Crops Analysis | June 3, 2021

( )

Corn

Price action: Corn futures fell, with July futures down 13 cents to $6.62 a bushel and December down 6 1/4 cents to $5.66 1/2.

Fundamental analysis: Corn market pressure stemmed in part from strong USDA crop ratings earlier this week and from forecasts suggesting improved rainfall chances for some parts of the Midwest over the next week. Some weather models today boosted projected rains for east-central North Dakota into nearby Minnesota Saturday into Monday. However, the estimated increase “is likely overdone,” according to World Weather Inc.

Heat and dryness continued to underpin the market, even with the USDA rating 76% of the corn crop in “good” or “excellent” condition to start the week. Temperatures are expected to near or surpass 90 degrees F in the Corn Belt this weekend. World Weather forecast temperature 6 to 12 degrees above normal for the upper Midwest from June 4-10. The forecaster also said the axis of a high-pressure ridge over North America may shift over the western Plains and near the front Range of the Rocky Mountains over the next two weeks, which may lead to reduced rain in the northern U.S. Plains.

Before the reopening, USDA did not announce any new private exporter sales this morning, which may have pressured nearby futures amid recent talk of new Chinese purchases. Traders will watch Friday’s USDA export sales report (delayed a day because of the Memorial Day holiday) for further confirmation of this year’s robust foreign demand.

Surging grain and meat prices are contributing to food inflation. Global food prices climbed 4.8% from April to May, with prices now up 40% from year-ago, the Food and Agriculture Organization of the United Nations (FAO) said in a report today. The monthly gain was the largest since October 2010.

Technical analysis: July futures set a new intraday low for the week at $6.52 3/4 and settled just a few cents above last week’s close at $6.56 3/4. Resistance is seen around this week’s high of $6.96 3/4, with support near the 40-day moving average at $6.46 and then $6.02 3/4, a four-week low notched May 26. December corn futures face resistance at the June 1 high of $5.58 1/2 with support around this week’s low of $5.51 and the 40-day moving average near $5.49.

What to do: Get current with advised 2020- and 2021-crop sales.

Hedgers: You should be 90% sold in the cash market on 2020-crop. You should also have 30% of expected 2021-crop forward-priced for harvest delivery.   

Cash-only marketers: You should be 90% sold on 2020-crop. You should also have 30% of expected 2021-crop forward-priced for harvest delivery.   

Soybeans 

Price action: July soybeans fell 13 1/4 cents to $15.49 1/4, while November futures dropped 10 1/4 cents to $14.03 1/2. September meal was down $2.10 to $3.92.80 and September soyoil fell 82 points to 63.98 cents.

Fundamental analysis: It was a choppy trade with prices erasing earlier gains as midday forecasts were for better rains in the Northern Plains, parts of the eastern Midwest and from the Delta to the Southeast. However, the center of the nation looks dry the next eight days and temperatures will be well above normal the next five days. Commodity Weather Group sees dryness issues expanding in the western Midwest in the second half of June, but cooler temperatures should help to limit stress. Some areas would benefit from the warmer weather after a cold May but that still means the heart of the Midwest will need timely rains and now extended heat in July and August.

Funds were on the sell side of the soybean and soymeal market today, paring positions ahead of the weekend and updated weather forecasts as well as Friday morning’s delayed weekly export sales report. Traders are looking for old-crop soybean sales to show a net reduction of 100,000 MT to a gain of 200,000 MT. New-crop sales are seen between none and 400,000 MT. 

The reversal in soyoil futures today also helped trim strong early gains in soybeans. July soyoil pushed up to a new contract high at 72.13 cents but did not rise above the record high set last month in the expired May futures at 72.32. The world vegoil markets have been on a tear on rising biofuel production and growing food demand. But weakness in South America soyoil basis this week raised concerns that high prices were slowing food demand. The August crush futures fell almost 8 cents to 77 cents after touching 87 1/2 cents overnight. Given tight supplies of old-crop beans the market is trying to send signals to slow soybean processing.

Technical analysis: July beans touched $15.89 overnight and closed near session lows, forming a hook reversal down and closing back below the 20-day moving average. The contract closed at $15.30 1/2 and that will be important closing support on Friday to close the week. Daily momentum turned up on Monday but now the market needs a close above today’s high to encourage fresh buying. November beans held above psychological support at $14.00 and above the contract’s 20-day moving average despite ending near session lows after erasing strong overnight gains.

What to do: Make sure you are caught up with advised sales.

Hedgers: You should be 90% priced in the cash market on 2020 crop. You should also have 30% of expected 2021-crop forward-priced for harvest delivery.

Cash-only marketers: You should be 90% sold on 2020 crop. You should also have 30% of expected 2021-crop forward-priced for harvest delivery.

Wheat

Price action: July SRW wheat closed down 10 3/4 cents at $6.76 1/4 today. July HRW wheat closed down 9 1/2 cents today at $6.24 1/4. Prices closed nearer the session lows today. September spring wheat futures slipped 5 1/2 cents lower to $7.82 3/4.

