Crops Analysis | September 17, 2021

( )

Corn ­

Price action: December corn fell 2 1/4 cents to $5.27 1/4 a bushel, up 1.9% from $5.17 1/2 at the end of last week for the first weekly gain in the past three. The new-crop contract is down 17% from a contract high of $6.36 1/2 in May.

5-day outlook: Corn futures recovered from a brief drop under $5.00 a week ago amid growing conviction the market forged a near-term bottom after the Sept. 10 USDA Crop Production Report. Harvest will accelerate in the week ahead, aided by dry conditions across much of the Midwest. USDA will update harvest progress Monday. As of Sept. 12, 4% of the corn crop was harvested, compared to the 5% average for the previous five years. USDA rated 58% of the U.S. crop in “good” or “excellent” condition as of Sept. 12, down from 59% the previous week. Chart levels to watch in December futures include this week’s high at $5.37 1/2 and the 40-day moving average around $5.43, as well as $4.97 1/2, a five-month low hit last Friday.

30-day outlook: Seasonal pressure as harvest expands may limit futures’ upside over the next month, and sluggish exports may also cap any rally attempts. Export infrastructure at the U.S. Gulf remains hobbled by damage and power loss from Hurricane Ida and may not fully operational for several weeks at the earliest. CHS Inc., for example, expects its Myrtle Grove, Louisiana, grain export terminal to be operational by the height of the U.S. corn and soy harvest but could not be more specific, Reuters recently reported. USDA will update its harvest estimates in its Oct. 12 Crop Production report.

90-day outlook: The market should have a good handle on the size of the U.S. harvest after USDA’s Nov. 9 crop production report, meaning long-term focus will shift to demand. USDA yesterday reported a disappointing 246,600 MT in weekly corn export sales, which didn’t break the market, but serves as a reminder that stronger foreign demand is needed to stir sustained buying interest—for funds, in particular. Recent drops to the $5.00 level in December futures has attracted fresh buying interest for a few months, but if exports don’t pick up, the market may test that key support area. Crude oil futures, which notched a six-week high this week, also bear watching, partly as a harbinger of the global economy.

What to do: Wait on an extended price recovery to get current with advised 2021-crop sales if you are behind. Catch up on the advised hedges. We are targeting a return to the mid-$5 level to increase 2021-crop sales.

Hedgers: You have hedges covering 101% of expected 2021-crop production in December corn futures at $5.22. You should have 40% of expected 2021-crop production forward-priced for harvest delivery.

Cash-only marketers: You should have 40% of expected 2021-crop production forward-priced for harvest delivery.

 

Soybeans

Price action: Soybean futures finished the week under pressure with losses of 9 1/2 to 12 cents through the July contract, led by November. For the week, November soybeans dropped 2 1/2 cents to $12.84 a bushel. Soymeal futures were mostly $1.70 to $2.40 lower, while soyoil finished mostly 48 to 58 points lower.

5-day outlook: Harvest activity is going to ramp up with the crop drying down quickly and a generally open forecast over the next week. That could put seasonal pressure on futures amid farmer and commercial hedge pressure. But traders will also keep a close watch on the export demand picture after China booked some Brazilian soybean cargoes for fall delivery this week. Any additional Chinese business that goes to Brazil is likely to put pressure on prices.

30-day outlook: China’s purchases of Brazilian soybeans for fall delivery are likely just making sure crushers get what they need, especially since they booked the cargoes at premium prices to U.S. soybeans. If Gulf shipping returns to somewhat of a normal situation over the next month, Chinese buyers could wash out those purchases and switch to U.S. origin cargoes. Another shipping factor to watch: delayed unloadings at the Gulf since Hurricane Ida has left barges out of position and caused shortages upriver, which is hammering interior basis.

90-day outlook: Of the 26 previous years when USDA has raised its soybean yield from August to September, only 14 times (54%) has the final yield been higher, while 12 years yields have declined. In years when USDA increased its yield in September, the average increase to the final yield was 0.4 bu. per acre. If you apply that to USDA’s September estimate of 50.6 bu., it would result in a yield of 51.0 bu. per acre. History says the soybean yield could creep a little higher, though the quick shutdown of the crop will likely prevent the yield estimate from rising much from USDA’s September figure.

What to do: Wait on an extended price recovery to get current with advised 2021-crop sales if you are behind. Catch up on the advised hedges. We are targeting a return to the mid-$13 level to increase 2021-crop sales.  

Hedgers: You have hedges covering 10% of expected 2021-crop production in November soybean futures at $12.73 1/2. You should have 40% of expected 2021-crop production forward-priced for harvest delivery.

Cash-only marketers: You should have 40% of expected 2021-crop production forward-priced for harvest delivery.

