Crops Analysis | September 22, 2023
Price action: December corn futures rose 2 cents to $4.77 1/4 and nearer the daily high. For the week, December corn rose a penny.
5-day outlook: December corn futures prices this week hit a two-year low and the market feels heavy. Harvest is ramping up and seasonal commercial hedge pressure will likely limit the upside for corn in the near term. From a macro perspective, this week’s FOMC meeting results that were more hawkish than expected have cast a pall over the raw commodity sector; that will likely keep the speculative bulls in the grain markets squelched. The U.S. dollar index today hit a 6.5-month high, which is also a bearish outside market element for grain futures.
World Weather Inc. today reported wetter weather advertised in the U.S. western Corn Belt late this weekend and in the northern U.S. Plains and southeastern Canada’s Prairies will disrupt summer crop maturation and harvest progress, but it should not last long enough to be a serious problem. Good harvest weather is expected in the eastern Midwest.
30-day outlook: South American crops will be coming more into focus in the next few weeks. Corn planting in Argentina is reported at 5% complete, three percentage points ahead of last year. World Weather Inc. today said Argentina and Brazil rainfall may increase closer to the end of this month and that would bode well for early spring planting. Brazil has taken over as the world largest corn exporter.
90-day outlook: The underlying bearish element for the corn market is a projected 2023-24 carryover of over 2 billion bushels. Market speculation of a smaller Brazilian crop and reduced U.S. corn plantings next spring offer some longer-term support. U.S. corn exports need to improve in the coming months in order for corn prices to sustain an uptrend. The strong greenback is not helping that prospect.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold in the cash market on 2022-crop. You should be 50% forward priced for harvest delivery on expected 2023-crop.
Cash-only marketers: You should be 100% sold on 2022-crop. You should be 35% forward priced for harvest delivery on expected 2023-crop production.
Price action: November soybeans rose 2 1/2 cents to $12.96 1/4, but lost 44 cents on the week, while December soymeal fell $2.30 to $385.80 and ended the week down $6.30. December soyoil rose 122 points to 59.62 cents but gave up 244 points on the week.
5-day outlook: Corrective gains in soyoil futures lent soybean futures mild support in today’s session, while meal weakness limited gains along with persisting U.S. dollar strength. Traders will continue to focus on harvest reports and begin to position ahead of the government’s release of the Sept. 29 Quarterly Stocks Report, with a looming government shutdown increasing the odds of no October Production Report, which is set for release Oct. 12. If a shutdown occurs, USDA’s data collection for the monthly report will end at midnight on Sept. 30. The release of the October report will largely depend on how long a shutdown lasts and how much data the National Ag Statistics Service (NASS) is able to collect prior to Oct. 1.
30-day outlook: Harvest conditions throughout the Midwest will continue to prove important in addition to South American weather as planting progresses in earnest. World Weather Inc. forecasts wetter weather in the U.S. western Corn Belt late this weekend and in the northern U.S. Plains, which will disrupt summer crop maturation and harvest progress, but it should not last long enough to be a serious problem. Meanwhile, good harvest weather is expected in the eastern Midwest and Delta where dry weather is most likely, with no serious changes to navigable river levels expected.
The forecaster notes Argentina and Brazil may see increasing rainfall as the end of the month nears, which would bode well for early spring planting.
90-day outlook: U.S. export demand will continue to be a focus amid a weak start to the 2023-24 marketing year, with number one importer, China, consistently looking to Brazil to fulfill their import needs, amid plentiful supplies. Meanwhile, a robust U.S. dollar has consistently kept U.S. supplies at a premium in the global marketplace. Currently, U.S. soybean export commitments are trailing year-ago by nearly 34%, amid already baked-in expectations of a 10% year-over-year drop.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold in the cash market on 2022-crop. You should be 45% forward sold for harvest delivery on expected 2023-crop production.
Cash-only marketers: You should be 100% sold on 2022-crop. You should be 40% forward sold for harvest delivery on expected 2023-crop production.
Price action: December SRW wheat futures rose 3 3/4 cents to $5.79 1/2 and nearer the session high. For the week, December SRW fell 24 3/4 cents. December HRW wheat futures gained 3/4 cent at $7.11 1/4, nearer the session low and hit a two-year low today. For the week, December HRW lost 35 1/4 cents. Spring wheat futures advanced 3.0 cents to $7.70 1/2. That represented a weekly loss of 18 1/2 cents.
