Corn
Price action: March corn futures surged 14 1/2 cents to $4.70 1/2 and closed near session highs, marking a nearly 8-month high close.
5-day outlook: Corn futures surged higher on report driven strength, closing at the highest level in over seven months on the continuation chart. A 276 million bushel (3.8 bu. per acre) cut to production was far more than expected and one of the biggest yield misses in recent memory. Cuts to yield in Indiana, Minnesota, Ohio and Kansas led to reductions in the corn crop. USDA lowered their ending stocks forecast 198 million bushels, led by lower production. USDA cut 50 million bushels from their feed & residual use, largely due to the cut to supply. The balance sheet is nearing “tight” levels which helped drive prices higher today. Monday could see some followthrough strength, but with futures overbought, some profit-taking is possible late into the week. If bulls are able to continue to push prices higher, or even maintain recent strength, it would be impressive. Weight continues to be a laggard and could weigh on prices early next week as spreaders look to sell relatively expensive corn and buy relatively cheap wheat.
30-day outlook: USDA opted to leave production unchanged for South America, leaving Brazil at 127 MMT and Argentina at 51 MMT. The attention of the marketplace will quickly return to South America once the dust settles following the USDA reports. La Nina could bring drier conditions to Brazil as soybeans continue to be harvested and safrinha corn is being planted. While some rains are expected from Jan. 17-23 in drier areas, some crop stress could persist. If crops continue to face stress over the coming month, strength could persist in the corn market as importers look to the U.S.
90-day outlook: USDA also lowered their export forecast by 25 million bushels. Considering news out of China today that they reduced their corn import projection by 4 MMT to 9 MMT, down 14.41 MMT (61.6%) from last year, that could drive exports even lower. While China has been purchasing much of their corn from Brazil in the past couple of years, lack of buying would lead to more Brazilian corn on the world market, competing with U.S. supplies. Today’s export sales report showed corn export sales of 445,000 MT for the week ended Jan. 2, a marketing-year low and down 43% from the previous week and 61% from the four-week average. Net sales were well below the pre-report range of 700,000 MT to 1.4 MMT. While disappointing sales are not surprising given the reporting period ended at the tail end of two holiday weeks, the low sales number did little to encourage buyers as exports look to take up a significant portion of 2024-25 supplies.
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: March soybeans rallied 26 1/4 cents to $10.25 1/4, notching a 33 1/2-cent weekly gain. March soymeal extended $1.00 lower to $298.30 and sank $10.30 on the week. Marcy soyoil surged 282 points to 45.58 cents and rallied 565 points on the week.
5-day outlook: Soybeans ended the week on a positive note, extending to a near one-month following the government’s release of its Annual Production and Quarterly Grain Stocks Reports. USDA trimmed the soybean yield by 1 bushel per from its November estimate to 50.7 bu. per acre and slashed harvested acres by 221,000 acres to 86.05, which reduced the soybean crop estimate by 95 million bu. to 4.366 billion bu. Meanwhile, USDA estimated Dec. 1 stocks at 3.1 billion bu. in its Quarterly Grain Stocks Report, which is up 99 million bu. from a year ago but 108 million bu. below the average pre-report estimate. U.S. ending stocks were slashed 90 million bu. from last month, with total supplies trimmed by 89 million bu. due to the smaller crop estimate, which was partially offset by a 5-million-bu. increase in estimated imports. Total use increased 1 million bu. from December amid a 1-million bu. increase in residual use, while crush and exports were each left unchanged. Today’s report figures were all well below analysts’ pre-report trade estimates.
Moreover, lending early support to the soy complex, was a rally in crude oil as some supply concerns arose from possible disruptions from more sanctions on Russia, and Iran, while cold weather across the U.S. is driving short-term demand for fuels.
While soybeans ended the session off the daily high, USDA’s updated data will likely undergird the complex, limiting seller interest in the near term.
30-day outlook: USDA left its Brazilian and Argentine soybean crop estimates unchanged at 169 MMT and 52 MMT, respectively, though lingering weather concerns could affect those figures in the coming weeks. World Weather Inc. notes weather in Brazil will remain mostly good for full season and late planted crops, however, there is a need for drier weather in some center west and center south crop areas to improve soil conditions and the environment for early soybean maturation and harvest progress. In Argentina, temperatures are expected to soar over the next seven days, which will accelerate drying and crop moisture stress, affecting all agricultural areas of the country. However, there is potential for rain Jan. 17-23, and if it occurs, will bring some temporary relief. Though the forecaster states follow up rain will be “absolutely necessary.”
