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Corn, Soybeans, Wheat and Cotton Futures Markets
Corn
Long-term Chart Comment...
Before the big boost in ethanol production hit prices in 2006, corn spent most of its time between $2.00 and $2.50 per bushel. Near the highs around $8.00, the meat industry becomes unprofitable and the expansion of corn ethanol plants shuts down. The upward momentum is strong, but at these levels, prices are highly unstable and susceptible to big swings (updated 7-15-08).
Short-term Chart Comment...
December corn has been in a strong uptrend since October of 2007, but it looks like that is now over. On July 8th, prices broke below the trading range between $7.50 and $8.00. On July 14th, prices closed below the 50-day moving average and, on July 22nd, prices closed below support at $6.00 - all signs of weakness (updated 7-23).
Fundamental Stats -
On June 30th, the USDA estimated that 78.9 million acres of corn will be harvested this fall, down 9% from last year. Due to flooding in June, a more accurate acreage estimate will be provided in the August 12th Crop Production report. On July 11, 2008, the USDA increased its estimate of 2008-2009 U.S. ending stocks from 673 to 833 million bushels. That puts the 2009 ending stocks to use ratio at a more comfortable 7%. On the world scene, the USDA is looking for 2008-2009 ending stocks to fall from 125 to 105 million tons, or 13% of annual use. Cold and wet conditions this spring in much of the Midwest have delayed planting schedules and put even more strain on an already tight situation.
In 2007-2008, exports are expected to be up 15% and, so far, they are up 13% from a year ago. As of July 20, 2008, 65% of the corn crop was rated good to excellent, up from 62% a year ago.
| U.S. Corn Market Statistics (in billion bushels) | |||||||||
| Year ending Sept. 30, | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 |
| Production | 9.92 | 9.50 | 8.97 | 10.09 | 11.81 | 11.11 | 10.54e | 13.07e | 11.72e |
| Total Use | 9.74 | 9.81 | 9.49 | 10.23 | 10.66 | 11.27 | 11.21e | 12.80e | 12.50e |
| Ending Stocks | 1.90 | 1.60 | 1.09 | .96 | 2.11 | 1.97 | 1.30e | 1.598e | .833e |
| Stocks/Use ratio | .20 | .16 | .11 | .09 | .20 | .17 | .12e | .12e | .07e |
| USDA corn crop maps: USA, China, or Brazil. | |||||||||
Soybeans
Long-term Chart Comment...
For the past few decades, soybeans spent most of their time between $4 and $6 per bushel. In 2003, soybeans broke to a new high and eventually got as far as $10 per bushel before turning around. In 2006, soybeans again spent most of the year below $6 per bushel, but broke higher late in the year, thanks to a big jump in corn demand. Since then, prices have been climbing higher, but you have to wonder if we are getting close to a top? (updated 6-18-08).
Short-term Chart Comment...
November soybeans had a nice two-month uptrend that may be over now. On July 18, prices closed at their lowest level in five weeks and slightly below the 50-day moving average - a sign of weakness (updated 7-18).
Fundamental Stats -
On June 30, 2008, the USDA said that it expects 72.12 million acres of soybeans to be harvested in the fall, up 15% from a year ago. On July 11, 2008, the USDA reduced its estimate of 2008-2009 ending stocks from 175 to 140 million bushels, up from 125 million bushels in 2007-2008. The resulting 2009 ending stocks to use ratio is 5%, still a tight situation. Worldwide, the USDA estimated that 2008-2009 ending stocks will stay at 49 million tons or 21% of annual use. Brazil and Argentina's soybean crops are expected to increase 4% in 2009.
In 2007-2008, the USDA expects exports to be up 2% and so far, they are up slightly from a year ago. As of July 20, 2008, 61% of the soybean crop was rated good to excellent, the same as a year ago.
| U.S. Soybean Market Statistics (in billion bushels) | |||||||||
| Year ending Aug. 31, | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 |
| Production | 2.76 | 2.89 | 2.76 | 2.45 | 3.12 | 3.06 | 3.19e | 2.59e | 3.00e |
| Total Use | 2.80 | 2.93 | 2.79 | 2.52 | 2.99 | 2.87 | 3.07e | 3.04e | 3.00e |
| Ending Stocks | .248 | .208 | .178 | .112 | .256 | .449 | .574e | .125e | .140e |
| Stocks/Use ratio | .09 | .07 | .06 | .04 | .09 | .16 | .19e | .04e | .05e |
| USDA soybean crop maps: USA, and Brazil. | |||||||||
Wheat
Long-term Chart Comment...
