Corn
Price action: July corn fell 1 3/4 cent to $4.48, a low-range close, while new-crop posted gains.
Fundamental analysis: Corn futures held a rather muted tone going into and after USDA’s Supply and Demand Report released in late-morning trade, as weaker-than-expected corn inspections, coupled with bearish wheat data and a soaring U.S. dollar limited short-covering interest. Technical resistance also looms overhead, though a correction may emerge eventually amid persisting oversold conditions.
USDA lowered its old-crop ending stocks estimate by 50 million bu. to 1.415 million bu., which was below the average pre-report estimate. Domestic use was left unchanged from April, but the export estimate was raised 50 million bu. to 2.6 billion bu. Moreover, the government gave its first look into new-crop supply and demand today using data from its March Prospective Plantings Report, which estimated corn acres to be 95.3 million acres. Harvested acres were pegged at 87.4 million acres, with estimated production at 15.82 billion bu., using a trendline yield of 181 bu. per acre. If realized, this would mark a production increase of 6% over year-ago. New-crop ending stocks were estimated at 1.8 billion bu., which was 220 million bu. below the average pre-report trade estimate. USDA anticipates feed and residual use at 5.9 billion bu. (up 150 million bu. from this year), food seed & industrial use at 6.885 billion (down 5 million bu. from this year, corn-for-ethanol use is 5.5 billion bu., unchanged from this year), with exports projected at 2.675 billion bu. (up 75 million bu. from this year).
USDA will also release its weekly Crop Progress Report following the close this afternoon, with traders expecting corn plantings to have advanced to 58% through Sunday.
Technical analysis: July corn futures continue to struggle technically as bears show their strength. Resistance at the 10-. 200-, 20- 40- and 100-day moving averages, layered from $4.59 1/4 to $4.79 1/2 will continue to curb a move higher, while bears will look to take out last week’s low of $4.42 1/4. However, efforts will be slowed by support at $4.46 1/4 and $4.42 1/2.
Hedgers: You should be 70% sold in the cash market on 2024-crop. You should have 20% of expected 2025-crop production forward sold for harvest delivery.
Cash-only marketers: You should be 70% sold on 2024-crop. You should have 20% of expected 2025-crop production forward sold for harvest delivery.
Soybeans
Price action: July soybeans closed 19 1/2 cents higher at $10.71 1/4 and settled nearer session highs. July meal climbed $4.0 to $298.1, near session highs. July bean oil surged 135 points to 49.92 cents and are breaking out on the daily chart.
Fundamental analysis: Soybeans showed impressive strength throughout today’s session, trading in a wide range in volatile trade driven by a few key catalysts, including the temporary reductions in tariffs between the U.S. and China and a friendly USDA report. The U.S. and China have agreed to dramatically reduce tariffs on each other’s goods for a 90-day period following high-level talks in Geneva, Switzerland. U.S. tariffs on Chinese imports will drop from 145% to 30%, while Chinese tariffs on U.S. goods will be reduced from 125% to 10%. The tariff reductions take effect on Wednesday and apply to most of the duties imposed in April, covering a wide range of consumer and industrial goods. China typically shifts the vast majority of their imports to Brazil this time of year, which is why new-crop futures led strength today. It would take more than a reduction in tariffs to drive additional Chinese demand to old-crop soybeans as fresh supplies are becoming available elsewhere on the world market that are cheaper than U.S. soybeans.
Old-crop ending stocks for soybeans were pegged at 350 million bushels, down from 375 million bushels and below expectations of 371 million. The reduction in stocks came from a 25 million bushel increase to the export estimate, which is now estimated at 1.85 billion bushels. That tracks with our pace analysis which estimated exports above UDA’s prior estimate. The big question mark remains as to whether export shipments will slow into the summer as more countries’ tariffs are put off hold. Export inspections this morning totaled 426,077 MT (15.7 million bu.), up 92,423 MT from the previous week and within pre-report expectations from 250,000 to 550,000 MT. Inspections continue to run ahead of the required pace to hit the USDA export estimate, though are expected to slow sharply in the next few weeks.
The new-crop balance sheet reflected the March Prospective Plantings acres, leading to the second tightest balance sheet on the initial report since 2012/13. Ending stocks are projected to fall to 295 million bushels, down 55 million bu. from this year and 67 million bu. below the average pre-report trade estimate. New-crop soybean total supplies are projected at 4.710 billion bu., down 24 million bu. from this year. The crop is projected at 4.340 billion bushels with a national average soybean yield of 52.5 bu. per acre. On the demand side, USDA projects soybean crush of 2.49 billion bu. (up 70 million bu. from this year), exports of 1.815 billion bu. (down 35 million bu. from this year) and total use is projected at 4.415 billion bu., up 31 million bu. from this year.
USDA reported daily soybean sales of 120,000 MT to Mexico. Of the total, 24,000 MT is for 2024-25 and 96,000 MT for 2025-26.
Technical analysis: July soybean futures were pulled higher by new-crop contracts today as spreads continue to collapse. Bulls hold the near-term technical advantage and are seeking to close prices above $10.75 on a push higher. Additional strength would find resistance at the Feb. 21 high of $10.81 3/4. Support comes in at $10.65 1/4, the 200-day moving average, which capped all of the upside in the late April rally, then $10.60, which capped most of the upside in the past few weeks.
