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July 2014 Archive for Hedging Corn and Soybeans

RSS By: Howard Tyllas,

Howard Tyllas is currently a member of the Chicago Board of Trade and registered with the Commodity Futures Trading Commission as a floor broker and as a Commodity Trading Advisor.

Hedging Corn and Commentary for 7/21/14

Jul 21, 2014

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Attention Corn & Soybean Producers:


Feel free to inquire on learning about the best way to hedge. In my opinion my strategy is the best I have seen since I became a member in 1976 trading corn and soybeans for my own account.


Are you tired of listening to the same BULL ****, and services that do not have a plan if the market goes down instead? Hedge means to take risk off the table, and my service has all producers 100% hedged and they do have most of the upside unhedged (if we can rally for whatever reason). Hedge with a Pro and option expert who has been trading grains for 40 years. 


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These numbers were sent on 7/18/14 4 pm to be used for trading on Monday 7/21/14. 

December 2014 Corn

3.95 ¾   
------------3.78       Pivot & contract low                  
5 day chart….     Down from last week same day                           
Daily chart …     Down     
Weekly chart…  Down              
Monthly chart…Down                          4.66 is the 200 DMA
ATR 10                                                          Ex. Oversold 1%


For 7/21/14: Contract low is a pivot now, daily numbers provide support and resistance.       
In my daily December 2014 corn numbers on Friday; my pivot acted as resistance and was .01 (.00 ¾ in open outcry) from the actual high; my support was the EXACT actual low.        

"The low of 2014 made in January is an automatic bracket line, now resistance".


Grains: Corn closed on its lows, and is highly likely to gap lower on Sunday night unless the weather forecast changed. September corn jabbed below the low made last Friday to see if there was sell stops below, and since there was not, they held off from jabbing below the low in the December contract, they will wait for Sunday night for that. Bears are already in total control, they might as well wait for the weekend weather and latest forecast to give the green light on Sunday to press the downside, and punish the bulls. The best the bulls can look for is a retest of last week’s high.

November soybeans actually closed $.10 ¼ higher for the week, but $.33 ½ off the previous day’s high, closing the week poorly. The market needed to correct as I noted before the correction began. Last Monday’s comments said it might go down for a day or two, but I thought a retest of the previous weeks high was likely. On Tuesday I said I was looking for $11.17 ½ and I said I would sell it there. Wednesday comments I was looking for $11.17 ½ and said it was dangerous to be long looking for a rally. On Thursday it got to $11.18 ¾.  I am not a reporter after the fact, I tell you what I think and why, and what I want to do no matter if the market goes higher or lower, I have a plan even if it means doing nothing.

Bulls have a chance if above the bracket line at $10.88 ¼, but below there they are in for more trouble and at least a retest of last Fridays contract low of $10.65. Best the bulls can look for this week is a retest of last week’s high.  

Low volume and small ATR’s do not bode well for higher prices. I never like to buy a quiet market, although normally the grain market is slow and low volume during the growing season when there are no weather events.

I have the same story since September 2012 and will tell it again, if you get decent growing seasons going forward, grain prices will have nowhere to go but lower without regard to the cost of production.

I still think we will go down to my projections by harvest, and then should claw our way back until March. The claw back at best will be to our current levels. Next year at this time if the 2015 crop looks like this one, I project $2.90 corn and $7.90 soybeans, those prices held the huge meltdown in 2008, and good enough to earn my respect.

Our 2015 corn hedges are now below our protection, 95% of my producers hedges are $4.90/$4.40 or the $4.80/$4.30, but in time these spreads will get to $.45, and then you can start over with $.37+ in your pocket and get new protection. If you let it go to full value, most paid $.04 or less by selling a call spreads, leaving you with $.46 minus commissions.  

Our 2014 and 2015 soybean hedges are doing fine now, but it is only a matter of time before that protection runs out.