From 1998 to 2002, wheat traded under $3 per bushel with plenty of supply and falling demand. From mid-2002 to mid-2006, prices shifted to the $3 to $4 range and then, in October of 2006, wheat prices broke higher in sympathy with corn and eventually hit $13 per bushel. Prices now appear to be looking for new support (updated 6-18-08).
Short-term Chart Comment...
December wheat peaked in March at $12.80, the result of last year's weather-stricken world wheat situation. Prices were higher recently in sympathy with corn, but $10 looks like tough resistance. On July 9th, prices slipped back below the 50-day moving average - a sign of weakness. The next question is: will prices find support at $8.00? (updated 7-23).
Fundamental Stats -
On July 11, 2008, the USDA increased its estimate of 2008-2009 U.S. ending stocks from 487 to 537 million bushels, a big jump up from the previous year's 306 million bushels. The result is a U.S. ending stocks to use ratio at 23%. Worldwide, the USDA is expecting 2008-2009 ending stocks to increase from 116 to 133 million tons, or 21% of annual use. On June 30th, the USDA said that 56.59 million acres of wheat will be harvested in 2008, up 11% from a year ago.
The USDA expects wheat exports to fall 21% in 2008-2009 but, so far, they are up 30%. As of July 20, 2008, the USDA said that 71% of the winter wheat crop was harvested, down from the five-year average of 79%. Also, 63% of the spring wheat crop was rated good to excellent, down from 75% a year ago.
| U.S. Wheat Market Statistics (in billion bushels) | |||||||||
| Year ending May 31, | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 |
| Production | 2.23 | 1.95 | 1.61 | 2.35 | 2.16 | 2.11 | 1.81e | 2.07e | 2.46e |
| Total Use | 2.40 | 2.15 | 1.97 | 2.35 | 2.23 | 2.15 | 2.05e | 2.32e | 2.33e |
| Ending Stocks | .876 | .777 | .491 | .546 | .540 | .571 | .456e | .306e | 537e |
| Stocks/Use ratio | .37 | .36 | .25 | .23 | .24 | .26 | .22e | .13e | .23e |
| USDA wheat crop maps: USA spring, and USA winter. | |||||||||
Cotton
Long-term Chart Comment...
For the past 12 years, cotton has spent most of its time between 40 and 80 cents, but that may be changing as the market seems more willing to trade near or above 80. Sustained trading above 80 would be a very bullish sign (updated 7-3-08).
Short-term Chart Comment...
December cotton prices have chopped lower for the past three months in spite of a smaller planting this year and dry conditions in Texas. On July 1st, prices closed below the 50-day moving average and are now probing new lows for the year (updated 7-23).
Fundamental Stats -
On June 30th, the USDA said that 9.25 million acres of cotton will be planted in 2008, down 15% from a year ago. On July 11, 2008, the USDA reduced its estimate of 2008-2009 U.S. ending stocks from 5.4 to 5.3 million bales, down from 10.2 million bales the previous year. That puts the 2009 ending stocks to use ratio at 28%, more in line with "normal." Worldwide, the 2009 ending stocks estimate is expected to fall from 61 to 53 million bales, or 42% of annual use.
U.S. mill use in May slipped from an annual rate of 4.60 to 4.53 million bales. For all of 2007, U.S. mill use was down 12%. In 2007-2008, the USDA expects exports to be up 7%, but so far, they are up 4% with one week to go. As of July 20, 2008, 45% of the cotton crop was rated good to excellent, down from 55% a year ago. In Texas where 51% of the nation's cotton crop is planted, 33% was rated good to excellent.
| U.S. Cotton Market Statistics (in million bales) | |||||||||
| Year ending May 31, | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 |
| Production | 17.2 | 20.3 | 17.2 | 18.3 | 23.3 | 23.9 | 21.6e | 19.2e | 14.0e |
| Total Use | 15.6 | 18.7 | 19.2 | 20.0 | 21.1 | 23.4 | 17.9e | 18.5e | 18.9e |
| Ending Stocks | 6.00 | 7.45 | 5.39 | 3.51 | 5.50 | 6.05 | 9.48e | 10.20e | 5.30e |
| Stocks/Use ratio | .38 | .40 | .28 | .18 | .26 | .25 | .53e | .55e | .28e |
| USDA cotton crop maps: China, and USA. | |||||||||
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Tons and bushels
One million metric tons of corn equals 39.37 million bushels.
One million metric tons of soybeans or wheat equals 36.74 million bushels.
One million metric tons of cotton equals 4.593 million bales.
One bushel of corn produces (roughly) 2.8 gallons of ethanol.
One metric ton of ethanol equals 7.94 petroleum barrels.
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