Market Situation
Acreage.Going in to today’s Acreage report from USDA, the average trade guess was for corn planting to be down about 3 million acres relative to the planting intentions survey in March. Instead, corn acres are reported up 97,000 acres. Compared to 2012, planted corn acres are up 224,000 and harvested are projected to be up 1.760 million fromthe drought shortened crop. This is the highest number of corn acres since 102 million were planted in 1936.
With the increase in corn acres, soybean plantings were lower than the trade expected, 78 million the average trade guess, 77.7 planted. This is still an all-time record high for soybean acres.
Cotton acres are down 17% compared to 2012 and sorghum up 15%. In Texas, cotton plantings increased 3% compared to the intentions survey and sorghum decreased 10%. Thisisthe same actual versus intended response we saw in the other exceptionally dry springs of 2009 and 2011.
Grain Stocks. The Grain Stocks report showed tighter inventories than anticipated for corn, soybeans, and wheat. Corn use in the March to May quarter is lower than last year, 2.88 billion bushels versus 2.64 billion, but corn used for ethanol and exports have been relatively strong of late. In contrast to corn, wheat stocks, while smaller than expected, continue to track with recent trends.
Outside Markets. Much attention and market activity in the last week has been focused on comments by Fed Chairman Ben Bernanke that the Federal Reserve might begin slowing its program of bond purchases, quantitative easing, as economic growth dictates. One Fed governor, Jeremy Stein, commented that investors may have overreacted to that statement, using a famous metaphor of Fed policy as a punchbowl at a party. "The Federal Reserve is not only leaving the punch bowl in place, we're continuing to spike the punch, though at a decreasing rate over the next year." Timothy Taylor, author and editor of the Journal of Economic Perspectives, explains this reference (http://conversableeconomist.blogspot.com/): Investment returns for the second quarter of the year were +2.31% for stocks and -6.44% for commodities.
Commitment of Traders. Hedge funds were more bearish ahead of the USDA reports this week. Open interest was down sharply, which along with the lower price index is indicative of longs getting out of the market.
Marketing Plan
2013 Corn Marketing Plan. Old crop corn futures gained 12 cents today on tighter stocks and new crop fell 27 cents on the prospect of higher production. I have price 60% of expected production in 2013 with my next pricing period in the temperature and precipitation sensitive period of corn development, tassel and silking in July and early August.
2014 Wheat Marketing Plan. Today was the last day for calculating the RMA insurance harvest price for most hard red winter wheat producers. The harvest price is the average closing price for July Kansas City futures from June 1 through June 30. That price is $7.22/bushel, $1.56 below the projected price of$8.78. Without a production loss, this was not enough of a price decrease to earn an indemnity payment for 65% and 75% coverage revenue policies; it will pay on an 85% policy.
Source : tamu.edu
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