Corn
Price action: July corn rose 3 1/2 cents to $4.10 3/4, marking a near mid-range close.
Fundamental analysis: Corn futures saw modest short-covering ahead of USDA’s supply and demand update tomorrow, while a weaker-than-expected Consumer Price Index (CPI) reading spurred selling in the U.S. dollar, which underpinned grains. Meanwhile, USDA released its weekly export sales data for the week ended July 4, with net sales of 538,300 MT landing within analysts’ pre-report range of 300,000 to 850,000 MT. Sales rose 51% from the previous week but were down 13% from the four-week average. Top purchasers included Colombia, Japan and Mexico. Exports for the week remained steady at 879,100 MT, down 2% from the previous week and 27% from the four-week average.
USDA will update balance sheets on Friday, which will reflect adjustments to old-crop forecasts based on June 1 stocks. There will be major changes to the new crop balance sheets to reflect planted acreage figures. On average, analysts are expecting old-crop ending stocks of 2.049 billion bu. and new-crop ending stocks of 2.312 million bu., according to a Reuters poll. New-crop world ending stocks are expected to be 311.63 MMT, on average.
Technical analysis: December corn ended the session above previous resistance of $4.09 1/2, though looming resistance at the 10-day moving average of $4.17 1/2, which is backed by solid resistance at $4.26 1/2, limited stronger buying efforts. Conversely, initial support will now serve at $4.10, then at $4.06 3/4 and this week’s low of $4.04, with psychological support at $4.00.
What to do: Get current with advised sales.
Hedgers: You should be 50% sold in the cash market on 2023-crop.
Cash-only marketers: You should be 50% sold 2023-crop.
Soybeans
Price action: November soybean futures firmed 3/4 cent to $10.67 3/4, settling near mid-range. August meal futures rallied $3.2 to $342.4, closing nearer session highs. August bean oil futures climbed 78 points to 47.12 cents.
Fundamental analysis: Soybeans struggled to hold onto overnight gains as sellers re-emerged during today’s session, with November futures closing near recent for-the-move lows. Some positioning is likely ahead of tomorrow’s update to the balance sheet in the 11 a.m. CDT reports from USDA. Expectations call for relatively higher ending stocks for 2023-24, with the average estimate at 357 million bushels, up from 350 million bushels in June. That is likely due to stocks coming in higher than expected in the June Quarterly Grain Stocks report. New-crop ending stocks are seen as falling 8 million bushels from June to 447 million bushels, which comes on the back of lower expectations for production due to a slight drop in acres indicated in the June Acreage Report. One item traders will be watching is new-crop exports. Sales for new-crop have been slow though, with China making initial purchases just recently, well behind normal. While it is still early, USDA could lower exports, further expanding the balance sheet.
Weather remains favorable for crop development across the Midwest, with some portions of the eastern Soybean Belt receiving precip in the past couple of days, says World Weather Inc. Cooler than average temperatures have slowed evaporation rates as well, keeping ample soil moisture. World Weather Inc. noted today that the summer growing season is unlikely to be affected by La Niña due to its slow evolution, which leaves the door open for other weather patterns to dominate the atmosphere. Relatively neutral ENSO conditions are likely until Autumn, says the forecaster.
Conab modestly lowered its Brazilian soybean production estimate to 147.336 MMT, down from 147.353 MMT in June. That remains well below USDA at 153 MMT in the June WASDE.
USDA reported net export sales of 208,000 MT, down 9% from the previous week and 40% from the four-week average. Sales were near the low-end of pre-report expectations that ranged from 200,000 to 600,000 MT. New-crop sales were reported at 191,300 MT, while export shipments totaled 267,300 MT. The current pace indicates the current USDA export estimate is reasonable and should be reached.
Technical analysis: November soybean futures saw action on both sides of unchanged before closing modestly higher. Bears continue to maintain full control of the near-term technical advantage. Today’s high of $10.76 marks initial resistance, which is backed by $10.85 then the 10-day moving average at $10.96. Further selling targets support at $10.61 1/2 with little backing until the psychological $10.50 mark.
August meal futures saw relative strength today, though bears continue to hold a slight technical advantage. First resistance lies at $345.0 while additional buying seeks to overcome the 10-day moving average at $347.0. Support comes in at yesterday’s close of $339.2 then $333.0.
August bean oil futures made up most of yesterday’s loss as bulls continue to maintain the near-term technical advantage. Resistance stands at 47.50 cents then last Friday’s close of 49.55 cents. Selling finds support at 46.23 cents, the 100-day moving average, then 45.59 cents.
What to do: Get current with advised sales.
