Corn Production Was Increased 298 Million Bushels


   Last Thursday’s USDA report was negative for corn. The corn yield was projected at 175.4 bushels/acre a record yield, 3.0 bushels above the average trade guess and 3.6 bushels above last month’s estimate of 171.8 bu./ac. Production was increased 298 million bushels and feed and exports were both increased 75 million bushels. Ending stocks were increased 148 million to 2.488 billion. The largest ending stocks since 1987. 
   World ending stocks were increased 2.9 mmt to 203.9 mmt from last month. However, ending stocks are projected to be down 23 mmt from last year.    World production is projected to be down 30 mmt from last year while domestic use is projected to be up 4 mmt. World corn ending stocks to domestic use is projected at 70 days, down from 80 days two years ago. When the demand for ethanol was taking off, the stocks to days use was in the 60 to 65 day range. The bottom line is we have plenty of corn in the U.S., but any production problems in the world for this growing season or next has the potential for a significant rally. This is why it is important to keep any eye on the South American corn crop. 
   Technically, December futures has broken out to the down side of the $3.45 and $3.62 trading range and is presently at $3.40. The nearby weekly chart has support and $3.30 and then at $3.00. Using the March contract, the resistance levels are at $3.70 and at the 200-day moving average at $3.90. However, at this time it will be hard to get back to these levels unless we have some very positive fundamental news. In the near term, it could be potential production problems in South America. Historically, the December to March period gives the best returns to storage with a rebound in basis. Use strength in basis and futures to make sales. 
   In the November 9 report, soybean ending stocks were cut slightly to 425 million bushels and the season average price was increased 10 cents to $9.30.  The soybean yield was left unchanged at 49.5 bu./ac but the trade was expecting a cut in yield. 
   World ending stocks were increased 1.0 mmt to a record 97.1 mmt. With the large stocks in the U.S. and world, prices will remain under pressure. Just as in corn, the key will be the South American production. In Brazil, plantings were delayed due to dry weather but rains have allowed planting to progress recently. Many are talking about the La Nina weather pattern, which could bring some production problems this year. This is just another factor that needs to be watched closely. 
   Technically, February futures has broken below the 200 day moving average and the next support level is at $9.60 and then support every 10 cents lower until you reach $9.20. Just as in corn, the December to March period gives the best returns to storage. Watch basis and futures to make sales.  
   The only change in the November report was a 25 million bushel increase in exports and a corresponding reduction in ending stocks to 936 million bushels. World ending stocks were down less than 1.0 mmt to 267.5 mmt. With world ending stocks climbing higher and adequate stocks in the U.S., prices will continue to be under pressure. 
   Technically, July 2018 wheat futures has nearby support at $4.60. Price resistance is at $4.80 and then at $5.05. The 200-day moving average is at $5.09.  There is just not a lot of bullish news to rally wheat. There are always news about dry weather concerns in the U.S. that could give a price rally but nothing at this time.
   Cotton ending stocks were bumped up 300,000 bales on an increase in yield and production. The ending stocks of 6.1 million bales is the largest since 2008. World ending stocks are at 90.9 million bales up 2.0 million from last year.
   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 futures has price support at 68.0 cents and resistance at 70 cents. Next support level is at 66.5 cents.   
   Rice ending stocks were increased 2.1 million cwt on a combination of a slight increase in supply and a 2.0 million decrease in exports. U.S. rice ending stocks continue to be tight. World ending stocks were cut 2.6 mmt from last month to 138.9 but still at record levels. 
   For cash rice quotes, contact your rice buyer to get the most current price quotes and cash price outlook.  
   Technically, January futures prices continues to drop.  On the weekly nearest price chart, prices have found some temporary price support at $11.00. ∆
   DAVID REINBOTT: Agriculture Business Specialist, University of Missouri
MidAmerica Farm Publications, Inc
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