New hedges should consider selling more upside away, or closer to the put spreads, to make it cheaper to buy a little more protection than $.50 corn or $.80 soybean hedges. Many the last few years have bought much more than that, or morphed cheaply when they had one of many chances, and have really paid off. Maybe they were bearish, maybe just glad to lock in more of what could be high prices, but whatever the reason for their decisions, it was comfort for them when they hedged, it was comfort when we rallied, and certainly is comfort now.

Take responsibility for your decisions.

Instead of saying what you should have done (the old lady at the racetrack), learn from your past and do what is right for you now.

Many have hedged 2015 100%, some only a percentage of what they NEED. With my many warnings for the unhedged, and demand for you to have a plan if not, you are in jeopardy of working for nothing next year. A few weeks ago you could have gotten $5, many a day for months it was offered there, and I do not know how much you were looking to sell it higher for, but right now you are losing over $1.20 to get it.

Think what you want, but reality is the only real. Corn, or a car, or a house might be worth a price in your mind, but go into the real world and you will find what reality says they are worth. Grain pricing is easy; the last price is always reality.

Now reality hits home, with a good crop this year stocks will be burdensome, and the only way to use the crop is to go lower and find demand only low prices can activate that cannot be used at current price levels.

Nobody on my book has December 2014 corn protection below $4. Your insurance should be taking over for protection below there. Nothing could be done cheaply once the market went below $4.80, if the decision was made not to need more protection when above $5 and cheap; the price makes the decision for not getting it when expensive. Instead of worrying about more protection for 2014, worry about what is unhedged for 2015 where you can always get $.50 protection and at least $.50 upside unhedged really cheap for $.04 or less. Buying $.20 at the money corn 2014 put spreads will cost almost $.10 and not worth it when your insurance should really be working for you at this price.

You must wait until your 2014 corn call spreads are bought back, and your put spreads are within $.02 of full value, before you can make another decision. In time and you already have the price of the insurance locked in, and then you can easily start over and do ... Subscribe now... You made between $.40 to over $1 depending if you started when at $5.60, and how bearish you were, or how well you morphed when cheap. Add that to a $4 call you might sell, and what you get in return is a new 3 way protection for little to no cost depending on the strikes you select.  

This is the first week this year that I am hearing bad news from many a producer who called when placing orders. My producers are doing great, but everyone around them is turning into if not already, the living dead. There are many at every exchange, and I have seen many every year and now can remember them as "ghosts of bad decisions past". I never want to put myself into that "position", and it is their position that gets them into deep trouble. It was easy to learn from watching traders make that fatal lesson before I bought a "seat", nobody had to tell me the reasons why they could not last more than 6 months, nor what they were doing and why, I just learned that if you lose too much on one bad idea, you go "bust". So the easiest way to avoid that was to not risk too much on one idea. That is one important lesson I learned from the losers that I keep in the forefront of my approach to this day, the winners rarely taught me anything about what they do. 

Now reality is sinking into the unhedged, and instead of thinking how they will spend all the money when they can sell corn at $6 or whatever they were looking for, now they are looking on how to pay the bills. "The market went down, there was nothing I could do, or that is a part of the "business" they tell their wives or worse if they really tell themselves that, because all that means is that is their way of masking the "gambler" inside themselves.  Life must be boring without the gamble, like there are no other gambles in farming, but the one gamble should never be allowed to be neglected, is some sort of hedge to protect your income separate from what you think. The unhedged are more worried about what they leave on the table or do not make if it goes higher, than worried about what happens if the market goes lower instead. Just as I form trade ideas, I taught you to hedge, the first thing I look at is protecting the risk if wrong versus the reward for being right. I do not want to try and hedge $.40 higher and watch the market go down $.80 instead. Just like I worry about what the risk is on a trade idea, you must worry about protecting your income if the market goes down.

