USDA extends certification deadline
The USDA is extending the deadline for farmers to report certified acres. Farmers in Arkansas, Illinois, Indiana, Iowa, Kentucky, Michigan, Missouri, Minnesota, North Dakota, Ohio, Tennessee and Wisconsin now have until July 22, 2019, to report, due to flooding and excessive moisture. Farmers in all other states must still report by July 15. Reporting by the deadline is required to maintain eligibility for USDA farm safety net, conservation, crop insurance, disaster assistance and farm loan payments.
Rice futures have rallied, with the September contract putting over 70 cents on the market since setting a new low for the move on July 3. Support begins at that low of $11.21, and futures are currently testing resistance near $12, but that level is proving to be tough to break. USDA has current acreage pegged at 2.16 million acres across the U.S., with total acreage in Arkansas pegged at 1.3 million. However, many think that number is too high and will likely come down after acreage is certified later this month. Recent strength has come from those concerns and from solid exports. USDA this week lowered their 18-19 ending stocks estimate to 51.6 million hundredweight, down from 57.3 in the June report, thanks to more robust exports in recent weeks. That 5.7 million cwt. decrease in beginning stocks in 19-20 helped to offset a 10.6 million cwt. increase in the production estimate. Total use for 19-20 was increased 6 million cwt., resulting in ending stocks down 1.1 million cwt. to 50.0 million. The season-average farm price was pegged at $11.80, up 10 cents from the June report.
Cotton futures have made new lows again this week. December 2019 has moved below 62 cents, while December 2020 looks headed to 65 cents. The July WASDE report added more fuel to the bearish outlook as USDA raised the 18-19 carryout by 350,000 bales to 5 million bales, and raised the carryout for 19-20 by 300,000 bales to 6.7 million bales. World numbers were bearish as well, with production up nearly 500,000 bales and consumption projected lower. They cut the average on-farm price estimate by a penny, resulting in an estimate of 63 cents per pound. Tropical Storm Barry, though, could potentially have an impact on the crop in gulf coast states.
The trade in corn futures has been erratic, with futures trading in wide ranges. December has clearly topped at $4.73, and looks to be headed for a retest of support at $4.20. USDA will resurvey farmers in several states regarding acreage, as the lateness of the crop has left many uneasy with the current acreage estimate. In the June production report, USDA pegged the corn crop at 13.875 billion bushels, with planted acres of 91.7 million and a yield of 166 bushels per acre. The season average price is now estimated to be $3.70, down 10 cents from last month’s report. The weather outlook for the southern corn belt looks hot and dry for the next couple of weeks, potentially stressing the crop there.
Exactly no one was projecting a 4.6 million acre cut to soybean acreage from the March report to the June, but that is what we got. USDA now says 80 million acres were seeded to soybeans in the U.S. However, farmers in 14 states will be re-surveyed before the August report, and most in the trade expect to see that number revised upward. The July WASDE report saw 18-19 ending stocks cut to 1.05 billion bushels, down 20 million bushels from the June report. 19-20 ending stocks were down to 795 million bushels from 1.045 billion in the June report. The November contract has been working lower again this week, and looks headed for a retest of support at $8.90.
Live cattle futures have been trending higher after holding above support at the May low. However, in the July supply/demand report, USDA pegged 4th quarter cash steer prices at $110, which suggest the market may not have much upside potential above that level. The October contract tested resistance at $110 this week, but has failed to close above that level. Also in the report, USDA cut its forecast for 2019 beef production by 75 million pounds and lowered projected exports a bit.
The recent hog inventory report held mixed news, with herd and market inventory at the high end of expectations, while fall farrowing intentions were lower than expected. Mexico is dropping their tariff on U.S. pork, which is good news, but the Chinese tariffs remain a big problem for the market. The October contract looks to have bottomed at $67.50 had has put about $1 back on the market in the past two weeks. Ideas cash prices have bottomed and building technical strength are providing support.