Corn
Advice: We advise corn hedgers and cash-only marketers to sell another 10% of 2023-crop to get to 80% priced in the cash market.
Price action: December corn fell 4 1/2 cents to $4.00 3/4, a near mid-range close.
Fundamental analysis: A gap lower overnight in December corn futures set the stage for follow-through selling into the day session, with a second straight day of U.S. dollar strength following the recent selloff seemingly counterweighing any optimism around surging crude oil futures. Meanwhile, the weather forecast continues to prove mostly favorable, as it has through much of the U.S. growing season, favoring robust production in many areas. As a result, many analysts are forecasting a yield increase on Monday in USDA’s updated production figures. However, the wild card may lie around planted and harvested acreage data as the Aug. 12 report will include FSA certified acres compared to farmer surveys in the June 28 Acreage Report.
The Energy Information Administration reported ethanol production averaged 1.067 million barrels per day (bpd) during the week ended Aug.2, down 42,000 bpd (3.8%) from the previous week but up 4.3% from last year. Ethanol stocks declined 206,000 barrels to 23.767 million barrels.
USDA will release its weekly export sales data early Thursday morning, with analysts expecting net old-crop sales to have ranged from 100,000 to 400,000 MT and new-crop sales between 475,000 MT and 1.0 MMT during the week ended Aug. 1. Last week, old-crop sales totaled 167,864 MT, a marketing-year low, while 2024-25 sales totaled 710,900 MT.
Technical analysis: December corn managed to hold a close above psychological support at $4.00 following a late-session breach of the level. The level will now serve as initial support, with backing from last week’s low of $3.95. A turn below low both levels will find bears looking towards $3.50. Conversely, initial resistance will stand at the 10- and 20-day moving averages of $4.06 1/4 and $4.08 1/2, which are backed by resistance at $4.12 1/2, $4.20 and the 40-day moving average of $4.24 1/2.
What to do: Get current with advised sales.
Hedgers: NEW ADVICE -- Sell another 10% of 2023-crop to get to 80% priced in the cash market.
Cash-only marketers: NEW ADVICE -- Sell another 10% of 2023-crop to get to 80% priced.
Soybeans
Advice: We advise soybean cash-only marketers to sell another 10% of 2023-crop to get to 80% priced.
Price action: November soybeans fell 8 cents to $10.18 3/4 and near mid-range. September soybean meal closed down $7.00 at $323.60, nearer the session low and hit a two-week low. September soybean oil closed up 122 points at 42.07 cents and near the session high.
Fundamental analysis: The soybean and meal markets saw some selling pressure today amid a continued rebound in the U.S. dollar index, after it hit a six-month low Monday. The U.S. stock indexes started out the session strong but faded as the day wore on, suggesting some grain-market-bearish risk aversion might be creeping back into the general marketplace. Soybean oil futures were supported by short covering and solid gains in the crude oil market today.
Soybean complex traders are closely watching a labor dispute by soybean oil factor workers in Argentina. Two unions representing the factory workers announced a strike over wages on Tuesday, stopping activity at soybean processing plants. After failing to reach an agreement Tuesday the unions announced plans to continue the strike today. The unions will reportedly discuss how long to extend the work stoppage if their wage demands are not met.
World Weather Inc. today said a large part of the Midwest will dry down during the next two weeks, “but most crops will not see serious stress as temperatures through the next 10 days will often be mild, while subsoil moisture is still adequate to support crop development in much of the region.” However, the drier areas in the western Corn Belt where topsoil moisture has become short could see rising levels of crop stress. “Timely rain advertised for Sunday into Monday will be important in easing crop stress” in that region, said World Weather.
Thursday morning’s weekly USDA export sales report for the week ended Aug. 1 is expected to show U.S. soybean export sales of 100,000 to 300,000 MT in the 2023-24 marketing year and sales of 400,000 to 900,000 MT in the 2024-25 marketing year.
Technical analysis: The soybean bears have the solid overall near-term technical advantage. Prices are in a 2.5-month-old downtrend on the daily bar chart. The next near-term upside technical objective for the soybean bulls is closing November prices above solid resistance at $10.86 3/4. The next downside price objective for the bears is closing prices below solid technical support at $10.00. First resistance is seen at this week’s high of $10.42 and then at $10.50. First support is seen at the August low of $10.13 and then at $10.00.
The soybean meal bears have the firm overall near-term technical advantage and have momentum. The next upside price objective for the meal bulls is to produce a close in September futures above solid technical resistance at this week’s high of $343.70. The next downside price objective for the bears is closing prices below solid technical support at the July low of $313.00. First resistance comes in at today’s high of $330.60 and then at $335.00. First support is seen at today’s low of $323.10 and then at $320.00.