I am proud of this hedge service, you have all one way or another, hedged all or part of your risk, you have total control of what you do, and you know all the reasons when to improve your hedge cheaply as time goes on. You use the chart as your road map, and that is all you need to make your hedge decisions. I am getting many calls and inquire from the walking wounded, and the one from the other day is the winner so far this year. He opened a hedge account at a "big name" firm, he hedged and of course he made money, and the broker told him he "was suppose to use that money to gamble on the grain market", and within an hour he lost most of the money made on the hedge. How many victims are out there? It is like going to a "quack" when you thought he was a real doctor. He says he graduated from Harvard, but if you look closely at his paper on the wall it says "Harvard" Nigeria. Big name firms in my opinion have a lot of quacks and very few doctors. Being self directed is the most important thing you can do to protect yourself from what is "out there".

As the weather permits, we will work our way lower. Rallies will be short lived and met with sellers at resistance levels. If producers and funds turn sellers, we can see sharply lower prices by September after the weather premium is taken out of soybeans. You can say it is like an odds on favorite paying only $2 for every $5 bet, but heavier favorites than that lose more than you would expect. This crop is NOT in the combine yet, and I have respect for the market knowing it can rally for some unforeseen or unknown reason, but it can rally.

I said in September 2012 we could be starting "the great bear market" because we started from "all time highs". Those highs was the first mile in the marathon, we are much more than half way to the finish line now, but plenty of race to run yet.  

Now the whole farming industry will feel the change, and those who live in the now but do not plan for the future, are their own victims, and I say that in all aspects of life. I have always "lived for today, but plan for the future", and I certainly did that daily to make a living, let alone on plans for the future of my family. 

Red ink is here and now, and it does not look like things will get better until there is a production shortfall, and that is a terrible bet. Betting the "normal" is better odds than the abnormal. I tell my producers that in time they will see "fire sales" but to make sure the fire is out before you buy it.

Hedgers who are 100% hedged through 2015 have taken "income" off the table, as well as stress, and buys time for more decisions for 2016. This is the first day of the rest of your life, write in your journal daily what you feel is right for you, the reasons you hedged or did not hedge, and at least try to execute your plan, and learn from your experiences to improve the way you look and do things in the future. The BEST thing that can happen to you after you hedge, is for the market to get into 2008 or 2012 mode and rally straight up, because that means you can capture more money than your original hedge.

I know I have said things you do not want to hear, and put words in front of your eyes that you know you cannot ignore, but just like it is easy to be a bad parent and hard to be a good parent, it is worth it for me to take the hard road to say what is right for you.

I know what sad faces say weeks before they are never seen again, because the gorilla in the clearing house will not tolerate trading on reasons, you must trade money, so he makes sure he gets between you and the floor. Your bank and other places have the own gorillas, you have seen them too pass over your farm on their way to another, so make sure you never let potential profits cloud the responsibilities of protecting your money if it goes down instead. Hedge service or not, as a trader I live by the same rules. 

I would think current levels will hold, but I would not bet on it, I would rather sell significant rallies like at the highs of last week if we can get up there. I continue to say "I want to day trade futures without bias today but realize the market is extremely oversold and would be cautious when taking the sell signals down here, and risk $.03 in corn and $.05 in soybeans using a stop to protect any idea".              


Grains: I do not think we are going anywhere today, I expect a slow day with a lot of position adjustments before the weekend. With a continued ideal forecast Sunday night, we should be eroding further next week. With a change in weather, and it would not take much, we would see what the market is made of. Just as sellers appeared in a big way when at my first resistance numbers, they should also appear at every chart resistance level.

I think the lows corn made this week will not be far from if not the bottom for the next week. Soybeans are more vulnerable to the downside next week if weather permits. Soybeans seem high priced to me versus corn, and soybean possibilities of getting a record yield must be on the table. With a big crop, soybeans are doomed from this price level. Soybeans have been Humpty Dumpty for at least 2 years now, but it is on the edge right now before the fall.

Prices seem right for now, and the bets made by the bulls and bears are now based upon the weather. Continued good weather will ensure much lower prices, hot/dry will rebound prices from what has been factored in for this price level. Weather futures are the trade idea. Perception and market sentiment based upon guesses, lets the market pendulum swing. I just want to take advantage of that, by waiting for the market to swing to a level I can risk little and be rewarded nicely when the number/chart level holds. I know where I am right (it holds) and when I am wrong (the number failed to hold), and that is impossible to do using fundamentals alone.

