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Weekly Crop Comments (Jul 23, 2013)

Overview

USD, Crude and Dow

Corn and wheat were down; cotton and soybeans were up for the week. Weather continues to be a key market driver. Precipitation and reduced heat in the ten day forecast, for a good portion of the Corn Belt, could push corn prices lower, however if expected precipitation is not released the market could find support for prices next week. Old crop soybean stocks remain tight lending support to cash and nearby futures prices. Partially due to availability, some soybean facilities have begun annual maintenance/ upgrading which could reduce some of the short term demand in coming weeks. Since May 1st December cotton futures have traded between 82 and 89.5 cents. These support and resistance levels appear quite solid as a drop to the 82 to 83 cent range triggers buying (primarily from China) while a move over the 87 cent level causes buying to dry up. Wheat yields being reported in some regions have not been as high as originally estimated. On a global basis, wheat exports are facing stiff competition from sales out of the Black Sea region which is providing downward price pressure to U.S. exports.
USD, Crude and Dow

Corn

Historical September Corn Futures Prices

Nearby and Harvest Corn Futures Prices

Weekly exports were within expectations for old crop and slightly above expectations for new crop with net sales of 68.6 million bushels (6 million bushels for the 2012/13 marketing year and 62.6 million bushels for the 2013/14 year). Exports were 16 million bushels. Last week ethanol production decreased 5,000 barrels per day to 876,000 barrels per day. July 12th ending ethanol stocks increased to 16.6 million barrels from 15.7 million. Sep/Dec future spread was -$0.44.

Crop progress report released July 15th reported corn silking at 16% compared to 6% last week, 67% last year, and 35% for the 5-year average. Corn condition was reported as 66% good to excellent compared to 68% last week and 31% last year; 9% poor to very poor compared to 8% last week and 38% last year. In Tennessee, corn silking or beyond was reported at 75% (5-year average 86%); corn dough or beyond was 22% (5-year average 23%); and corn condition was 83% good to excellent and 3% poor to very poor. 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. From a price risk management standpoint a $5.45 September Put Option costing 19 cents would establish a $5.26 futures floor or a $5.10 December Put Option costing 36 cents would establish a $4.74 futures floor.

Soybeans

Historical November Soybean Futures Prices

Nearby and Harvest Soybean Futures Prices

Weekly exports were within expectations with net sales of 25.8 million bushels (4.1 million bushels for 2012/13 and 21.7 million bushels in sales for 2013/14). Exports were 4.5 million bushels. Aug/Nov future spread was -$2.16.

Soybeans blooming were reported July 15th at 26% compared to 10% last week, 63% last year, and a 5-year average of 40%. Soybean condition was reported as: 65% good to excellent compared to 67% last week and 34% last year; 8% poor to very poor up 1% from last week and compared 30% last year. In Tennessee, soybeans planted was reported at 98% (5-year average 100%), soybeans emerged were 88% (5-year average 98%), soybeans blooming was 15% (5-year average 45%), and crop condition was 80% good to excellent and 5% poor to very poor. Having 40% of the crop priced at this point should be considered. Downside protection could be achieved by purchasing a $12.80 November Put Option which would cost 56 cents and set a $12.24 futures floor.

Wheat

Historical July Wheat Futures Prices

Nearby and Fall Wheat Futures Prices

Weekly exports were within expectations with net sales of 36.6 million bushels for 2013/14 marketing year. Exports were 26.7 million bushels. Sep/Dec future spread was 11 cents.

Winter wheat harvest reported as of July 15th was reported at 67% compared to 51% last week, 87% last year, and a 5-year average of 71%. In Tennessee, winter wheat was reported as: 98% harvested compared to a 5-year average of 100%.

Nationally, spring wheat headed was 71% compared to 45% last week, 93% last year, and a 5-year average of 73%. Spring wheat condition was reported as: 70% good to excellent compared to 72% last week and 65% last year; 5% poor to very poor the same as last week and 8% last year. A $6.65 September Put Option would cost 19 cents and set a $6.46 futures floor.

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