Happy New Year! Best wishes for a safe and profitable year. Cotton prices are mixed with corn, soybeans, and wheat prices down for this first week of 2013. Even the somewhat resolution of the fiscal cliff and an almost 4% uptick in the Dow this week could not prevent commodity prices from continuing the slide from late 2012. There has been very little bullish news in recent weeks for crop prices and probably some news considered bearish (export cancellations, slow export sales, and still prospects for a large South American crop). This appears to have put grain prices in an oversold position and possibly ripe for a correction depending on the outcome of the January 11 USDA reports (supply & demand, production, and grain stocks). Market disappointment in the reports and the slide could continue as focus could quickly turn to 2013 production prospects. USDA will release their reports at 11:00 a.m. Central time which is a change from the 7:30 a.m. release in place since 1994. University of Tennessee 2013 budgets have been released and can be downloaded in an Excel spreadsheet or PDF format.
Weekly exports were well below expectations with net sales of 1.9 million bushels for the 2012/13 marketing year. Ethanol production slipped 27,000 barrels per day to 807,000 barrels per day in the latest report. USDA may be inclined to lower demand in these areas in the January 11 report. A few estimates on production for next week’s report show a range of 76 million over the December number to 107 million under. More estimates will be coming out in the days before the report.
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A producer based survey of 2013 acreage from one firm placed corn at 97.75 million acres compared to 96.9 million acres in 2012. This continues the trend of estimates showing higher corn acres for 2013. A bullish January 11 USDA report could pull 2013 prices up slightly and create an opportunity for pricing. A bearish report will continue to put pressure on new crop prices and make spring/summer weather a key marketing factor.I would have 10% of 2013 production priced.