I continue to want to keep my known risk bear strategies for soybeans, same goes for corn, but the downside appears limited for now. 

November soybeans had the correction I was looking for to the tune of $.53 ¾, $.01 ¼ from my $11.17 ½ resistance level I talked about in my comments for Thursday. The question I had was if the market could hurdle $11.17 ½ and try to fill the gap $.16 above there. My producers who wanted to sell, most were buying protection, did sell above $11.08 to $11.18. People who bought the market or reduced call spreads, or sold put spreads, waited for the market to get below $11 before doing so.

I think the range will be below average, I would tell you to adjust your position to make yourself comfortable going into one of many to come weather weekends. Compare Friday weather forecast at the close with the forecast Sunday night, if you are looking for direction to come from that. After last year I have no respect for weather forecasts, so I disregard the affect one might think the weather has, and stick to the charts because that is 100% factual based on everyone’s opinion in the past up to the last trade price. That is the only reality I can touch and feel.     

I continue to say "I want to day trade futures without bias today but realize the market is extremely oversold and would be cautious when taking the sell signals down here, and risk $.03 in corn and $.05 in soybeans using a stop to protect any idea".              




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WASDE Report for 7/11/14

Jul 11, 2014


Sign up: Learn a better way to hedge for free

Attention Corn & Soybean Producers:


Feel free to inquire on learning about the best way to hedge. In my opinion my strategy is the best I have seen since I became a member in 1976 trading corn and soybeans for my own account.


Are you tired of listening to the same BULL ****, and services that do not have a plan if the market goes down instead? Hedge means to take risk off the table, and my service has all producers 100% hedged and they do have most of the upside unhedged (if we can rally for whatever reason). Hedge with a Pro and option expert who has been trading grains for 40 years. 


