Rice ending stocks for 2013-14 were increased 2.0 million cwt to 29.3 cwt. Exports were cut 2.0 million cwt to 95.0 million cwt. For 2014-15, ending stocks are projected to increase 5.0 million cwt to 34.2 million cwt. World ending stocks for 2013-14 were cut slightly to 111.25 million cwt and the ending stocks for 2014-15 are projected at 109.77 million cwt.
For cash rice quotes, contact your rice buyer to get the most current price quotes and cash price outlook.
Technically, July futures are in a trading range of $15.25 to $15.60. If you need to make old crop sales, I would use rallies over $15.50 to make sales. September futures have support at $14.40, and resistance at $14.60. I would look to make some sales if prices can rally back to $14.60.
