Grain marketing commentary

David Reinbott
Agriculture Business Specialist
University of Missouri Extension
573-545-3516
reinbottd@missouri.edu

October 17, 2019

Marketing Resources

USDA Reports and Supply & Demand Tables

Corn
The October 10 USDA report was bearish to corn with higher yields, production, ending stocks, and harvested acres than the trade was expecting.  However, with the adverse weather that has hit the Western Corn Belt and the uncertainty of the corn yields in the Eastern corn states, yields could be coming down in future reports.  USDA has projected the yield at 168.4 bushels per acre up .2 bushel from last month.  If the yield is closer to 166, the ending stocks drop to 1.6 billion bushels compared to 1.9 in the October report.  This would project a season average price close to $4.00.  Also locally, we may get a bump in basis due to potential quality problems with the corn in the northern states.  In addition, the planting of the Brazilian soybean crop is delayed due to dry weather.  With 2/3’s of the corn planted double crop after soybeans, this will delay corn planting and could result in lower yields.  The key word is Weather!  Weather in the United States and the World will be key to prices going forward.  I still believe we will not get a good handle on acres and yields until 2020.  That means ending stocks can easily project between 2.0 and 1.5 billion bushels until we get a better idea on supply.    

Technically, December futures has ran into resistance at the 200-day moving average at $4.02.  In the March futures, the 200-day moving average is at $4.12.  To continue this rally from the September lows we need solid closes above the 200-day moving average.  The next price targets would be $4.25 and $4.35 in the December and March futures respectively.  Price support is at the 50-day moving averages at $3.80 in the December and $3.90 in the March.  Going forward weather and how it influences supply will have a big impact in price direction along with government policies on trade.  Use improvement in futures and basis to make cash sales as needed.   

Soybeans

For soybeans, the USDA report was bullish.  The yield, production, ending stocks, and harvest acres came in less than the trade expected.  Ending stocks were projected at 460 million bushels at a yield of 46.9 bushels/acre.  It is interesting than just a few months ago we were projecting ending stocks over 1.0 billion bushels.  If the yield is 46 bu./acre, ending stocks would be closer to 400 million bushels.  As I mentioned in corn, weather in South America will have a big impact on supply and prices.  Presently, they are experiencing dry weather, which may have an impact on yields depending upon how long the dry weather persists.  The off again and on again trade discussions with China is another major factor on prices.   

Technically, January futures has ran up to the summer high of $9.60.  The next resistance level is the winter highs of $9.75. Support is at the 200-day moving average at $9.22.  Fall weather, exports, trade agreements or lack of it, and South American weather will determine price direction going forward.  I would use present rally to make some sales. 

Wheat

The wheat balance sheet did not change much from last month for the U.S. and the world.  U.S. wheat ending stocks were increased 30 million bushels to 1.04 billion bushels and world-ending stocks were increased 1.2 mmt to 287.8. 

Technically, July 2020 has support at the 200-day moving average at $5.22.   Resistance is in the $5.50 and $5.70 price range.  Seasonally, October is a good time to make new crop sales. 

Cotton

There were no major changes in the United States or World supply and demand tables.  U.S. ending stocks were cut 0.2 million-pound bales to 7.0 on a reduction in production.  World ending stocks were lower slightly from last month to 83.7 million pound bales.

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 has been in a slow uptrend since it bottomed on August 26 at 56.6 cents.  The first major resistance is at the 200-day moving average at 68 cents. 

Rice

Ending stocks were increased 1.3 million cwt from last month to 37.1. 

For cash rice quotes, contact your rice buyer to get the most current price quotes and cash price outlook.  

Technically, November futures is trading between $11.60 and $12.40.  The $12.40 to $12.50 price range would be a good place to make some sales.