Sign up: Free 1 Day Trail of My Daily Numbers & Hedge Ideas 


OILSEEDS:  U.S. oilseed production for 2014/15 is projected at 113.1 million tons, up 5.0 million tons with higher soybean production accounting for most of the change.  Soybean production is projected at a record 3,800 million bushels, up 165 million due to increased harvested area.  Harvested area, forecast at 84.1 million acres in the June 30 Acreage report, is 3.6 million above the June forecast.  The soybean yield is projected at 45.2 bushels per acre, unchanged from last month.  Soybean supplies are 180 million bushels above last month’s forecast due to higher beginning stocks and production.  Soybean crush is projected at 1,755 million bushels, up 40 million reflecting increased domestic soybean meal disappearance in line with adjustments for 2013/14 and higher U.S. soybean meal exports that offset lower projected exports for India.  Soybean exports for 2014/15 are raised 50 million bushels to 1,675 million reflecting record U.S. supplies and lower prices.  U.S. soybean ending stocks are projected at 415 million bushels, up 90 million.  If realized, projected stocks would be the highest since 2006/07.
Prices for soybeans and products for 2014/15 are all reduced.  The U.S. season-average soybean price is projected at $9.50 to $11.50 per bushel, down 25 cents on both ends of the range.  Soybean meal prices are projected at $350 to $390 per short ton, down 5 dollars on both ends.  The soybean oil price range is projected at 36 to 40 cents per pound, down 1 cent on both ends.
Global oilseed production for 2014/15 is projected at a record 521.9 million tons, up 5.8 million from last month with soybeans and rapeseed accounting for most of the change.  Global soybean production is projected at 304.8 million tons, up 4.8 million mostly due to higher production in the United States.  Higher soybean production is also projected for Russia and Ukraine, both reflecting higher harvested area.  Lower soybean production for India resulting from reduced harvested area partly offsets these gains.  Harvested area is reduced based on planting delays resulting from the slow development of the monsoon in the main soybean producing states.  Rapeseed production is raised for Canada based on higher planted area reported by Statistics Canada.  Rapeseed production is also raised for Australia on higher area and yield.  Global oilseed ending stocks for 2014/15 are projected at 99.7 million tons, up 3.6 million mostly reflecting a sharp increase in U.S. soybean stocks.
U.S. soybean crush for 2013/14 is raised 25 million bushels to 1,725 million on both increased soybean meal exports and domestic soybean meal use.  Soybean exports for 2013/14 are projected at 1,620 million bushels, up 20 million reflecting record shipments through early July.  Seed use is raised and residual is reduced based on indications from the June 30 Acreage and Grain Stocks reports, respectively.  Soybean ending stocks for 2013/14 are projected at 140 million bushels, up 15 million.
COARSE GRAINS:  Projected 2014/15 U.S. feed grain supplies are raised with increases for corn and sorghum beginning stocks and higher expected sorghum production.  Corn production is projected 75 million bushels lower based on harvested acres from the June 30 Acreage report.  The national average corn yield remains projected at a record 165.3 bushels per acre.  Favorable early July crop conditions and weather support an outlook for record yields across most of the Corn Belt, however, for much of the crop, the critical pollination period will be during middle and late July.  At the projected 13,860 million bushels, this year’s crop remains just 65 million bushels below last year’s record.    
Corn use changes for 2014/15 are limited to a 50-million-bushel reduction in expected feed and residual use based on the lower production projection and higher projected sorghum feed and residual use.  Sorghum food, seed, and industrial use, exports, and ending stocks are also raised for 2014/15 with sorghum production projected up 50 million bushels on the higher area reported in the Acreage report.  Corn ending stocks are projected up 75 million bushels with a higher carryin and lower feed and residual use more than offsetting the small acreage-driven decline in production.  The projected range for the season-average corn price is lowered 20 cents on each end to $3.65 to $4.35 per bushel.  Lower farm prices are also projected for sorghum, barley, and oats.
A number of 2013/14 feed grain supply and use changes are made this month reflecting June 1 stocks estimates from the June 30 Grain Stocks and based on final marketing-year barley and oats trade data from the U.S. Census Bureau.  Projected corn feed and residual use is lowered 125 million bushels based on lower-than-expected March-May disappearance as indicated by the June 1 stocks.  Corn used to produce ethanol is projected 25 million bushels higher based on the pace of ethanol production to date and lower projected sorghum food, seed, and industrial use, most of which is for ethanol.  Sorghum exports are projected up 10 million bushels reflecting continued steady export sales and the large 2013/14 outstanding sales balance.  Projected 2013/14 farm prices for corn and sorghum are lowered this month as favorable weather for developing 2014 crops reduce summer price prospects.