90-day outlook: U.S. dollar strength has undeniably hovered over commodities throughout the past several months, though recent short-covering despite a strong greenback could indicate traders are less concerned about its direction. Nonetheless, exports will continue to be a focus, although a seasonal dip is imminent as harvest in Brazil ramps up. Earlier today, USDA reported weekly export sales of 288,700 MT for the week ended Jan. 2, which were a marketing-year low, down 40% from the previous week and 72% from the four- week average. Net sales missed pre-report estimates, though with the New Year holiday included in the period, it’s not entirely unusual for such to happen.
What to do: Get current with advised sales.
Hedgers: You should be 30% sold in the cash market on 2024-crop production.
Cash-only marketers: You should be 30% sold on 2024-crop production.
Wheat
Price action: March SRW wheat futures fell 3 1/4 cents to $5.30 3/4, near mid-range and set a new contract low. For the week, March SRW gained 1 1/2 cents. March HRW wheat futures rose 1 1/2 cents to $5.51 3/4, near mid-range and on the week gained 12 3/4 cents. March spring wheat futures rose 3/4 cent to $5.84 1/4 and gained 6 1/2 cents on the week.
5-day outlook: The wheat futures markets got a neutral-to-slightly bearish batch of USDA data today, to likely limit buying interest next week. USDA estimated Dec. 1 U.S. wheat stocks at 1.57 billion bu., up 149 million bu. from year-ago and 5 million bu. above the average pre-report trade estimate. The agency estimated U.S. winter wheat seedings up 725,000 acres from last year after traders expected a modest decline in plantings. It’s more likely the wheat markets will follow the corn market in the near term, and that would be friendly for wheat after today’s solid gains in corn futures to a 6.5-month high. A rally in the crude oil market to a 5.5-month high today will also be a bullish outside-market element for wheat next week, if crude can hold and add to its recent gains.
30-day outlook: Wheat traders will continue to monitor poor wheat conditions in the lower Danube River Basin, eastern Ukraine, Russia’s southern region and western Kazakhstan. Dry weather has dominated the planting season there. However, most of these poorly established winter crop areas are unlikely to see threatening cold anytime soon and recent precipitation sets the stage for improved crop conditions in the early spring, said the forecaster. Meantime, cold weather in U.S. wheat areas has not had any negative impact due to snow cover and that will likely continue to be the case through the next 10 days. January state crop reports indicated HRW conditions in several major U.S. growing states, particularly Kansas and Nebraska, suffered significant rating declines from December.
90-day outlook: USDA today reported U.S. wheat export sales of 111,300 MT for the week ended Jan. 2, down 21% from the previous week and down 70% from the four-week average. Net sales were below the range of market expectations. Disappointing U.S. wheat sales abroad may continue for at least the near term, as the U.S. dollar index today hit a two-plus-year high, making U.S. wheat prices even less competitive on the world trade markets.
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 149 points to 67.01 cents, finishing the week down 65 points.
5-day outlook: Notable selling was featured in cotton futures today following bearish data from USDA in late-morning trade. USDA raised its U.S. cotton crop estimate 159,000 bales from December and bumped yield by 44 lbs. to 836 lbs. per acre, though harvested area was reduced by 364,000 acres to 8.271 million acres. The increase in supplies upped carryover by 400,000 bales from a month ago to 4.8 million bales. Total use was slashed 300,000 bales and exports were lowered 300,000 bales to 11. Million. Unaccounted use increased from 60,000 bales to 30,000 bales. Global carryover was pegged at 77.91 million bales for 2024-25. USDA’s production estimate, U.S and world ending stocks figures were all well above average pre-report estimates, which will likely continue to weigh on the natural fiber into next week.
30-day outlook: With comfortable global supplies presently hindering buyer interest in cotton, traders will continue to monitor weather in South America. World Weather Inc. notes northern Argentina cotton areas may dry down for a while, though subsoil moisture should support most crop needs for a while. Nonetheless, rain will be needed soon in most areas. Meanwhile, planting has advanced in areas of Brazil, with conditions in Goias, Minas Gerais and Mato Grosso do Sul all favoring a wetter bias in the next couple of weeks, slowing additional fieldwork. Planting has begun in Mato Grosso though soybean harvest must occur first before aggressive cotton planting can occur.
90-day outlook: Global economic conditions will continue to be in the forefront of traders’ minds as the new calendar year progresses, with special attention on President-elect Trump’s policies. Moreover, persisting strength in the U.S. dollar could continue to affect the natural fiber’s competitiveness on the global market. Earlier today, USDA reported net cotton sales of 137,400 RB for the week ended Jan. 2, which were up 2% from the previous week, but down 27% from the four-week average. However, exports did notch a marketing-year high of 191,700 RB.
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.