Crops Analysis | September 29, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: December corn fell 11 3/4 cents to $4.76 3/4, marking a 1/2 cent loss on the week.

5-day outlook: Corn futures fell following the Grain Stocks report despite ending stocks coming in tighter than anticipated. Corn stocks in all positions as of Sept. 1 totaled 1.361 billion bu., 68 million bu. less than the average pre-report estimate. Of the total stocks, 605 million bu. (44.4%) were stored on farms, up 19% from last year. Off-farm stocks stood at 756 million bu. (55.5%), down 13% from a year ago. Implied disappearance during the final quarter of 2022-23 was 2.75 billion bu., down 7.4% from the same period last year. Selling was persistent following the report as prices posted a bearish low range close, though remained above Monday’s low. While the prior low was protected this week, the uptrend that persisted from the Sept. 19 low is broken and historicals point to extended weakness throughout the remainder of harvest. A looming U.S. government shutdown is also not supportive of prices over the coming week as any data, apart from inspections, will be delayed and traders seek safe haven assets. Selling pressure is likely to persist over the coming week.

30-day outlook: Data collection for the upcoming Crop Production report will be halted at midnight on Saturday, assuming a shutdown. Weekly export sales data will be halted as well, so even if cash grain is sold, the data will not be made available to the public until lawmakers are able to agree on funding. This will delay any objective data that implies a lower yield or data that shows renewed export demand. One or both of these categories will need to see a significant shift in order to turn selling pressure around over the coming month. Uncertainty in these regards, continued harvest pressure and river levels that are likely to fall to a record low will continue to limit any upside over the coming month.

90-day outlook: While there has been an increase in daily export sales announcements in the past few weeks, evidenced by today’s daily sale announcement of 223,540 MT for delivery to Mexico during the 2023-24 marketing year, bringing the weekly total up to 1.9 MMT of daily corn sales announcements over the past week, total outstanding sales remain poor. As of Sept. 21, outstanding sales to all destinations are down 7.8% from last year and 34.5% below the five-year average. China currently has less than 10% of last year’s outstanding sales at 204.5 MT, as they reportedly purchases 10-12 cargoes of Ukrainian corn for delivery in November and December, on top of the corn the nation has been importing from Brazil. Until the demand situation improves, ending stocks above 2 billion bushels will provide headwinds in spurring a rally in corn prices.

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.

 

 

Soybeans

Price action: November soybeans fell 25 1/2 cents to $12.75, marking the lowest close since June 28 and a weekly loss of 21 1/4 cents. December meal gave up $10.30, closing at $381.20, a $4.60 loss on the week. December soyoil fell 108 points to 55.83 cents and lost 379 points week-over-week.

5-day outlook: Soybean futures fell under extended selling pressure following USDA’s Quarterly Stocks Report, trading to the lowest level since June 30. Traders were anticipating Sept. 1 stocks of 268 million bu., which was 26 million bu. above the average pre-report estimate. While the figure was lower than 274 million bu. a year ago, the news cast a shadow over the complex. Traders will continue to mull the data into next week, though a government shutdown will likely exacerbate today’s more-bearish-than-expected data.

30-day outlook: A potential government shutdown on Oct. 1 could mean no October Crop Report, which is set for release Oct. 12, as surveys for the report are scheduled to run today through Oct. 4. There is a possibility the report could be released, even if there is a shutdown, but it will largely depend on how long the shutdown lasts, and most importantly how much Data the National Ag Statistics Service can collect prior to Oct. 1.

Meanwhile, traders will look South American weather, which will become increasingly important as planting efforts progress. World Weather Inc. maintains some concern remains for summer crops in Mato Grosso where erratic and lighter than usual rain may occur for a while longer, though the region will get greater rain next week and into the second week of October. Center south Brazil is also expecting greater rainfall next week and into the following week, which will bolster moisture and improve early season planting conditions.

90-day outlook: U.S. exports will remain a focus as the marketing year progresses. So far, commitments are running 33.6% behind a year ago as top importer, China, has consistently looked to Brazil to fulfill their import needs. An elevated U.S. dollar has crimped export business over the past year as U.S. supplies have been a premium to competitors. Earlier this week, USDA reported net sales of 672,200 MT during the week ended Sept. 21, which was up notably from the previous week, but near the low-end of pre-report expectations. China was the top purchaser for the week, along with Mexico and the Netherlands.