Global coarse grain supplies for 2014/15 are projected 7.0 million tons higher with larger beginning stocks for the United States, Brazil, and China and larger production for China, the EU, Ukraine, Russia, and Serbia.  Lower corn production for the United States and lower corn, barley, and oats production for Canada partly offset this month’s increases in world coarse grain output.  World barley production is higher with larger crops expected in Ukraine and Russia.  Foreign corn production for 2014/15 is raised 1.7 million tons.  China corn production is up 2.0 million tons on higher expected area.  China 2013/14 corn production is also raised, up 0.8 million tons based on the latest government estimates that include higher area.  EU 2014/15 corn production is raised 0.4 million with larger crops expected in Germany and France.  Serbia corn production is also raised 0.3 million tons.  Partly offsetting is a 0.9-million-ton reduction in Canada corn reflecting the lower planted area recently reported by Statistics Canada.  Brazil corn production is unchanged for 2014/15, but raised 2.0 million tons for 2013/14 based on higher area indications for second crop corn.
Global 2014/15 corn trade is nearly unchanged with a reduction for Canada exports partly offset by an increase for Serbia.  For 2013/14, world corn trade is raised with higher imports for the EU and South Korea more than offsetting a reduction for China.  Corn exports for 2013/14 are raised for Canada, the EU, and Russia.  Global corn consumption is lowered slightly for both 2013/14 and 2014/15 mostly reflecting the lower U.S. feed and residual use projections. Global 2014/15 corn ending stocks are projected 5.4 million tons higher with increases for China, Brazil, and the United States more than offsetting the Canada reduction.
WHEAT:  Projected U.S. wheat supplies for 2014/15 are raised this month with a sharp increase in forecast Hard Red Spring (HRS) wheat more than offsetting a decrease for Hard Red Winter (HRW).  The HRW crop was damaged by drought and April freezes in the Southern and Central plains; however, the HRS crop in the Northern Plains has benefitted from abundant soil moisture and cooler than normal early summer temperatures.  Yields for Durum and other spring wheat are forecast to be above average.  Feed and residual use for all wheat in 2014/15 is lowered 15 million bushels to 145 million as tight supplies of HRW wheat and relatively more attractive prices for feed grains reduce expected feed and residual use.  All wheat exports for 2014/15 are lowered 25 million bushels reflecting expectations of large world supplies and strong competition in export markets.  Ending stocks are projected 86 million bushels higher.  The projected season-average farm price range is lowered 40 cents at the midpoint to $6.00 to $7.20 per bushel.  
Global wheat supplies for 2014/15 are raised 1.8 million tons with increased production more than offsetting lower beginning stocks.  World production is raised 3.6 million tons to 705.2 million.  This is down 9.0 million tons from last year but still the second largest production on record.  The biggest foreign increases are 1.6 million tons for the EU and 1.0 million tons for Ukraine both due to continued favorable weather.  Production is raised 0.5 million tons for Australia based on the latest government indications for area.  Production is also raised 0.3 million tons each for Brazil and Serbia.  Partly offsetting this month’s production increases is a reduction of 1.0 million tons for Kazakhstan due to June dryness and a decline of 0.5 million tons for Canada based on the latest area indications from Statistics Canada.
Global wheat consumption is raised 0.9 million tons with increased wheat feeding for the EU and higher food use for several countries.  EU wheat feeding is raised 1.0 million tons as wheat quality is expected to suffer in the lower Danube region because of excessive rainfall in recent weeks.  Feeding reductions for Kazakhstan, Egypt, and Thailand are partly offsetting.  Food use is raised for Indonesia, Sudan, Morocco, and Bangladesh but lowered for Egypt.  Global wheat trade for 2014/15 is lowered with exports reduced 1.0 million tons for Kazakhstan and 0.7 million for the United States.  Partly offsetting increases in exports are made for Australia, Ukraine, and Serbia with improved crop prospects.  EU imports are lowered 0.5 million tons due in part to larger expected supplies of feed quality wheat in Bulgaria and Romania.  Imports are also lowered for Egypt and Mexico, but raised for Sudan, Indonesia, and Nigeria.  With supplies rising faster than use, global ending stocks are raised 0.9 million tons and remain at a 3-year high.
