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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. After July, it looks like $7.50 is the top of the range - what will be the bottom? Possibly $5.00 or even $4.50? (updated 7-31-08).
Short-term Chart Comment...
December corn was in a strong uptrend since October of 2007, but there has been a serious break and now the up-trend is questionable. Prices found support around $5.00 in mid-August and now they are testing the 50 and 125-day moving averages for resistance. The new trading range may be between $5.00 and $6.50 for a while (updated 8-29).
Fundamental Stats -
On August 12, 2008, the USDA increased its estimate of 2008-2009 U.S. ending stocks from 833 million bushels to 1.133 billion bushels - a substantial increase. That puts the 2009 ending stocks to use ratio at a more comfortable 9%. On the world scene, the USDA is looking for 2008-2009 ending stocks to fall from 122 to 112 million tons, or 14% 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 14% and, so far, they are up 12% from a year ago. As of August 24, 2008, 64% of the corn crop was rated good to excellent, up from 59% 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 | 12.29e |
| Total Use | 9.74 | 9.81 | 9.49 | 10.23 | 10.66 | 11.27 | 11.21e | 12.82e | 12.74e |
| Ending Stocks | 1.90 | 1.60 | 1.09 | .96 | 2.11 | 1.97 | 1.30e | 1.576e | 1.133e |
| Stocks/Use ratio | .20 | .16 | .11 | .09 | .20 | .17 | .12e | .12e | .09e |
| 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. It looks like the new range is $12 to $16? (updated 7-31-08).
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. $12 to $14 may be a new range? (updated 8-22).
Fundamental Stats -
On August 12, 2008, the USDA reduced its estimate of 2008-2009 ending stocks from 140 to 135 million bushels, the same as 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 3% and so far, they are up 1% from a year ago. As of August 24, 2008, 61% of the soybean crop was rated good to excellent, up from 55% 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 | 2.97e |
| Total Use | 2.80 | 2.93 | 2.79 | 2.52 | 2.99 | 2.87 | 3.07e | 3.03e | 2.98e |
| Ending Stocks | .248 | .208 | .178 | .112 | .256 | .449 | .574e | .135e | .135e |
| 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. For the past four months, prices have traded roughly between $7.75 and $9.50 with a bias to the downside as expectations are for a better harvest this year (updated 8-29).
Fundamental Stats -
On August 12, 2008, the USDA increased its estimate of 2008-2009 U.S. ending stocks from 537 to 574 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 a comfortable 25%. Worldwide, the USDA is expecting 2008-2009 ending stocks to increase from 115 to 136 million tons, or 21% of annual use.
The USDA expects wheat exports to fall 21% in 2008-2009 but, so far, they are up 16%. As of August 24, 2008, the USDA said that 55% of the spring wheat crop was rated good to excellent and 61% of it was harvested.
| 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 | 2.33e | 2.29e |
| Ending Stocks | .876 | .777 | .491 | .546 | .540 | .571 | .456e | .306e | 574e |
| Stocks/Use ratio | .37 | .36 | .25 | .23 | .24 | .26 | .22e | .13e | .25e |
| USDA wheat crop maps: USA spring, and USA winter. | |||||||||
Cotton
Long-term Chart Comment...
For the past 12 years, cotton spent most of its time between 40 and 80 cents and from mid-2004 to mid-2007, the range narrowed to 40 to 60 cents. In July of 2007, prices broke above 60 cents and prices have chopped higher since. Sustained trading above 80 would be very bullish, but so far, prices don't appear ready for that (updated 8-8-08).
Short-term Chart Comment...
December cotton prices chopped lower for the past five months in spite of a smaller planting this year and dry conditions in Texas. Prices may be looking for support here in the high-60's (updated 8-29).
Fundamental Stats -
On August 12, 2008, the USDA reduced its estimate of 2008-2009 U.S. ending stocks from 5.3 to 4.6 million bales, down from 10.2 million bales the previous year. That puts the 2009 ending stocks to use ratio at 24%, 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 improved from an annual rate of 4.49 to 4.65 million bales in July. For all of 2007, U.S. mill use was down 12%. In 2008-2009, the USDA expects exports to be up 3%, but so far, they are down 35%. As of August 24, 2008, 48% of the cotton crop was rated good to excellent, down from 49% a year ago. In Texas where 51% of the nation's cotton crop is planted, 38% was rated good to excellent.
While cotton supplies are currently adequate, there may be some tightness ahead. Demand for biofuels is pushing more acres toward corn and soybeans and away from cotton - not only in the U.S., but also in India and China. Also, there is growing international pressure for the U.S. to reduce its subsidy for growing cotton. Less future production and stable demand is a recipe for higher prices down the road.
| 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 | 13.8e |
| Total Use | 15.6 | 18.7 | 19.2 | 20.0 | 21.1 | 23.4 | 17.9e | 18.5e | 19.4e |
| Ending Stocks | 6.00 | 7.45 | 5.39 | 3.51 | 5.50 | 6.05 | 9.48e | 10.20e | 4.60e |
| Stocks/Use ratio | .38 | .40 | .28 | .18 | .26 | .25 | .53e | .55e | .24e |
| 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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