Corn
Price action: December corn futures fell 4 1/4 cents at $3.97 1/4 and nearer the session low. Prices Monday hit a contract low.
Fundamental analysis: Strong selling pressure in the soybean complex futures today spilled over into price weakness in corn futures. A USDA reported daily U.S. corn sale of 137,160 MT to Mexico for the 2024-25 marketing year and a lower U.S. dollar index today could not provide any significant support to corn futures.
Pro Farmer crop consultant Michael Cordonnier this week has raised his U.S. corn yield by 1.5 bu., to 183.5 bu. per acre, noting generally favorable conditions and no threatening weather in the forecast. USDA Monday afternoon rated 67% of the U.S. corn crop as “good” to “excellent” and 10% “poor” to “very poor.” On the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 0.9 points to 373.7.
World Weather Inc. today said rain in the U.S. Midwest this week and early next week should be sufficient to restore favorable moisture conditions after recent drying. “Summer crop production potential will remain good,” said the forecaster.
Technical analysis: The corn futures bears have the solid overall near-term technical advantage. Prices are in a three-month-old downtrend on the daily bar chart. The next upside price objective for the bulls is to close December prices above solid chart resistance at $4.15. The next downside target for the bears is closing prices below chart support at $3.80. First resistance is seen at today’s high of $4.03 and then at $4.09. First support is at today’s low of $3.95 1/4 and then at the contract low of $3.90 1/4.
What to do: Get current with advised sales.
Hedgers: You should be 80% priced in the cash market on 2023-crop.
Cash-only marketers: You should be 80% priced on 2023-crop.
Soybeans
Price action: November soybeans fell 23 1/2 cents to $9.62 1/2, while December soymeal edged $5.40 lower to $299.20 and September soyoil fell 119 points to 40.29 cents. Each marked contract low closes.
Fundamental analysis: Turnaround Tuesday was not in the equation today for soybeans, which eroded for the sixth straight session to a contract low in tandem with soymeal futures. USDA’s bearish production data continued to weigh on the soy complex, despite another daily flash confirming additional export demand from China and a weaker U.S. dollar. The sale of 132,000 MT of soybeans brought the country’s total soybean purchases for the week to 264,000 MT. Meanwhile, Conab upped its 2023-24 Brazilian soybean production forecast to 147.38 MMT, up from its previous estimate of 147.34 MMT, while exports were unchanged at 92.4 MMT.
On Monday, USDA also released its weekly Crop Progress Report, which showed the soybean crop’s “good” to “excellent” rating unchanged from a week ago at 68%, while the “poor” to “very poor” rating also held at 8%. On our CCI, the soybean crop slid 0.7 point to 367.8. Weather conditions should continue to bode well for soybeans as they edge toward maturity. World Weather Inc. notes Midwest crop areas dried out last week, though rain will fall across most production areas in the coming week to restore favorable soil moisture and maintain a very good outlook for summer crops.
Technical analysis: November soybeans extended to a new contract low, though support at $9.61 served up support and will now serve as initial support, followed by $9.46 1/2. A push into oversold territory could ignite some corrective buying action, which will face initial resistance at $9.73 1/2, then at $10.00 and again at the 10- and 20-day moving averages of $10.11 and $10.31 1/4.
December soymeal futures ended the session below support at $300.60 at a fresh contract low. Initial support will now serve at today’s low of $298.60, which is backed by support at $296.60 and $290.50. Conversely, a corrective bounce will face resistance at today’s failed support level, then at $306.70, $310.70 and the 10- and 20-day moving averages of $316.40 and $317.50.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold in the cash market on 2023-crop with 25% reowned in October $10.50 short-dated serial call options at 18 1/2 cents. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Cash-only marketers: You should be 80% priced on 2023-crop. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Wheat
Price action: December SRW futures fell 8 cents to $5.51 3/4 and settled nearer session lows. December HRW futures fell a penny to $5.62 1/2. September HRS futures rose 3/4 cent to $5.93.
Fundamental analysis: December SRW futures closed at a two-week low, unable to shake off weakness in the corn and soy markets. Demand for wheat in the world market continues to improve, though the U.S. has not seen much of that increase. In yesterday’s WASDE, USDA raised world production by over 2.0 MMT yet cut world ending stocks for 2024-25. Egypt continues to buy significant amounts of wheat out of the Black Sea, taking advantage of low prices. Some demand for U.S. origin wheat is likely to spillover as countries continue to stock up on supplies.
Much of Russian spring wheat and Kazakhstan wheat is predicted to remain too wet, hurting crop quality, according to SovEcon. Rain is expected to persist in the coming week leading to fieldwork delays and could cause some localized flooding. Conditions in the northern Plains of the U.S. remain favorable with some rain forecast, though not enough to cause any major fieldwork delays.
USDA rated 72% of the spring wheat crop as “good” to “excellent” and 5% “poor” to “very poor.” On our CCI, the spring wheat crop improved 1.2 points to 381.9, despite the overall ratings decline, as improvement in top producer North Dakota offset declines in some of the other states.
Technical analysis: December SRW futures fell for the second consecutive session. Bears continue to hold the near-term technical advantage. Resistance stems from the 10-day moving average at $5.60, which is reinforced by the 20-day moving average at $5.65 3/4, which capped gains the last two sessions. Bulls are seeking to hold support at the psychological $5.50 mark, which is backed by the contract low at $5.39 1/2.
December HRW futures continue to trend lower on the daily bar chart. Resistance stems from $5.69 3/4 and is firmly backed by the 20-day moving average at $5.76 1/4. Bulls are seeking to bold support at the intraday low of $5.55 3/4 then the contract low at $5.51 1/4 on sustained selling pressure.
What to do: You should have claimed profits on the 2024-crop hedges in July SRW futures. Wait on a corrective rebound to increase sales.
Hedgers: You should be 60% sold on 2024-crop in the cash market. You should also have 10% of anticipated 2025-crop production forward sold for harvest delivery next year.
Cash-only marketers: You should be 60% sold on 2024-crop. You should also have 10% of anticipated 2025-crop production forward sold for harvest delivery next year.
Cotton
Price action: December cotton fell 108 points to 67.99 cents, near the session low.
Fundamental analysis: Cotton futures continued to be limited by the 20-day moving average, which has served as resistance since late June. Outside markets were mixed, with strength in equities and a weaker dollar unable to fully compensate for the corrective selling in crude oil futures. Earlier this morning, the Bureau of Labor Statistics reported Producer Price Index (PPI) data for July was lower than expected during the month as a rebound in wholesale costs of goods was partially offset by the services index turning negative. PPI climbed 2.2% annually last month, compared with June’s 2.7% growth and below the 2.3% pace that analysts were projecting. With tomorrow comes the Consumer Price Index (CPI) Report, a key inflationary gauge.
In its weekly Crop Progress Report, USDA rated the cotton crop as 46% “good” to “excellent,” up one point from last week, while the “poor” to “very poor rating fell two points to 25%. USDA rated the Texas crop as 33% in the top two categories and 37% in the bottom two. USDA reported 96% of the crop was squaring, 74% was setting bolls and 13% had bolls opening, each category was one-point ahead of the respective five-year average.
Technical analysis: December cotton ended the session below the 10-day moving average of 68.08 cents, though support at 67.86 cents limited heavier selling efforts. Bears continue to firmly grasp the near-term technical advantage and will look toward last week’s low of 66.55 cents as their next major objective, with additional support serving at 65.18 cents. Converesely, initial resistance will now stand at the 10-day moving average, then at the 20- and 40-day moving averages of 68.99 cents at 70.70 cents.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.
Cash-only marketers: You should be 100% sold on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.