RICE:  U.S. all rice supplies in 2014/15 are raised 12.5 million cwt or nearly 5 percent to 279.8 million, the highest since 2010/11, as beginning stocks and production are raised 0.5 million and 13.0 million, respectively.  Conversely, the import forecast is lowered 1.0 million cwt to 21.0 million.  All rice production for 2014/15 is forecast at 226.0 million cwt, up 13.0 million or 6 percent due entirely to an increase in area.  All rice average yield is estimated at 7,469 pounds per acre, nearly the same as last month, but 3 percent below record 2013/14.  All rice total use for 2014/15 is raised 10.0 million cwt or 4 percent to 240.0 million, the highest since 2010/11, as domestic and residual use and exports are each increased 5.0 million to 133.0 million and 107.0 million, respectively.  Ending stocks for 2014/15 are projected at 39.8 million cwt, up 2.5 million.
Changes to U.S. 2013/14 rice supply and use include larger imports, lower domestic and residual use, larger exports, and higher ending stocks.  All rice imports for 2013/14 are forecast at 23.0 million cwt, up 1.0 million from last month, due mostly to an unexpectedly large May shipment of broken rice from Thailand reported by the Bureau of the Census.  Domestic and residual use for 2013/14 is lowered 1.0 million cwt to 123.0 million based largely on NASS’ Rice Stocks report showing larger than expected stocks as of June 1.  Exports for 2013/14 are raised 1.5 million cwt to 93.5 million based on data from the Bureau of the Census through May and data from the weekly U.S. Export Sales report through early July.
The 2014/15 U.S. long-grain rice season-average farm price is projected at $12.00 to $13.00 per cwt, down 80 cents per cwt on each end of the range from last month.  The 2014/15 combined medium- and short-grain price is projected at $17.00 to $18.00 per cwt, down $1.20 per cwt from a month ago.  The 2014/15 all rice price is projected at $13.50 to $14.50 per cwt, down 90 cents per cwt on each end of the range from last month.  Larger domestic supplies of both long-grain rice and medium-grain rice along with plentiful supplies among most of the major global exporters will exert downward pressure on prices.
Global 2014/15 rice supplies are reduced due to both lower beginning stocks and production.  Beginning stocks for 2014/15 are lowered 0.6 million tons due chiefly to reductions for China and the Philippines, partially offset by an increase for Vietnam.  Global production is projected at a record 479.4 million tons, down 1.3 million from last month owing mostly to a decrease in India, partially offset by increases for Vietnam and the United States.  India’s 2014/15 rice crop is projected at 104.0 million tons, down 2.0 million from last month attributed to the slow and erratic start to the Southwest Monsoon.  Global trade and consumption are changed little from a month ago.  U.S. 2014/15 exports are raised 160,000 tons from a month ago.  World ending stocks for 2014/15 are projected at 108.5 million tons, down 2.1 million from last month, and 3.0 million below the revised 2013/14 stocks forecast.  Ending stocks projections for 2014/15 are lowered for India, China, and the Philippines, partially offsetting increases for Brazil, Vietnam, and the United States.
SUGAR:  The Mexico 2013/14 estimate for sugar production is reduced by 75,000 metric tons (MT) to 6.025 million, based on very close to end-of-harvest reporting from Mexican authorities.  The 2013/14 estimate of exports is increased by 80,000 MT based on industry reporting of increased exports to non-U.S. destinations.  No other changes were made, implying ending stocks at 663,000 MT, for a low stocks-to-consumption ratio of 15.4 percent.  The Mexico 2014/15 forecast of production is lowered to 6.140 million MT based on expected reduced harvested area, and average sugar yields.  Imports are forecast to increase 224,000 MT to cover domestic consumption in that period before the harvest begins in late November.  Because consumption and ending stocks forecasts are unchanged, exports are forecast 291,000 MT lower at 1.616 million.  
The U.S. 2013/14 beet sugar production is lowered by 50,000 short tons, raw value (STRV) to 4.750 million, based on an expected slow start of 2014/15 harvesting in September.  Imports are increased by 89,000 STRV due to the reallocation of the tariff-rate quota (TRQ) by USTR.  Total deliveries are increased by 90,000 STRV based on pace.  These events imply lower ending stocks, estimated at 1.808 million STRV with stocks-to-use at 14.5 percent.  The U.S. 2014/15 sugar production is forecast 130,000 STRV lower due to revised cane sugar processors’ forecasts.  Total production is forecast at 8.225 million STRV.  Imports from Mexico are reduced to 1.877 million STRV, down 234,000 STRV.  Deliveries for human consumption are increased by 50,000 STRV, based on modest growth from the previous year.  Ending stocks are forecast at 1.447 million STRV for a stocks-to-use ratio of 11.9 percent.
