Grain Marketing Commentary

Corn

USDA’s report on Tuesday was neutral to bearish.   USDA used the quarterly stocks from the March 31 report to update the demand for 2018-19.   Ending stocks were increased 200 million bushels to 2.035 billion. The trade guess was 2.01 billion.  Feed and exports were both cut 75 million bushels and food, seed, and industrial was cut 50 million bushels.    World ending stocks were increased 5.5 mmt from last month to 314 mmt.    However, it is 16 mmt less than last year. 

 

In May, USDA will give their first new crop supply and demand report for 2019-20.  They will use 92.8 million planted acres from the March planting intentions survey.  With trend line yields, the ending stocks will be in the 2.1 – 2.2 billion bushel range.  The market will turn its attention to weather and how many acres are planted.  If the wet weather pattern continues and acres are unchanged from last year at 89.1 million, ending stocks could be as low as 1.3 billion based on a 172-bushel yield.  In March, I had estimated ending stocks as low as 800 million.  However, with the increase in beginning stocks and the uncertainty in demand for next year, 1.3 billion is probably as low as we can expect without a major cut in supply due to a drought or flooding.  Right now, ending stocks could easily be in a 1.2 billion bushel range from 1.3 at the low end to 2.5 at the top end.  It will come back to weather.

 

The negatives in the market are the African swine fever and its impact on corn use, the projected large corn crop from South American in 2019, and the trade uncertainty with China.

 

Technically, May futures has initial support at $3.55 and resistance at $3.80.  The nearby futures are in a trading range of $3.40 to $3.95.  December futures has found support at $3.84 and near term resistance at $4.02.  From the weekly chart, the long-term trading range is $3.50 to $4.20. 

 

Soybeans

The report for soybeans came in slightly bullish.  Ending stocks were cut 5 million bushels on some small adjustments while the trade was expecting an 18 million bushel increase.   World ending stocks were increased less than 1.0 mmt to 107 mmt compared to 99 mmt from last year.   For the new crop 2019-20, ending stocks could easily be above 1.0 billion bushels and 1.4 to 1.5 billion bushels cannot be ruled out depending upon acres and yield.  As I mentioned in past weeks, it will probably take a yield of 45 bushels/ac or less to drop ending below 500 million bushels. 

 

Technically, May soybean futures has found support at $8.95 and resistance at the 200-day moving average at $9.08.  From the weekly chart, support is at $8.80 and then $8.10.  Resistance is at $9.60 then $10.60.  November futures has support at the 200-day moving at $9.28 and resistance is at $9.70.   

 

Wheat

Wheat ending stocks were increased 31 million bushels from last month to 1.087 billion bushels based on a 10 million bushel drop in feed use and 20 million bushel cut in exports.  World ending stocks were increased 5.0 mmt to 276 but is 5.0 mmt less than last year.

 

Technically, July 2019 futures has price support at $4.62 and resistance at $4.80.

 

Cotton

 

Cotton ending stocks were increased 100,000 bales to 4.4 million bales.  Cotton has had a nice rally since the March planting intentions report on a cut in planted acres in 2019 instead of a projected increase from last year.  Acres were estimated at 13.78 million compared to the trade estimate of 14.5 million and 14.1 million acres from 2018.

 

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 ran into the $77.0 to $79.00 resistance area.  Support is at the 200-day moving average at $76.50 and a close below this level would open the door to test $74.5. 

 

 

Rice

Rice ending stocks jumped 4.0 million cwt to 53.5 on a 4.0 million cwt cut in exports.  World ending stocks were unchanged at 172 million but is up 10 million from last year.  Acres are projected to be down 75,000 to 2.87 million acres.   

 

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

 

Technically, May futures has tumbled over $1.00 the past two weeks.  Support is at $9.90 and resistance is at $11.30.