Corn
Price action: March corn futures settled 1 1/2 cents lower to $4.42, up 2 cents on the week.
5-day outlook: Corn futures continued lower following Wednesday’s rejection off $4.50 resistance. Thus far, selling efforts can be chalked up to corrective selling as March futures neared overbought territory mid-day Wednesday. Initial support at the 10-day moving average held today and will remain key support at $4.40 1/4. Considering volume is likely to get light and positioning ahead of the new year is likely to drive trade in the coming weeks. Considering funds are largely technically driven, maintaining 10-day moving average support is likely to limit selling interest, whereas a break below that mark could spark profit-taking from funds.
30-day outlook: USDA will update 2024 production and give an inside look into first quarter use in the January 10 Annual Crop Production Summary and Quarterly Grain Stocks reports. Late cuts to production historically indicate another cut to production could come in January, which would likely lead to further reductions in the balance sheet, supportive of prices. Meantime, the quarterly stocks report will give a look into feed and residual use in the first quarter of the marketing year. Whereas ethanol and export use are generally well known, feed use (the largest use category) is more difficult to pin down. Generally when prices are low, feed use tends to increase. Such an increase could prove supportive for the balance sheet (and prices) as well.
90-day outlook: Private forecasters and government agencies alike have been slow to change their Brazilian corn production forecast over the past several weeks as the bulk of Brazilian production has yet to be planted. Plantings will be better known over the coming quarter. Recent exchange rates between the Brazilian real and the dollar have led some analysts to believe that safrinha plantings will come in higher than expected. Ultimately, production will come down to weather and when the safrinha crop gets into the ground. A continued rainy season and timely plantings in Brazil would likely weigh on corn prices in the coming quarter, but strong recent strong use has negated a lot of those concerns recently.
What to do: Get current with advised sales.
Hedgers: You should be 30% sold in the cash market on 2024-crop.
Cash-only marketers: You should be 30% sold on 2024-crop.
Soybeans
Price action: January soybeans lost 7 1/2 cents to $9.88 1/4, marking a 5 1/2-cent loss on the week. January meal futures fell $3.3 to $286.2 and marked a fresh contract low. January bean oil futures fell 6 points to 42.61 cents.
5-day outlook: Soybean futures saw a disappointing day of trade as prices fell near this week’s low and uptrend support dating back to the November low. Support is likely to stem from the latter mark, driving corrective strength over the coming week. While this week’s USDA reports did little to support prices, corn futures tend to lead price action in December and without a breakdown in corn, the downside is likely to be limited. At this juncture, it looks as though soybeans will continue to trade in a tight range into the new year, with positioning driving trade. Volume across the curve was the lowest in months today, which draws some question to the validity of today’s selloff and indicates some strength can be expected in the coming week.
30-day outlook: USDA will likely revise 2024 production in the Jan. 10 reports. We anticipate a modest cut to production, which would likely shore up the balance sheet, though ending stocks are still expected to increase year over year with production near record levels. USDA has been slow to increase their export estimate over concerns about the latter portion of the marketing year being hindered by changes in trade policy come Jan. 20 when Trump is inaugurated for his second term. Exports will be closely watched by traders and analysts alike over the coming month, especially given this week’s slowdown in sales. Whether slow sales this week start a trend or were a one-off event will be key in how the export outlook is come January.
90-day outlook: Weather in Brazil has led to analysts increasing their soybean crop estimate over the past couple of weeks. While impressive use has tightened the world corn balance sheet, world soy ending stocks continue to be driven higher by near-record production in the U.S. and anticipated record production in Brazil. Many believe USDA is too pessimistic on world soy use, but given uncertainty regarding upcoming changes to trade policy, biofuel mandates and oil production, some hesitation is warranted. Soybeans are likely to see an increase in volatility over the coming quarter as more of these factors become known.
What to do: Get current with advised sales.
Hedgers: You should be 20% sold in the cash market on 2024-crop.
Cash-only marketers: You should be 20% sold on 2024-crop.
Wheat
Price action: March SRW wheat futures fell 6 1/4 cents to $5.52 1/4 and near the daily low. For the week March SRW lost 5 cents. March HRW wheat fell 5 3/4 cents to $5.57, nearer the daily low and on the week up 3 1/4 cents. March spring wheat futures settled at $5.98 down 4 1/2 cents on the day.