Soybean oil bears still have the solid overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. The next upside price objective for the bean oil bulls is closing September prices above solid technical resistance at 44.00 cents. Bean oil bears’ next downside technical price objective is closing prices below solid technical support at this week’s low of 39.67 cents. First resistance is seen at today’s high of 42.15 cents and then at 43.00 cents. First support is seen at 41.00 cents and then at 40.00 cents.
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: NEW ADVICE -- Sell another 10% of 2023-crop to get to 80% priced. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Wheat
Price action: December SRW wheat fell 4 1/2 cents to $5.62, while December HRW fell 6 cents to $5.72 1/4, each forging low-range closes. September spring wheat fell 6 3/4 cents to $5.85 3/4.
Fundamental analysis: Despite inching up from recent lows, wheat futures continue to be plagued by bears’ technical advantage, with a two-day rebound in the U.S. dollar crimping buyer interest at mid-week. However, cheaper commodity prices are gaining the attention of global buyers, as Egypt’s state grain buyer, the General Authority for Supply Commodities, announced a record tender for 3.8 MMT of wheat to cover imports between October 2024 and April 2025 as prices are near four-year lows. Egypt’s Finance Minister Ahmed Kouchouk said the global price drop presents an opportunity to more aggressively procure supplies.
Weather across the globe is mostly favorable for wheat crops, though World Weather Inc. reports there’s still come concern over spring wheat in the Russia New Lands because of too much rain east of the Ural Mountains and not enough in some southwestern production areas. The forecaster notes Australia’s winter crop outlook is still quite favorable and rain in southern and eastern Argentina this week will be welcome, though Cordoba and Santa Fe will remain too dry. Rainfall in Canada’s Prairies this week has been helpful for some late filling wheat, but moisture comes too late for most areas.
USDA will release weekly export sales data early Thursday morning, with analysts expecting net sales to have ranged from 250,000 to 500,000 MT during the week ended Aug. 1. Last week, net sales of 286,600 MT were reported for the previous week, which were down 7% from the previous week and 41% from the four-week average.
Technical analysis: December SRW futures gave up Tuesday’s gains, ending the session below the 20-day moving average of $5.63 1/2, though support at the 10-day moving average of $5.58 1/4 continued to limit selling efforts. An extension below the 10-day will face additional support at $5.48 1/4 and again at the July 29 low of $5.39 1/2. Meanwhile, resistance above the 20-day moving averages stands at $5.73 1/2, then at $5.80 3/4, which is backed by the 40-day moving average of $5.88 1/2.
December HRW futures ended the session below the 20-day moving average of $5.77, though support at the 10-day moving average of $5.71 1/2 limited losses. An extension lower will face additional support at $5.62, then at $5.55 3/4, which is backed by the July 30 low of $5.51 1/4. Conversely, a move above the 20-day will face resistance at $5.84 1/2, then at $5.90 1/2, $6.00 and the 40-day moving average of $6.18 1/2.
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 rose 43 points to 67.73 cents, near mid-range after hitting a contract low early on.
Fundamental analysis: Short covering and perceived bargain hunting were featured in the cotton futures market today after December futures prices hit a contract low in the early going. The rebound in the U.S. stock indexes this week, after strong recent losses, was somewhat supportive to the cotton market today. However, the stock index’s gains faded away as the session progressed, pushing cotton down from its daily high. Solid gains in the crude oil market helped out the cotton bulls today, although more gains in the U.S. dollar index today were a mildly bearish element for cotton.
World Weather Inc. today said too much rain and flooding in the southeastern states “may hurt cotton development, especially if flood water develops in many fields and prevails a while. Far southwestern Georgia and the western Florida Panhandle as well as Alabama were not negatively impacted by the storm. Concern about the Carolinas will be high until Tropical Storm Debby passes.” Harvest weather in southern Texas will stay good all week this week. West Texas rainfall will not be enough to counter evaporation and crop conditions should stay mostly unchanged, said the forecaster.
Traders will closely scrutinize Thursday morning’s weekly USDA export sales report, especially to see if the recent drop in cotton prices has spurred any better export demand for U.S. cotton.
Traders are also awaiting next Monday’s monthly USDA supply and demand report for August. A Bloomberg survey of analysts showed an average U.S. cotton production estimate at 17.02 million bales. Our team did a study and found that over the past 10 years the USDA U.S. cotton production forecast in the August report has exceeded the trade forecast average six times and been below it four times, including the most recent three years. The four years USDA has been lower than the trade forecast has averaged 1.64 million bales below. The six years totaling above the trade average forecast is 0.84 million bales above.
Technical analysis: The cotton futures bears have the solid overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. A bear flag pattern has also formed on the daily chart. The next upside price objective for the cotton bulls is to produce a close in December futures above technical resistance at 70.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 63.00 cents. First resistance is seen at this week’s high of 68.58 cents and then at 69.00 cents. First support is seen at today’s low of 66.86 cents and then at 66.00 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.