LIVESTOCK, POULTRY, AND DAIRY:  The forecast for total meat production in 2014 is raised from last month.  Beef production is raised on higher steer and heifer and cow slaughter and slightly higher carcass weights.  Pork production is lowered as USDA’s Quarterly Hogs and Pigs report indicated a slower-than-expected expansion in farrowings during the second quarter.  This implies lower than previously forecast hog slaughter later in the year, but strong hog prices and lower feed costs are expected to provide incentives to feed hogs to heavier weights.  No change was made to broiler production as the production expansion remains muted.  Turkey production is raised on higher second-quarter production. Egg production is raised on strong table egg prices and lower feed costs.  For 2015, beef and broiler production is forecast higher, but pork production is forecast lower.  Cattle slaughter is forecast higher in early 2015 based on 2014 placements.  Pork production is reduced as supplies of market hogs will remain relatively tight.  Broiler production is forecast higher as lower expected feed costs support a more rapid increase in production.
Forecasts for 2014 and 2015 beef imports are raised as demand for processing grade beef remains strong.  Exports for 2014 are raised on recent data.  Pork imports for 2014 are reduced slightly.  Despite high prices, pork exports remain robust and forecasts for both 2014 and 2015 are raised.  Broiler and turkey exports are raised for 2014 based on May data, but forecasts for 2015 are unchanged from last month. 
Cattle and hog price forecasts for 2014 are raised from last month on the strength of demand.  Broiler price forecasts for both 2014 and 2015 are unchanged from last month.  The turkey price forecast for 2014 is raised based on June price data, but the egg price is reduced.  The hog price forecast is raised for 2015 on expectations of tighter supplies and continued strong demand.  Prices for cattle, broilers, turkey, and eggs are unchanged at the midpoint for 2015.   
The milk production forecast for 2014 is lowered from last month as slower growth in output per cow more than offsets a more rapid expansion in cow numbers.  The forecast for 2015 is raised as higher milk prices and lower feed costs are expected to support more rapid growth in cow numbers and output per cow.  Export forecasts for 2014 are lowered on a fat basis but raised on a skim-solids basis.  High domestic butter prices are expected to limit export opportunities, but nonfat dry milk/skim milk powder (NDM/SMP) exports are expected to remain strong.  For 2015, no change is forecast to fat-basis exports, but strength in NDM/SMP sales will help support higher skim-solids exports.  
Product prices are forecast higher for 2014 with strength in butter prices expected to carry into 2015.  Despite increased production, robust domestic demand and stronger NDM/SMP exports will support prices.  Class III and Class IV prices for 2014 are raised on stronger component product prices and the Class IV price forecast for 2015 is raised reflecting strength in butter prices.  The all milk price is forecast at $23.25 to $23.55 per cwt for 2014, and $19.75 to $20.75 per cwt for 2015.
COTTON:  The 2014/15 U.S. cotton forecasts show sharply higher production and ending stocks relative to last month.  Expected production is raised 1.5 million bales to 16.5 million due to larger planted area indicated in the June 30 Acreage report and lower expected abandonment based on favorable precipitation and improved crop conditions.  Domestic mill use is raised 100,000 bales due to expanding domestic mill capacity, while exports are raised 500,000 bales due to the larger available supply.  Despite the higher disappearance, ending stocks are raised to 5.2 million bales which, if realized, would be the largest since 2008/09.  The forecast range for the marketing-year average price received by producers is 60 to 76 cents per pound, with a midpoint of 68 cents, a 5-year low.
A combination of higher estimated beginning stocks, higher production, and lower consumption raise projected 2014/15 global ending stocks by 3.0 million bales this month.  World beginning stocks are raised nearly 1.6 million bales due mainly to higher estimated 2013/14 production for Brazil and lower consumption for China and Pakistan.  China’s consumption is reduced 1.0 million bales for 2013/14 and 500,000 bales for 2014/15, as high domestic price levels and uncertainty about future policies have discouraged cotton use in textiles in favor of polyester.  However, China’s consumption is expected to grow nearly 6 percent in 2014/15 as a result of the announced elimination of government price supports.  For 2014/15, world production is raised 500,000 bales, as the forecast increase for the United States is partially offset by lower production for India, Australia, and Brazil.  Aggregate world trade is about unchanged from last month, but exports are raised for the United States, Australia, and Brazil and reduced for several other exporting countries.  World stocks for 2014/15 are now projected at 105.7 million bales.



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