Corn
Price action: March corn futures surged 5 1/2 cents higher to $4.46 1/4 today, marking a weekly gain of 4 1/4 cents.
5-day outlook: Corn futures finished the week strong, surging higher today to mark out a modest gain for the week. Corrective buying in soybeans lent support to corn bulls today. Prices remained below this month’s high and volume is likely to be light next week given the holiday schedule and traders taking some time off. That is likely to lead to minimal volatility over the coming week (and the following week) as prices are unlikely to break above key resistance and fundamentals are too supportive to warrant much of a breakdown. Soy prices continue to be an anchor and any volatility there could spill over into corn, but at this juncture, sideways trade seems likely over the next week.
30-day outlook: The coming month will provide key insights into the domestic balance sheet with the quarterly Grain Stocks Report and Annual Production Summary coming on Jan. 10. We anticipate another cut to production via a lower yield in the production report, which is likely to further shore up U.S. ending stocks. Eyes will be on first quarter feed use in the stocks report. While ethanol and export demand is well known as there are weekly reports for each, feed use is much more ambiguous, with just a few insights a year available. Generally, when corn prices are relatively low, feed use tends to increase and given feedlots have opted to hold onto cattle longer, driving weights higher, we feel that could be especially true this year. Higher than expected feed use and a cut to production could drive prices higher over the coming month.
90-day outlook: South American production has been driving trade in the soybean market and the focus will shift to corn as Brazil begins planting their safrinha crop over the coming quarter. Recent long-term forecasts have a more La Niña-like tendency which generally increases the odds of drought in southern parts of Brazil, including Mato Grosso do Sul, while increasing rainfall in the northern parts of the nation. Drought in southern portions could limit corn production, but a close eye will be kept on soybean harvest progress in the northern parts of Brazil as any delay to safrinha plantings could drive planting past the ideal window. Trader attention is likely to turn to South American crop prospects in the coming quarter with any cuts to production likely being price supportive.
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 rose 11 1/2 cents to $9.74 1/2 but lost 13 3/4 cents on the week. March soymeal rallied $10.40 to $294.50 and marked a $9.10 weekly gain. January soyoil slid 53 points to 39.48 cents, and plunged 313 points on the week.
5-day outlook: Soybeans faced another day of corrective gains, with soymeal strength underpinning the complex as well as support from a weaker U.S. dollar. However, this week’s selling has intensified technical resistance, though a push above 10- and 20-day moving averages next week could spur additional short-covering toward $10.00. However, with the coming midweek Christmas holiday, volume will likely remain light throughout the week, though some volatility and risk off trade could stem from a possible government shutdown, after the House of Representatives rejected a temporary government funding plan backed by President-elect Donald Trump.
30-day outlook: USDA’s Annual Production and quarterly Grain Stocks Reports, due out January 10, will garner attention of the marketplace as traders get one last look at the size of the U.S. crop, while South American weather will dictate the market undertone up to and following the report’s release. Currently, weather in Brazil has proven quite favorable, with expectations of regular rounds of rain, which will keep soil conditions favorable for crop development over the next two weeks. However, in Argentina, outside a band of significant and welcome rains across central areas of the country today into Saturday, little rain of significance is expected through the next ten days to two weeks and the drying expected should eventually induce some increases in crop stress, especially in the last days of December and early January when temps should warm.
90-day outlook: As the Trump administration re-enters the White House, traders will closely monitor global trade relations amid the potential for additional tariffs, which could largely impact agricultural trade. Meanwhile, persisting inflation and the direction of the U.S. dollar, which has soared since the presidential election, could certainly be a compounding issue for soybean exports.
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 closed unchanged at $5.33, nearer the daily high but hit a fresh contract low early on. For the week, March SRW lost 19 1/4 cents. March HRW wheat gained 1 1/2 cents to $5.44 3/4 and near mid-range. On the week, March HRW fell 12 1/4 cents. March spring wheat futures rose 3 1/2 cents to $5.90 1/4 but closed down 8 1/4 cents on the week.
5-day outlook: Risk aversion in the general marketplace up-ticked late this week, following a hawkish pivot from the Federal Reserve and as the U.S. government is on the verge of shutting down due to lack of a new spending bill. If the government is shut down come Monday morning, look for wheat market bulls to remain on the sidelines amid the uncertainty of the matter. The Christmas holiday is next Wednesday, which is likely to make for thin markets all next week. The corn futures market showed resilience late this week, including posting a technically bullish weekly high close in March corn today. Wheat bulls will be looking to the corn market for help. Follow-through buying interest in corn early next week could help pull wheat markets out of their tailspins.
30-day outlook: Wheat traders will continue to monitor weather conditions in major world wheat-growing regions. World Weather Inc. today said U.S. wheat “is favorably established and mostly dormant or semi-dormant. Some needed moisture has fallen recently in the Pacific Northwest to improve topsoil moisture and more is expected. Unusually warm weather next week will reduce winter hardiness for many winter crops in the United States,” said the forecaster. Meantime, much of central and northern Europe and the western CIS are cool enough for most winter crops to be dormant or semi-dormant. The majority of crops are well established, except in the lower Danube River Basin, eastern Ukraine, Russia’s Southern Region and western Kazakhstan. Most of these poorly established winter crop areas are unlikely to see threatening cold anytime soon. Australia’s late-season wheat harvest in the south is advancing better now that drier weather has resumed. Not much rain of significance is expected for a while. Argentina’s wheat region has seen a good mix of rain and sunshine for its late-season crop in the south. Net drying over the next two weeks will promote grain filling, crop maturation and harvest progress, said World Weather.
90-day outlook: USDA Thursday reported improved U.S. wheat export sales of 457,900 MT for the week ended Dec. 12, up 58% from the previous week and up 16% from the four-week average. Wheat exports will need to continue to improve in the coming months for the wheat futures markets to be able to break out of their malaise and sustain price uptrends. That chore will be even more difficult with the U.S. dollar index this week surging and hitting a two-year high.
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 rose 15 points to 68.06 cents but was down 121 points on the week.
5-day outlook: Cotton futures succumbed to technical pressure early in the session, extending to a fresh contract low despite notable weakness in the U.S. dollar. However, as the session progressed, modest short-covering ensued, pulling the natural fiber from the daily low. Some modest buying could occur next week amid low volume trade due to the Christmas holiday on Wednesday. Gains will likely be limited amid strong technical resistance.
30-day outlook: USDA’s production estimates in January will likely be a market driver, as will weather in South America. World Weather Inc. reports rain in northern Argentina will be well balanced with periods of sunshine supporting additional planting, emergence and establishment, helping early season crop development advance well. Meanwhile, planting has advanced well in areas of Brazil.
90-day outlook: U.S. cotton exports will continue to drive prices over the long-term, with an increasing focus on trade relations as the Trump administration returns. Meanwhile, persisting or exacerbated inflation combined with continued strength in the U.S. dollar could continue to crimp competitiveness on the global marketplace.
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.