Corn
Price action: March corn futures closed 7 3/4 cents lower to $4.87 1/2, though still marked a 5 1/2 cent gain on the week.
5-day outlook: Corn futures saw selling pressure to end the week and settled near Thursday’s lows, which served up impressive support in the latter half of the session. Tariff talk led to heightened volatility across the marketplace today, evidenced by the general risk-off tone. Bulls were encouraged to see key technical support hold today as they continue to struggle breaking prices above psychological $5.00 resistance. A test of that level feels forthcoming. A close below $4.83 would be the first step in negating bulls’ recent advantage. USDA will update their supply and demand forecasts early next week. Traders are anticipating a cut to Argentine corn production, with the average estimate coming in at 49.7 MMT in the Bloomberg poll, below USDA’s estimate of 51 MMT in January. Analysts expect little change in the domestic balance sheet, with the average forecast coming in 13 million bushels lower than USDA’s previous estimate to 1.527 billion bushels. While a surprise next week could dictate some trade, most of the marketplaces’ attention will remain on trade rhetoric.
30-day outlook: The wetness in interior Brazil has brought concerns as to how much of Brazil’s safrinha corn crop will be planted in the ideal window. Drying has been occurring in some center west and center south crop areas which will likely continue into early next week, according to World Weather Inc. The key question will be how quickly Brazil can harvest their soybeans. Brazil has shown they have the capacity to get machinery into the fields and do work at a rapid pace. If they are able to do that here in the next few weeks, it could negate a lot of the current concerns and ignite selling pressure in the U.S. market.
90-day outlook: The recent rally in corn prices, especially when compared to soybean prices, has analysts anticipating a jump in corn acres from last year. While soybeans are down around a buck from last year at this time, corn prices are steady, tightening the soybean/corn ratio to the tightest level since 2013. That historically points to an increase in corn acres year-over-year, but soybean acres have proved to be resilient, which could be especially true this year given high input costs for corn. Traders will keep a close eye on acres in USDA’s Prospective Plantings Report in March, alongside their yield assumptions in the Outlook Forum at the end of the month.
What to do: Get current with advised sales.
Hedgers: You should be 50% sold in the cash market on 2024-crop in the cash market. You should also have 10% of expected 2025-crop production sold for harvest delivery.
Cash-only marketers: You should be 50% sold in the cash market on 2024-crop. You should also have 10% of expected 2025-crop production sold for harvest delivery.
Soybeans
Price action: March soybeans fell 11 cents to $10.49 1/2 but still gained 7 1/2 cents on the week. March soymeal fell $5.00 to $301.40 but managed to notch a 30-cent weekly gain. March soyoil rose 58 points to 45.98 cents and ended the week down 13 points.
5-day outlook: Soybean futures ended the week under pressure amid corrective selling after touching a four-month high midweek. While today’s price action was mostly comprised of looming trade uncertainty, which sent the U.S. dollar higher and a host of global currencies sliding lower, much-needed rains in Argentina were also a component of the negativity.
Meanwhile, with next week comes USDA’s monthly supply and demand update, which is expected to include only minor changes from January, though there is a high probability of positioning ahead of its release on Feb. 11 at 11:00 a.m. CT. However, Sunday’s open will surely reflect any weekend trade advancements or expanding geopolitical tension.
30-day outlook: A sluggish Brazilian harvest and recent hot, dry conditions in Argentina will keep traders focused on advancing efforts, weather and production estimates over the coming month. Despite persistent rains in Brazil, the country is expected to produce a whopper crop, largely offsetting production losses in Argentina; however, there has been increasing concern over quality as producers and elevators alike battle a high-moisture crop. Mato Grosso, the largest soybean-producing state, has felt the greatest impact, with logistical problems also arising due to washed-out roads and bridges, with inadequate on-farm storage further hindering swifter progress. World Weather Inc. reported earlier that some areas of Brazil are drying down, and will through Monday, before scattered showers and thunderstorms restart and prevail for a while. The forecaster maintains the harvest of early soybeans will continue to prove a rather slow process and believes monsoonal rain in Brazil will not end early, further indicating there is a fair chance the current weather pattern will linger a little later than usual into April and possibly early May.