5-day outlook: The winter wheat futures markets today saw tepid short covering in bear markets. The rally in the U.S. dollar index to a 6.5-month high today limited the upside in the wheat markets. Next week wheat traders will likely continue to be influenced by price action in corn futures. With corn harvest moving into full swing, don’t expect much upside for that market any time soon. Traders will continue to monitor the Ukraine-Russia war and resulting grain-shipping problems in the Black Sea region. However, it appears traders have become numb to that situation.
World Weather Inc. today reported U.S. hard red winter wheat areas have benefited from recent rain, although the west will now be drying down. Rain is needed in northwestern hard red winter wheat areas. Montana and the Pacific Northwest also need moisture and it looks like both areas will receive it, leading to better winter crop planting and emergence conditions. Canada’s Prairies will see good drying conditions in central areas over the next week, supporting its late harvest. Meantime, concerns about Australia, southern Russia and Ukraine small grains “continues high with little opportunity for significant rain over the next ten days. Temperatures will also remain higher than usual, keeping evaporation rates strong,” said the forecaster.
30-day outlook: Rains expected over the eastern Midwest may impede SRW plantings in the coming weeks, but that should improve the crop’s early condition. The poor basis levels suggest wheat producers may limit plantings this fall. HRW basis is also poor, which could offer farmers few incentives to plant wheat. Lower prices are not likely to spur much farmer selling in the near term. The wheat markets need corn futures to find a market bottom.
90-day outlook: USDA Thursday reported another week of disappointing U.S. wheat export sales. Sales for 2023-24 totaled 307,700 MT in the week ended Sept. 14. That’s down 30% from the previous week and down 20% from the four-week average. U.S. wheat sales abroad are going to have to improve markedly if wheat futures markets are going to be able to sustain price uptrends in the coming months.
What to do: Get current with advised sales.
Hedgers: You should be 50% sold in the cash market on 2023-crop production.
Cash-only marketers: You should be 50% sold on 2023-crop production.
Price action: December cotton fell 51 points to 85.96 cents and is down 53 points on the week.
5-day outlook: Cotton futures pressed lower for the third straight session to end the week, amid U.S. dollar strength and concerns of wavering demand from China. The dollar index reached a six-month high and notched gains for a tenth consecutive week amid a more hawkish tone from the Federal Reserve in the wake of the September FOMC Meeting, held earlier this week. However, persisting crude oil strength from fading global supplies has underpinned the natural fiber, ultimately limiting losses. Traders will continue to take near-term direction from outside markets and closely monitor events in Washington as a potential government shutdown looms. The Senate will now take the lead approach in achieving a continuing resolution when politicians reconvene their efforts on Tuesday with only five days left before a possible government shutdown occurs.
30-day outlook: Weather in key growing areas will remain a focus as harvest efforts progress throughout the U.S. World Weather Inc. forecasts scattered showers in the Texas Blacklands this weekend, which will interfere with cotton maturation and briefly induce some cotton fiber discoloration. However, rainfall in West Texas should be minimal for a while, though totally dry weather is not expected. The forecaster notes Delta weather will remain mostly very good in addition to the outlook for most of the southeastern states.
90-day outlook: Traders will continue to monitor U.S. exports and economic data which will provide insight into the U.S. and global economy and ultimately demand. A sputtering Chinese economy has increased demand concerns, with many traders fearing the country will look consistently to Brazil and Australia for import needs before the U.S. In the week ended Sept. 14, USDA reported net sales of 105,800 MT, which rose 57% from the previous week and 67% from the four-week average. Primary purchasers for the week included Vietnam, China and Mexico. Export commitments are currently running 31.3% behind a year ago, with projections of a near 4% drop in exports year-over-year.
What to do: Get current with advised sales.
Hedgers: You should be 100% priced on 2022-crop in the cash market. You should have 60% of expected 2023-crop production forward sold for harvest delivery.
Cash-only marketers: You should be 100% priced on 2022-crop. You should have 60% of expected 2023-crop production forward sold for harvest delivery.