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.

 

 

Wheat

Price action: December SRW wheat futures dropped 37 1/4 cents to $5.41 1/2, near the daily low and set a contract low. For the week, December SRW fell 38 cents. December HRW wheat lost 21 1/4 cents to $6.63 3/4, near the session low and hit a contract low. On the week, December HRW lost 47 1/2 cents. December spring wheat futures fell 38 3/4 cents to $7.08 1/4, and lost 62 1/4 cents on the week.

5-day outlook: Today’s drubbing in the winter wheat futures markets that produced technically bearish weekly, monthly and quarterly low closes sets the stage for follow-through technical selling pressure next week.

Wheat futures traders got some surprisingly bearish news from USDA today that solidly extended early-morning losses. The agency said U.S. wheat stocks at 1.780 billion bu. were 8 million bu. more than the average trade estimate. Meantime, USDA’s final all-wheat production estimate was raised 78 million bu. from August and came in 83 million bu. above the average pre-report trade estimate.

Wheat traders will likely be looking to the corn futures market for direction in the near term, but corn also faded today as harvest pressure and commercial selling will likely dampen corn futures in the coming weeks.

30-day outlook: Wheat traders in the coming weeks will continue to closely watch weather patterns in major world wheat regions. World Weather Inc. today said U.S. wheat planting weather should be mostly good in the central states, Pacific Northwest and Midwest during the next two weeks. Similar conditions are likely in Europe, although there will be areas of dryness in the southeast. Rain is needed in Ukraine and Russia’s Southern Region to improve seed germination, emergence and establishment, said the forecaster. Argentina still needs greater rain in the west while the eastern crops are in good shape. Southern Brazil crops are expected to perform favorably, although the region is expected to get too much rain at times starting late next week. Australia’s rain in New South Wales and Victoria early next week will prove to be very good for developing wheat.

90-day outlook: USDA Thursday reported U.S. wheat export sales of 544,500 MT during week ended Sept. 21--up 77% from the previous week and up 51% from the four-week average. The U.S. wheat export picture has improved a bit recently, but sales abroad need to continue to rebound to help to turn around the slumping wheat futures markets. A strong U.S. dollar on the foreign exchange market won’t help out U.S. wheat export prospects 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.

 

 

Cotton 

Price action: December cotton fell 152 points to 87.19 cents but gained 128 points on the week.

5-day outlook: December cotton faced profit taking to end the week following four straight days of gains as traders position ahead of a potential government shutdown on Oct. 1. A slide in crude oil and equities, along with losses across the grain and soy complex following USDA’s Quarterly Stocks Report, added additional pressure to the natural fiber. With increasing odds of a shutdown, traders are likely to enter next week in risk-off mode until a funding resolution is met.

30-day outlook: Given a government shutdown occurs over the weekend, traders will then focus on the duration of the shutdown, which could affect the release of the October World Agriculture Supply and Demand Estimates Report, due out Oct. 12. A lack of government data could prolong a potential risk off tone across commodities, though traders will continue to closely monitor harvest weather across the U.S. World Weather Inc. reports harvest weather is expected to be favorable, with some rain developing in Texas this weekend into next week, although it should not last long enough to be a serious threat to cotton fiber quality. Meanwhile, the Delta and southeastern states will experience restricted precip and warm weather until late next week when rain is expected. The forecaster notes the drier days will be great for crop maturation and harvesting while the rainy days will place fieldwork on hold for a little while.  

90-day outlook: U.S. exports will remain a focus as the marketing year progresses. Importing countries have recently looked to Brazil to fulfill its import needs, putting the country on track to reach record cotton shipments during 2023-24. A smaller U.S. crop means that Brazil could surpass the U.S. in exports in the current marketing year. According to the latest USDA data, the country still appears to be ahead of Brazil as an exporter, currently, with exports forecast at 12.3 million bales versus 11.8 million for the South American country.

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.

 

 

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