Weekly Crop Comments, July 5, 2013

Overview Corn was down; soybeans and wheat were mixed; and cotton was up for the week. The June 28th USDA Acreage report indicated corn acreage of 97.4 million acres, 2+ million more than many anticipated contributing to a decrease in December corn to close below $5.00. Weather conditions going forward appear to be very supportive to corn and soybean growth in the Corn Belt. Hot and dry weather conditions in west Texas have lent support to cotton prices. Winter wheat harvest is approaching the half way mark with reported yields slightly higher than projections.

Corn Weekly exports were within expectations with net sales of 12.4 million bushels (9.2 million bushels for the 2012/13 marketing year and 3.2 million bushels for the 2013/14 year). Exports were 13.9 million bushels. Last week ethanol production increased 22,000 barrels per day to 863,000 barrels per day. June 28th ending ethanol stocks decreased to 15.4 million barrels from 16.3 million. July corn futures were $6.84.  Sep/Dec, Jul/Sep, and Jul/Dec future spreads were    -34 cents, -159 cents, and -193 cents, respectively.

Crop progress report released July 1st reported corn silking at 3% compared to 22% last year and 9% for the 5-year average. Corn condition was reported as 67% good to excellent compared to 65% last week and 48% last year; 8% poor to very poor the same as last week and 22% last year. In Tennessee corn silking or beyond was reported at 35% (5-year average 54%) and corn condition was 79% good to excellent and 5% poor to very poor. Producers should evaluate their current pricing position and proceed cautiously between now and harvest. December corn is currently slightly above $5.00, unless adverse weather conditions occur in key corn producing areas it is unlikely that the harvest price will move substantially higher between now and harvest.  Having at least 40% of production priced at this point is beneficial and producers should look for any rallies as an opportunity to price additional production. It is important for producers to evaluate all alternatives available when looking at potential marketing strategies. From a price risk management standpoint a $5.30 September Put Option costing 22 cents would establish a $5.08 futures floor or a $5.00 December Put Option costing 37 cents would establish a $4.63 futures floor.

Soybeans Weekly exports were above expectations with net sales of 13.6 million bushels (4.4 million bushels for 2012/13 and 9.2 million bushels for 2013/14). Exports were 4.3 million bushels. July soybean futures closed at $15.88. Jul/Nov and Aug/Nov future spreads were -$3.60 and -$2.04.

Soybean planting was reported July 1st at 96% compared to 92% last week, 100% last year, and a 5-year average of 98%. Soybeans emerged were 91% compared to 81% last week, 99% last year, and a 5-year average of 94%. Soybean condition was reported as: 67% good to excellent compared to 65% last week and 45% last year; 7% poor to very poor the same as last week and 22% last year. In Tennessee soybeans planted was reported at 85% (5-year average 94%), soybeans emerged were 67% (5-year average 85%), and crop condition was 82% good to excellent and 3% poor to very poor. Having 40% of the crop priced at this point should be considered. Downside protection could be achieved by purchasing a $12.40 November Put Option which would cost 60 cents and set an $11.80 futures floor.

Cotton All cotton weekly export net sales increased slightly from last week with sales of 80,600 running bales (34,500 bales of Upland cotton for 2012/13; 41,500 bales of Upland cotton for 2013/14; 2,900 running bales of Pima cotton for 2012/13; and 1,700 bales of Pima cotton for 2013/14. Exports were 196,200 bales of upland cotton and 5,500 of Pima. July 5th adjusted world price (AWP) increased 0.44 cents to 71.12 cents. July cotton futures were 83.54 cents. Jul/Dec and Oct/Dec future spreads were 1.35 cents and -1.40 cents.

Cotton squaring was reported at 37% this week compared to 23% last week, 47% last year, and a 5-year average of 45%. Cotton setting bolls was reported at 6% compared to 13% last year and a 5-year average of 11%. Cotton condition was: 47% good to excellent compared to 43% last week and 47% last year; 17% poor to very poor compared to 23% last week and 18% last year. In Tennessee cotton squaring was reported at 29% compared to 56% last year and a 5-year average of 49% and cotton condition was reported as 67% good to excellent and 9% poor to very poor. Purchasing an 86 cent December Put Option costing 4.55 cents would establish an 81.45 futures floor.

Wheat Weekly exports were within expectations with net sales of 21.8 million bushels for 2013/14 marketing year. Exports were 25.3 million bushels. On Thursday South Korea lifted the ban on U.S. wheat imports providing support to prices.  July wheat future price was $6.56. Jul/Sep and Sep/Dec future spreads were -4 cents and 10 cents.

Winter wheat harvest reported as of July 1st was reported at 43% compared to 20% last week, 73% last year, and a 5-year average of 52%. Crop condition ratings for winter wheat were: 34% good to excellent compared to 32% last week; 42% poor to very poor compared to 43% last week. In Tennessee, winter wheat was reported as: 98% ripe compared to a 5-year average 91% and 80% harvested compared to a 5-year average 94%.

Nationally, spring wheat emerged was 93% compared to 90% last week, 100% last year, and a 5-year average of 99%. Spring wheat headed was 18% (5-year average of 32%). Spring wheat condition was reported as: 68% good to excellent compared to 70% last week and 71% last year; 5% poor to very poor the same as last week and last year. A $6.60 September Put Option would cost 25 cents and set a $6.35 futures floor.

Additional Information What is Support and Resistance in the corn, soybean, cotton and wheat Tables? Support and resistance are tools used by technicians to help them identify and follow price trends. Horizontal lines are drawn on the bar chart to indicate areas of support and resistance. The troughs or reaction lows on a price chart are identified as support. Support is an area on the chart where buying pressure overtakes selling pressure and the market reacts higher. Usually support is identified by a previous reaction low or trough on the bar chart. Resistance is an area on the chart where selling pressure overtakes buying pressure and the market reacts lower. A resistance level is identified by a previous price high or peak on the bar chart.