Crops Analysis | September 15, 2023
Price action: December corn futures ended the session down 4 1/4 cents to $4.76 1/4, marking a 7 1/2 cent loss on the week.
5-day outlook: Corn futures saw selling pressure throughout the session, though the double bottom from August and September lows remains intact. December futures continue to put a series of lower highs on the daily bar chart and the range continues to tighten. This will lead to price expansion one way or the other, indicated by a daily close below the double bottom at $4.73 1/2 or a daily close above $4.85. Seasonality continues to be bearish through harvest, but contra seasonal rallies do happen, and corn futures have seen significant losses from the summer. It is ultimately a “wait and see” as the market can easily break one way or the other. Until direction is decided, prices are likely to continue trading in a tight range back and forth.
30-day outlook: While the short-term technical outlook can go either way, prices are likely to face selling pressure over the coming month as harvest selling ramps up. River levels have not improved despite recent rains and barge traffic is restricted on major rivers in the Midwest. Bulls are looking for production estimates to fall, so far the data does not point to a meaningful drop in production. The balance sheet was seen as expanding this week even with a cut in yield due to an increase in planted acres. Ending stocks are seen as rising over 50% from 2022-23. This gluttony of supply and logistical issues in getting grain moved will keep pressure on prices over the coming month.
90-day outlook: Brazil has taken over as the world largest corn exporter and are seen as maintaining that crown for several years. China has created ties with countries in South America and the effect on corn exports can already be seen, as outstanding sales for 2023-24 are at the lowest level since 2019-20, when the trade war had a large negative influence on China’s willingness to buy U.S. corn. The logistical issues of moving grain are unlikely to resolve into the winter as meaningful precipitation remains sparse and river levels continue to fall. USDA sees exports as rising nearly 400 million bushels from 2022-23, the current pace of sales do not warrant such demand, which will likely continue to weigh on prices into December.
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 fell 20 1/4 cents to $13.40 1/4, losing 22 3/4 cents, while meal futures fell $7.30 to $392.10, a $9.30 drop on the week. December soyoil rose 34 points 62.06 cents, a 156-point gain on the week.
5-day outlook: Soybean futures ended the week lower after attempting to recapture early week losses following USDA’s September crop data which cast a negative tone across the complex. Weakness in meal futures and lackluster export data to kick off the marketing year also weighed on soybeans. Market participants have also been tuned into yield reports as harvest begins in earnest.
Earlier today, the National Oilseed Processors Association (NOPA) reported August soybean crush at 161.453, an 11-month low and below most trade estimates, will likely influence prices into next week. August crush was down 6.8% from July and 2.5% lower than August 2022 and is the smallest soy crush since last September. However, soyoil stocks as of Aug. 30 were reported at a nearly-six year low of 1.250 billion pounds, which could offset a portion of the bearishness stemming from lower-than-expected crush.
30-day outlook: South American weather will become increasingly important as spring planting efforts increase. World Weather Inc. reports Brazil and Argentina weather is following typical El Nino biases which should support a relatively normal start to the planting season in Brazil with Rio Grande do Sul, Paraguay and areas north into southwestern Parana being a little too wet at times. Brazilian producers were eligible to plant soybeans beginning Sept. 11 in Parana, while Mato Grosso, Mato Grosso Do Sul and Sao Paulo will begin on Sept. 16. Meanwhile, Rio Grande do Sul, Minas Gerais and Bahia will be eligible to plant soybeans on Oct. 1.
90-day outlook: As the year progresses, traders will keep a close eye on U.S. export sales, U.S. production and the global economy. While China’s downtrodden economy has recently caused widespread concern across commodities, looming U.S. supply uncertainties in the wake of hot, dry weather through much of the Midwest during August could potentially offset demand woes amid lingering tight supplies. This week, USDA reported weekly sales of 703,900 MT for 2023-24, which were down notably from the previous week and 34.2% behind a year-ago. Primary purchasers for the week included China, unknown destinations 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.
Price action: December soft red winter wheat futures rose 10 1/2 cents to $6.04 1/4 and on the week gained 8 1/2 cents. December HRW wheat futures closed up 10 cents at $7.46 1/2, near the session high and for the week up 14 1/2 cents. December spring wheat rose 5 1/2 cents to $7.89, and gained 18 1/4 cents on the week.
5-day outlook: Today’s technically bullish weekly high closes in December SRW and HRW contracts set the table for follow-through buying interest early next week. More upside price action next week would begin to suggest the wheat markets have put in near-term market bottoms. World Weather Inc. today reported an active weather pattern is expected the next two weeks in the HRW region. Above-average rainfall will be good for wheat planting and emergence but could also lead to some fieldwork delays. Wheat traders will also look to the corn market for direction in the near term, especially as harvest will pick up steam in the coming weeks.
30-day outlook: The U.S. dollar index this week hit a six-month high and is trending higher, suggesting still more appreciation for the greenback. That will likely be a bearish outside market element for wheat futures in the coming weeks. On the positive side, wheat futures price losses the past year, as well as a likely big U.S. corn harvest, likely won’t encourage aggressive wheat plantings.
90-day outlook: USDA this week reported weekly U.S. wheat export sales of 437,900 MT for 2023-24, which were up 18% from the previous week and up 20% from the four-week average. While the numbers were better than in recent weeks, U.S. wheat sales abroad will need to show marked improvement if wheat futures prices are to sustain price uptrends in the coming months. The strong U.S. dollar will not at all help U.S. wheat’s price-competitiveness abroad.
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 136 points to 86.44 but gained 53 points on the week.
5-day outlook: December cotton futures gave up Thursday’s gains as traders weigh lackluster export demand and production curbs in the wake of hot, dry conditions in Texas through much of the growing season. Outside markets were mildly friendly, with a weaker U.S. dollar likely limiting the day’s losses. Traders will continue to closely monitor outside markets, as crude oil has recently sustained strength amid global supply concerns as OPEC+ and Russia hinder production into the winter months.
30-day outlook: Weather will continue to be an important factor as harvest progresses in cotton-growing regions. World Weather Inc. notes showers and thunderstorms will continue today in western Texas and southwestern Oklahoma inducing further improvements in conditions for irrigated cotton while some dryland cotton should benefit from the rain as well with the rain coming too late to improve yields for much of the dryland crop. The forecaster indicates Delta crop conditions remain mostly good as are those in far western states.
90-day outlook: U.S. export sales will continue to be a long-term focus, as traders look to the weekly data for global demand insight, with a particular focus remaining on purchases from top importer, China. On Thursday, USDA reported weekly sales of 67,400 RB for 2023-24, which were down 21% from the previous week and 27% from the four-week average. Top purchasers for the week included Vietnam, Mexico and China. Meanwhile, shipments for the week totaled 118,200 RB, which were down 33% from the previous week and 41% from the four-week average. China, Bangladesh and Vietnam were the top destinations.
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.