July meal posted strong gains today, closing above the 10-day moving average for the first time since April 17. Bears continue to hold the technical advantage and are looking to close prices back below that mark at $296.1, which is backed by firm support at $294.0. Resistance stands at $300.0, bulls next objective, then $304.0.
What to do: Get current with advised sales. Our next sales target is $11.00 in nearby futures.
Hedgers: You should be 55% sold in the cash market on 2024-crop. You should also have 10% of expected 2025-crop production sold for harvest delivery.
Cash-only marketers: You should be 55% sold on 2024-crop. You should also have 10% of expected 2025-crop production sold for harvest delivery.
Wheat
Price action: July SRW wheat fell 6 1/2 cents to $5.15 1/4, near the session low and hit a contract low. July HRW wheat lost 9 1/2 cents to $5.08, nearer the session low and set a contract low. July spring wheat futures slid 9 1/2 cents to $5.84.
Fundamental analysis: The wheat futures markets were pressured today by fresh USDA data that was not price-supportive, and by strong gains in the U.S. dollar index. Lower corn price action today also spilled over into selling in the wheat markets. Wheat traders got no traction from much-improved risk appetite in the general marketplace following the weekend news of a thawing in U.S.-China trade relations.
USDA’s May monthly supply and demand report showed USDA’s initial U.S. winter wheat crop estimate increased 33 million bu. from last year and topped the average pre-report estimate by 57 million bushels. Estimated production for all three winter wheat categories came in higher than expected. USDA trimmed 5 million bu. from its old-crop U.S. wheat carryover estimate. That’s 9 million bu. below the average pre-report trade estimate. New-crop U.S. wheat carryover is projected at 923 million bu., up 77 million bu. from this year and 60 million bu. above the average pre-report trade estimate. USDA puts the national average on-farm cash wheat price for 2024-25 at $5.50, unchanged from last month. The agency puts the national average on-farm cash wheat price for 2025-26 at $5.30, down 20 cents from this year.
USDA earlier this morning reported U.S. wheat export inspections of 405,170 MT during the week ended May 8, down 6,641 MT from the previous week but within the pre-report range of expectations.
This afternoon’s weekly USDA crop progress reports are expected to show the U.S. winter wheat crop in 51% good to excellent conditions as of Sunday, the same as last week and compares to 50% in the same conditions at the same time last year. U.S. spring wheat planted is expected at 62% complete as of Sunday versus 44% last week and 61% in the ground at the same time last year.
Tuesday kicks off the annual Wheat Quality Council tour of U.S. hard red winter wheat regions. Traders will closely watch reports coming out of the tour, which ends Thursday.
Technical analysis: Winter wheat bears have the solid overall near-term technical advantage. Prices are in downtrends on the daily bar charts. SRW bulls’ next upside price objective is closing July prices above solid chart resistance at the May high of $5.48. The bears’ next downside objective is closing prices below solid technical support at $5.00. First resistance is seen at today’s high of $5.28 1/4 and then at $5.40. First support is seen at $5.10 and then at $5.00. HRW bulls’ next upside price objective is closing July prices above solid chart resistance at $5.50. The bears’ next downside objective is closing prices below solid technical support at $5.00. First resistance is seen at today’s high of $5.24 1/2 and then at $5.35. First support is seen at $5.00 and then at $4.90.
What to Do: Get current with advised sales.
Hedgers: You should be 85% sold in the cash market on 2024-crop. You should have 20% forward sold for harvest delivery in 2025.
Cash-only marketers: You should be 85% sold on 2024-crop. You should have 20% forward sold for harvest delivery in 2025.
Cotton
Price action: July cotton rose 2 points to 66.63 cents, ending near the session low.
Fundamental analysis: A test of the 100-day moving average in overnight trade proved futile as the session progressed, cramped by a rocketing U.S. dollar following progressive trade talks between the U.S./China. USDA’s Supply and Demand Report proved neutral-bearish and included a 200,000-bale cut to carryover, amid an increase in exports of 200,000 bales. Meanwhile, new-crop carryover was projected at 5.20 million bales, up 400,000 bales from this year. The crop is forecast at 14.5 million bales, up 90,000 bales from last year amid, with harvested acres of 8.37 million and a national cotton yield of 832 lbs. per acre. Total new-crop use is projected at 14.2 million bales, up 1.4 million bales from this year, due to an estimated increase in exports.
World Weather Inc. reports much of the next two weeks will be dry across cotton areas in Texas and southwestern Oklahoma, which should allow planting efforts to advance well as fields dry down after recent rain. Field conditions in the Delta are a little too wet and drying will be interrupted by more rain during the next ten days.
USDA will also release its weekly Crop Progress Report following the close.
Technical analysis: July cotton ended low-range despite rallying in overnight trade, with bears holding a close below the 10-, 20- and 40-day moving averages, trading between 67.02 cents and 67.25 cents. Backing from the 100-day 200-day moving averages will likely continue to crimp upside momentum. Meanwhile, bears will look towards securing a close below the April 4 low of 62.05 cents, though initial support at 66.27 cents, 65.92 cents and 65.45 cents should limit those efforts.
What to do: Get current with advised sales and hedges.
Hedgers: You should be 35% sold in the cash market on 2024-crop.
Cash-only marketers: You should be 35% sold on 2024-crop.