90-day outlook: Lingering inflation, thus a robust U.S. dollar and ultimately trade will be the longer-term focus, with U.S. producers taking special note as they hammer out spring planting intentions. However, the aforementioned slow Brazilian harvest could have an impact in the coming months, as could any potential trade deals negotiated by the Trump Administration. Look for the marketplace to continue to closely monitor each of these, with special attention to the dollar, which could thwart the global competitiveness of U.S. commodities.
What to do: Get current with advised sales. Our next sales target is $11.00 in nearby futures.
Hedgers: You should be 55% sold in the cash market on 2024-crop. You should also have 10% of expected 2025-crop production sold for harvest delivery.
Cash-only marketers: You should be 55% sold on 2024-crop. You should also have 10% of expected 2025-crop production sold for harvest delivery.
Wheat
Price action: March SRW futures slid a nickel to $5.82 3/4 though climbed 23 1/4 cents on the week. March HRW futures fell 3 1/4 cents to $6.04 1/4, though still climbed a quarter on the week.
5-day outlook: Wheat futures ended the week modestly lower after making a fresh for-the-move high in the overnight session. Prices got within a dime of our next sales target before reversing lower. Over the past couple of weeks, March SRW futures have seen a persistent rally that generally sees a couple days of strong gains followed by profit-taking. There have not been two consecutive lower closes since Jan. 24 and 27, so price action on Monday will be key if that pattern continues. The path of least resistance remains higher in winter wheat futures over the coming week. Bulls are looking to hold prices above key support at $5.68 1/4 on any continued selling pressure. Next week’s WASDE is not expected to show much change from a week ago, with the average estimate coming in just a million bushels higher, bringing ending stocks to 799 million bushels. Traders will pay close attention to the world balance sheets in next week’s report for any changes to foreign production.
30-day outlook: As we mentioned last week, corn futures tend to lead price action in the month of February. Volatility picked up in corn to end the week as concerns over trade have increased, alongside woes regarding South American production. If corn falters, it could drag wheat prices lower as well, despite relative bullish wheat fundamentals, particularly on the world marketplace. Crops in Russia and Ukraine have not received much precipitation over the winter months and relatively warm temperatures have decreased hardiness. Any potential ceasefire in the war in Ukraine also has the potential to support prices as well, as Russia has been dumping wheat on the world market in order to fuel the war effort. Any slowdown of Russian exports could quickly drive demand to the U.S.
90-day outlook: The U.S. has not drummed up much export demand despite USDA anticipating a jump in year-over-year exports. Shipments were strong in the first half of the marketing year but have since slowed. Sales are currently below where they were a year ago at this time. While a slowdown of exports out of Russia, the world’s leading exporter of wheat, has done little to stir up demand for U.S. origin supplies. If exports do not live up to what USDA anticipates, it could quickly put pressure back on prices as the market prices in abundant domestic supplies.
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 40 points to 65.63 cents and lost 25 points on the week.
5-day outlook: Cotton futures continue to be weighed down technically, with early-week strength negated by returned U.S. dollar strength as trade uncertainties ring through the marketplace. Meanwhile, with next week comes USDA’s monthly supply and demand update which is expected to lean neutral- to bearish, according to pre-report expectations. Expect pre-report positioning early next week. However, any progressing trade deals or rising geopolitical tensions over the weekend will certainly prevail.
30-day outlook: Weather will be the focus over the next month as soybean harvest in Brazil has been notably delayed by persisting rains, which have slowed safrinha cotton plantings. World Weather Inc. reports plantings in Mato Grosso continue to lag well behind their usual pace, with 46% of the crop planted by Feb. 2, compared to 90% last year. Frequent rains are expected for the foreseeable future, raising worry over the potential performance of safrinha cotton once it gets planted. Meanwhile, as the calendar inches toward spring and conditions allow, attention will gradually shift to U.S. weather.
90-day outlook: Inflation and ultimately the U.S. dollar will garner longer-term trade attention, which is compounded by looming trade uncertainty. A robust dollar has certainly crimped U.S. cotton exports over the past year, with the current supply/demand landscape and economic environment likely proving dour for the natural fiber over the longer term. However, a trade deal or signs of improved demand from China could certainly catalyze short-covering from current levels.
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.