Corn
Price action: March corn futures surged a nickel to $4.40 and closed near session highs. That marked a 7-cent gain on the week.
5-day outlook: Corn futures showed impressive strength to end the week despite wavering strength in soy and wheat futures. As we noted in this week’s newsletter, it is not uncommon for corn futures to lead price direction in the month of December. So far this month, bulls have the edge, but lack of strength in soybeans and wheat is a bit concerning for corn bulls. Lagging soy prices hindered corn strength in November and that still looks to be the case. Tuesday USDA will update their monthly world supply and demand outlook. While there will be no change to 2024 production, the report will give key insights into the demand side of the balance sheet. We are anticipating the balance sheet to tighten in the upcoming report and when paired with recent strength, bulls hold the advantage next week.
30-day outlook: Export sales continue to be quite strong while shipments have been low seasonally. Sales continue to show robust demand while shipments have not increased much, indicating importers are not terribly concerned about trade policy come Jan. 20 when Trump is inaugurated for his second term. Export demand coming in at the highest mark since 2020-21 has helped offload a portion of the bumper crop. Ethanol use continues to be quite strong as well, coming in at the highest mark since 2018-19 through October. Record use as indicated by weekly EIA data in November is likely to continue that trend, further reducing 2024-25 ending stocks. More will be known following next week’s WASDE, which is followed by finalized production numbers and the quarterly Grain Stocks Report in early January. Strong demand and continued anticipation for a tighter balance sheet are likely to continue to support corn prices in the coming month.
90-day outlook: Trade policies and South American weather are likely to be the price drivers in the coming quarter. On the former point, as mentioned above, importers seem less concerned than one might assume, booking sales for 2024-25 but holding off on shipments. As for the latter point, Brazilian weather has improved in the past several weeks, leaving just limited pockets of dryness. The rapid pace of first-crop soybean planting does leave the door open for excessive rains to delay soy harvests, which could in turn delay safrinha corn plantings. Given three-quarters of Brazilian corn production comes from second-crop corn, weather is likely to play a significant role in price action in the coming quarter, especially if importers are actively looking for alternatives to U.S. corn.
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.
Soybeans
Price action: January soybeans closed unchanged at $9.93 3/4 but rose 4 1/4 cents on the week. January meal slid $3.60 to $283.80 and marked a weekly loss of $4.50, while January soyoil rose 66 points to 42.97 cents and rose 123 points on the week.
5-day outlook: Soybeans continue to face technical challenges along with lingering pressure from soymeal futures and a stronger U.S. dollar, though strength soyoil and corn futures helped lift futures closer to positive territory into midmorning trade. With next week comes USDA’s December supply and Demand update, due out Dec. 10. According to a Reuters poll, analysts are anticipating a minor 1 million-bu. reduction in ending stocks from November to 469 million bu. Meanwhile, world ending stocks are expected to rise from November to 132.45 MMT, on average.
Soyoil has recently notched spillover strength from rising palm oil futures amid flooding along the southern Malay Peninsula, near the Thailand/Malaysia border. A couple locations in the region have reported 48 to 52 inches of rain the past two weeks, resulting in horrific flooding. While much of the flooding has been abating in recent days, there will be a return of excessive rain later next week through mid-month, which will result in more flooding. The marketplace will continue to closely eye weather developments in the area.
30-day outlook: Weather in South America will also continue to be closely monitored as the crop progresses through the growing season. Argentina’s two-week outlook is back to a more restricted rainfall distribution in central and interior southeastern parts of the nation, while Brazil’s weather will be dominated by two issues, according to World Weather. One is a wet bias in the interior south and the other is a short-term drying bias that will occur in the north of the wet area from northern Paraguay and southeastern Bolivia to Goias, Tocantins and Bahia. Rainfall in the south, Friday through Wednesday, will result in some flooding, but mostly in small areas with heavy rainfall. Meanwhile, the dry region in Brazil will not be completely dry, though less than usual rainfall should occur resulting in a net decline in soil moisture from next week into the following weekend.