5-day outlook: Today’s technically bearish weekly low closes in winter wheat futures markets set the table for follow-through, chart-based selling pressure early next week. The rally in the corn market began to fizzle late this week and more losses in corn next week would very likely keep the wheat market bulls standing on the sidelines. The U.S. dollar index bulls had a very good week, to further squelch the grain market bulls.
30-day outlook: Weather patterns in global wheat-producing regions will be a mixed bag in the next few weeks. World Weather Inc. today said U.S. wheat is favorably established and mostly dormant or semi-dormant. “There is some concern for crops in unirrigated fields in the Pacific Northwest where soil moisture has not been abundant this autumn.” Much of central and northern Europe and the western CIS are cool enough for most winter crops to be dormant or semi-dormant as well. Australia’s wheat harvest in the southeast will improve greatly in this coming week with little to no rain expected. Argentina’s wheat region continues to get a good mix of rain and sunshine for its late season crop in the south. Yield potential did improve in the region when rain began falling a few weeks ago.
90-day outlook: Relatively tight world wheat stocks have done little to spur sustainable gains in U.S. wheat prices or U.S. export sales. While present U.S. wheat commitments are at the highest level since 2020-21, wheat export sales for the week ended Dec. 5 were disappointing at 290,200 MT, down 23% from the previous week and off 31% from the four-week average. The U.S. dollar strength seen this week, if continued, may become an even bigger obstacle to U.S. export sales in the coming months. Global customers continue a preference for U.S. spring wheat over the other wheat varieties. The new Trump administration and the uncertainty over the degree of trade tariffs levied by the new administration may continue to limit the upside in the grain markets in the coming weeks or few months.
What to Do: Get current with advised sales.
Hedgers: You should be 70% sold in the cash market for 2024 crop. You should have 20% forward sold for harvest delivery in 2025.
Cash-only marketers: You should be 70% sold for the 2024 crop. You should also be 20% sold for harvest delivery for expected 2025-crop.
Cotton
Price action: March cotton futures fell 82 points to 69.27 cents, near the daily low and a three-week-low close. For the week, March cotton lost 84 points.
5-day outlook: Today’s technically bearish weekly low close in March cotton futures sets the stage for follow-through selling pressure from chart-oriented speculators early next week. This week’s surge in the U.S. dollar index will also likely limit buyer interest in the natural fiber in the near term. Next week’s FOMC meeting of the Federal Reserve will likely see the Fed cut its main interest rate by 0.25%. That would be friendly for the cotton market. However, this week’s hotter producer price index reading has some thinking that after next week’s rate cut, the Fed may pause for a longer period of time, to better gauge U.S. inflation prospects.
30-day outlook: As the U.S. cotton harvest winds down, more focus is turning to weather in other global cotton-producing regions. World Weather Inc. today said crop harvesting in northern India and Pakistan “advanced well this year and should be nearing completion. Southern India’s crops are in mostly good condition, although recent rain and that which is forthcoming may threaten the quality of open boll cotton.” Recent rain in Australia’s eastern dryland crop region of New South Wales and Queensland has improved development potential. Production potentials have improved with recent rain, and drying in this coming week will be equally welcome, said the forecaster. Rain in northern Argentina periodically through the coming two weeks will be good for cotton planting, emergence and establishment. Some cotton planting has begun in Bahia, Brazil and a few of the minor production areas in Goias and Mato Grosso do Sul and weather conditions in each of these areas should be mostly good for early development, said World Weather.
90-day outlook: A booming U.S. stock market that has seen the major indexes hit new record highs this month, the prospect for lower interest rates globally and lower U.S. taxes all point to better global demand for consumer apparel in the coming months. This scenario will hopefully make for better demand for U.S. cotton abroad, which is not occurring at present. This week was another poor result from the weekly USDA export sales report. U.S. sales for the 2024-25 crop year reached only 153,000 running bales--a 10% weekly decline and down 37% from the four-week average. U.S. shipments were just 137,400 bales. An appearance by President-elect Trump at the NYSE Thursday may be an indicator of even better times ahead for the U.S. economy. Trump sounded a conciliatory tone at the NYSE, suggesting he may not be so aggressive on trade tariffs. Trump also touted the strong growth potential for U.S. companies. Some pundits said it was Trump’s finest hour. All of this is a positive for the cotton market heading into the new year.
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.