Fundamental analysis: Weakness in corn and soybean futures prices today spilled over into wheat, and some chart consolidation from recent gains were featured in wheat markets today. There is still concern over this week’s hot and dry weather in the northern U.S. Plains and southern Canada’s Prairies, but some rains may develop next week and that has put a cap on the spring wheat’s rally, at least for the moment.  U.S. spring wheat this week was rated just 43% “good” and “excellent” with 80% of the crop emerged. Improving weather for U.S. hard red winter wheat harvesting is expected but it will be a slow process.

Returning dry weather in Russia’s southern New Lands and northern Kazakhstan next week will be closely watched, while wet weather in Ukraine and Russia’s Southern Region is beginning to raise concerns about too much moisture. Good harvest weather is expected in China later this month.

Traders are looking forward to Friday morning’s weekly USDA export sales report, delayed by one day due to the Memorial Day holiday Monday. U.S. wheat sales are seen at 175,000 to 500,000 MT.

Technical analysis: Winter wheat bulls have the slight overall near-term technical advantage. It still appears last week’s lows were near-term bottoms. SRW bulls' next upside price objective is closing July prices above solid technical resistance at $7.25. The bears' next downside breakout objective is closing prices below solid technical support at last week’s low of $6.39 1/2. First resistance is seen at this week’s high of $7.02 and then at $7.10. First support is seen at today’s low of $6.69 1/4 and then at $6.60. The HRW bulls’ next upside price objective is closing July prices above solid technical resistance at the February high of $6.67. The bears' next downside objective is closing prices below solid technical support at last week’s low of $5.88. First resistance is seen at $6.40 and then at this week’s high of $6.53. First support is seen at today’s low of $6.17 1/2 and then at $6.10.

What to do: Make sure you are current with advised sales. Spring wheat producers should adjust sales levels based on your expected production levels given your moisture situation.

Hedgers: You should have 60% of 2021-crop sold in the cash market. You should also have 10% of expected 2022-crop production sold for harvest delivery next year.

Cash-only marketers: You should have 60% of 2021-crop sold. You should also have 10% of expected 2022-crop production sold for harvest delivery next year.

Cotton

Price action: July cotton rose 44 points to 84.21 and December futures were up 38 points to 85.04 cents.

Fundamental analysis: Cotton held relatively firm today in the face of weaker grains, a stronger dollar and a retreat in U.S. stock prices. Traders were awaiting Friday’s delayed export sales report with great anticipation after better sales last week that included new business with China, Pakistan and Turkey. Another week of strong sales as well as shipments will increase speculation that USDA will raise its export forecast and cut ending stocks in the June 10 Supply & Demand Report.

Traders were also waiting for the May U.S. jobs report on Friday morning after last month’s data showed a smaller gain in new employment. This report will reveal how well the U.S. economy is coming back from the pandemic and potential consumer spending. 

Weather forecasts show some rain and showers for much of Texas and the Southeast. Recent rains in parts of Texas have helped to get seeds in the ground, but more is needed for early development. In the Southeast, it has been very dry the past month, but the weather models are pointing to some very important rains coming over the next week. Some growers have already switched acres from cotton to soybeans because of the dry soils.

Technical analysis: December futures rose to 85.43 cents today but failed to rally above the June 1 high at 85.44. A close above that level is required to trigger fresh buying. Moving average support is at 83.80 to 83.95 in the short term. Daily momentum turned up on June 1 and that suggests prices may eventually test strong resistance at the April 27 high at 87.43 cents.

What to do: Get current with advised 2020 and 2021 crop sales; be ready to advance new-crop sales.

Hedgers: You should be 90% sold in the cash market on 2020-crop. You should have 40% of expected 2021-crop forward-priced for harvest delivery.

Cash-only marketers: You should be 90% sold on 2020-crop. You should have 40% of expected 2021-crop forward-priced for harvest delivery.

 

Latest News

After the Bell | March 27, 2024
After the Bell | March 27, 2024

After the Bell | March 27, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

Market Watch | March 27, 2024
Market Watch | March 27, 2024

Cash cattle prices soar to all-time high.

Baltimore Bridge Collapse: Limited Impact on Trade Basis Channel Reopening Timeline
Baltimore Bridge Collapse: Limited Impact on Trade Basis Channel Reopening Timeline

RFK Jr. VP | Dairy cattle bird flu update | John Deere layoffs | Dollar/yen exchange rate 34-year high

Ahead of the Open | March 27, 2024
Ahead of the Open | March 27, 2024

Corn and soybeans each favored the downside overnight, with corn leading the way lower. Wheat showed relative strength and went into the break near unchanged.

First Thing Today | March 27, 2024
First Thing Today | March 27, 2024

Corn, soybeans and wheat extended Tuesday’s losses during the overnight session.