90-day outlook: Traders will continue to closely monitor trade relations into the new year as the Trump administration re-enters the White House. Moreover, a report from Fastmarkets indicated the transition in the U.S. biofuel market from the Blenders Tax Credit (BTC) to the Clean Fuels Production Credit (CFPC) was not going as planned. A lack of government guidance on the CFPC has many stand-alone biodiesel producers either shutting down or scaling back production significantly, which meant these producers were not purchasing soyoil and other feedstocks. While the current administration prepared to give way to President-elect Trump, there were numerous macro-economic issues taking center-stage, though resolving the CFPc issue was not one of them. A biodiesel producer stated, “We’re filling our orders in December and then taking our plants offline for maintenance shutdowns in January, waiting for better days to return.”
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 1 cent to $5.57 1/4, near mid-range and on the week up 9 1/4 cents. March HRW wheat rose 1 1/4 cents to $5.53 3/4, nearer the daily high and for the week up 13 cents. March Spring wheat futures fell 2 cents to $5.96 1/2 but rose 4 3/4 cents on the week.
5-day outlook: Some modest short covering was featured late this week in the winter wheat futures markets, after notching contract lows earlier in the week. Next week, bulls will try to build on the slight momentum they gained late this week. However, near-term charts remain bearish amid price downtrends in place, which will likely limit any sustained price strength in the near term. Next Tuesday’s USDA supply and demand report will be the highlight of the week in the grain futures markets. However, no significant changes are expected to the supply and demand balance sheets for the wheat markets. Wheat markets could garner some price strength if the corn market continues its late-week rally into next week.
30-day outlook: Weather conditions in global wheat-growing regions will continue to be monitored by wheat traders in the coming weeks. World Weather Inc. today said U.S. hard red winter wheat areas benefited from recent weeks of rain with good root and tiller systems suspected in many production areas. Cooler temperatures have pushed most U.S. crops into dormancy or semi-dormancy. Much of central and northern Europe and the western CIS are now cool enough for most winter crops to be dormant or semi-dormant as well. The majority are well established, except in the lower Danube River Basin, eastern Ukraine, Russia’s southern region or western Kazakhstan. Australia’s wheat harvest had been advancing relatively well, although recent rain in South Australia, Victoria and southern crop areas of New South Wales slowed the process. Argentina’s wheat region continues to get a good mix of rain and sunshine for its late season crop in the south.
90-day outlook: The wheat market had seen buying interest limited in October and November from a surging U.S. dollar index that hit a two-year high. However, the past two weeks have seen the USDX tumble, negate an uptrend line and start a price downtrend. The index today hit a three-week low. A bearish broadening pattern has also formed on the daily chart for the USDX. If the index has indeed peaked and continues to trend sideways to lower in the coming weeks/months, such would be a significantly friendly development for the U.S. grain markets, and would probably work to put in major price bottoms in the wheat futures markets in that timeframe.
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 fell 99 points to 70.11 cents and marked a 182-point weekly loss.
5-day outlook: Cotton futures succumbed to selling to pressure amid lacking outside-market support and technical resistance to end the week. While December is typically a seasonally positive month for cotton futures, a strong dollar has crimped buyer interest thus far. Next week, USDA will release updated supply and demand estimates, due out Dec. 10. Look for cotton to continue to edge sideways to lower over the near-term.
30-day outlook: While the U.S. cotton harvest winds down, planting efforts are progressing in South America. World Weather Inc. reports rain in northern Argentina through the next two weeks will be good for planting, emergence and establishment, though some areas will be drying down for a while. Some planting has begun in Bahia, Brazil and a few of the minor production areas in Goias and Mato Grosso do Sul, with weather conditions in most of these areas expected to be mostly good for early development, though there will be a need for greater rain in western Bahia later this month.
90-day outlook: Demand for U.S. cotton will be a trade focus into the next year, especially amid heightened trade tensions with top importer, China. Moreover, a robust dollar could not only reduce the natural fiber’s competitiveness on the global marketplace, but also mean lingering inflation and thus higher-for-longer interest rates. Elevated interest rates could hinder domestic demand as the U.S. consumer grapples with reduced spending power.
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.