 

Wheat

Price action: December SRW wheat slid 4 1/4 cents to $7.08 3/4 a bushel, up 20 1/4 cents on the week. December HRW futures fell 7 1/2 cents to $7.13, up 30 1/2 cents from a week ago. December spring wheat fell 6 cents to $9.00 1/2, a 21 3/4-cent weekly gain.

5-day outlook: After rallying impressively early in the week, wheat futures followed corn and soybeans lower today. The grain industry will be watching how U.S. Plains weather influences winter wheat plantings. Sustained late-summer dryness suggests seedings will continue running well ahead of seasonal norms, but a persistent lack of rain would threaten early-season development. Otherwise, traders will be watching for news concerning U.S. exports. Strong international demand could give the markets a big boost.

30-day outlook: As noted above, the focus of trader monitoring might easily shift from the speed of winter wheat plantings to concerns about the early-autumn condition of the winter wheat crop if the Midwest continues to lack for rainfall. Export demand will remain key to bullish hopes, but the recent pattern of diminished production and/or export news from major global competitors holds the potential to give the wheat bulls fresh incentive to buy the market as well. Spring wheat futures are likely to follow the lead of the winter wheat markets, since the spring wheat harvest is nearing completion and planting season is six months away. Wheat prices may prove vulnerable to seasonal weakness spilling over from the corn and soybean markets if those suffer badly from harvest pressure.

90-day outlook: The condition of the winter wheat crop will be observed with considerable interest during the run-up to the year-end holiday season, but the strength of export demand will likely prove to be the most important factor affecting prices. International news of buying from major export customers, as well as production and supply news from major competitors could affect the markets as well. South American developments could prove particularly noteworthy, especially if La Niña conditions in the central Pacific Ocean become a factor. Shifts in corn and soybean prices will probably influence wheat prices as well.

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

Hedgers: You should be 70% priced in the cash market on 2021-crop. You should also have 20% of expected 2022-crop production forward-priced for harvest delivery next year.

Cash-only marketers: You should be 70% priced on 2021-crop. You should also have 20% of expected 2022-crop production forward-priced for harvest delivery next year.

 

Cotton

Price action: December cotton futures fell 18 points to 92.33 cents a pound, down 1.3% for the week and the lowest closing price since 92.30 cents on Sept. 1.

5-day outlook: Cotton futures held up fairly well this week amid weakness in grain markets. The surge in the U.S. dollar index this week limited price gains in cotton, and further dollar strength next week would likely do the same. U.S. stock indexes were poised to close at technically bearish weekly low closes, which may lead to follow-through selling pressure early next week. Grain futures’ performance next week will also influence cotton trading.

World Weather Inc. said remnants of Tropical Depression Nicholas should slowly dissipate through the weekend and into early next week. Some flooding rain has occurred this week in a part of Louisiana. “Rainy weather will not bode well for open boll cotton in the southeastern U.S. or Delta, but no heavy or excessive rain is expected.” West Texas will in coming days experience limited rainfall and warm temperatures favoring late-season crop development, said World Weather.

30-day outlook: The U.S. export sales pace for cotton will remain in focus for futures traders. Thursday’s USDA export sales backed off the solid pace seen in last week’s report. However, shipments this week were strong, including to China. The U.S. export sales pace in recent weeks has been overall impressive, given the elevated price levels for cotton. Such suggests that in the coming weeks, more of the same good U.S. sales can be expected.

90-day outlook: The U.S. hurricane season has been active through its first half. Cotton traders will continue to monitor Gulf region weather forecasts for the next several weeks, keeping an eye out for the next storm that could impact the maturing U.S. cotton crop. On the supply and demand front heading into year end, it appears the Covid strain’s rate of spreading in the U.S. is slowing down, or will soon do so, which is a positive for consumer demand for apparel this fall. Also, USDA’s recent hike in its U.S. cotton production forecast appears not to have significantly dented bullish enthusiasm in cotton futures.

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

Hedgers: You should be 75% forward-priced on expected 2021-crop production for harvest delivery. 

Cash-only marketers: You should be 75% forward-priced on expected 2021-crop production for harvest delivery.

 

Latest News

U.S. PCE Price Index Up 0.3% in Feb. 2024, Core Inflation Slows to 2.8%
U.S. PCE Price Index Up 0.3% in Feb. 2024, Core Inflation Slows to 2.8%

Final day for landowners to submit acres for CRP general signup

H&P Report negative compared to pre-report expectations
H&P Report negative compared to pre-report expectations

Nearly every category topped the average pre-report estimates.

After the Bell | March 28, 2024
After the Bell | March 28, 2024

After the Bell | March 28, 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.

PF Report Reaction: Bullish USDA data for corn
PF Report Reaction: Bullish USDA data for corn

Corn planting intentions and March 1 stocks came in lower than expected.