Hedgers: You should be 65% sold in the cash market on 2023-crop. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Cash-only marketers: You should be 60% sold on 2023-crop. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Wheat
Price action: December SRW wheat rose 10 cents to $5.95 and near mid-range. December HRW wheat gained 18 cents to $6.01 3/4 and nearer the session high. September spring wheat futures rallied 7 3/4 cents to $6.18 3/4.
Fundamental analysis: The winter wheat futures markets today saw short covering after recent selling pressure, most of which is related to commercial hedging amid the winter wheat harvest that is progressing north. There was also some “risk-on” speculator buying interest in the wheat futures markets today following another tame U.S. inflation report that suggests the Federal Reserve will indeed be able to lower interest rates sooner rather than later. The solid losses in the U.S. dollar index today, following the tame CPI report for June, also encouraged the wheat market bulls.
Gains in wheat futures were somewhat limited today by a drop in weekly U.S. wheat export sales. USDA reported wheat export sales of 240,400 MT during the week ended July 4, lower than pre-report trade expectations. Export shipments during the week totaled 294,600 MT.
World Weather Inc. today said that in HRW country net drying will still occur in the first week of the outlook in a majority of the region. However, some rain is expected next Tuesday through Wednesday. “The weather pattern will be nearly ideal for winter wheat harvesting. In the northern Plains, net drying with hot conditions in Montana will raise crop stress in the first week of the outlook. Conditions in the Dakotas and Minnesota will be more favorable with greater rainfall, said the forecaster.
Wheat traders are awaiting Friday morning’s monthly USDA supply and demand report. Traders are expecting modestly higher U.S. wheat production forecasts from the agency, compared to the June WASDE report.
Technical analysis: Winter wheat futures bears still have the firm overall near-term technical advantage. However, a five-week-old downtrend on the daily bar chart for December SRW has stalled out. SRW bulls’ next upside price objective is closing December prices above solid chart resistance at $6.40. The bears’ next downside objective is closing prices below solid technical support at the March low of $5.65 3/4. First resistance is seen at today’s high of $6.03 1/2 and then at last week’s high of $6.15 1/4. First support is seen at the June low of $5.79 and then at $5.65 3/4.
The HRW bulls’ next upside price objective is closing December prices above solid technical resistance at $6.25. The bears’ next downside objective is closing prices below solid technical support at the March low of $5.69 3/4. First resistance is seen at today’s high of $6.07 1/4 and then at the July high of $6.17 3/4. First support is seen at this week’s low of $5.80 and then at $5.69 3/4.
What to do: You should have claimed profits on the 2024-crop hedges in July SRW futures. Wait on a corrective rebound to increase sales.
Hedgers: You should be 60% sold on 2024-crop in the cash market. You should also have 10% of anticipated 2025-crop production forward sold for harvest delivery next year.
Cash-only marketers: You should be 60% sold on 2024-crop. You should also have 10% of anticipated 2025-crop production forward sold for harvest delivery next year.
Cotton
Price action: December cotton futures fell 6 points to 70.87 cents though closed near session lows.
Fundamental analysis: Cotton futures struggled to hold onto early gains and settled nearer session lows as traders anticipate bearish data in tomorrow’s updated supply and demand reports. Midday, USDA will release their updated Supply and Demand Reports. Expectations call for higher domestic production, with traders expecting production of 17.16 million bales, up from 16.0 million bales in the June report, according to a Bloomberg poll. Most of the increase in production is due to acres coming in well above expectations in the June Acreage Report. Ending stocks are seen as coming in at 5.05 million bales for 2024-25, up from 4.1 million bales a month ago. Almost all of the increase in production is seen as going to ending stocks as export estimates are already fairly high, especially considering demand concerns in China.
Western Texas and southwestern Oklahoma are expected to be dry most days in the next few weeks, bringing stress to dryland cotton. Some showers are expected early next week, which should temporarily ease crop stress, says World Weather Inc. Crop conditions continue to fall in the weekly Crop Progress reports and many of the added acres noted in the June Acreage Report came from Texas, which generally yields lower than other production areas, which could lead to less supplies than many anticipate come harvest.
Technical analysis: December cotton futures struggled and ultimately failed to rally as prices closed modestly lower on the day. Bears continue to own the near-term technical advantage. Initial resistance stems from the 10-day moving average at 71.69 cents, which capped rally efforts today. Further buying would find resistance at 72.44 cents. Bulls are seeking to hold initial support at 70.55 cents, else a trip to the June 17 low of 70.00 cents seems likely.
What to do: Get current with advised sales.
Hedgers: You should be 90% sold in the cash market on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.
Cash-only marketers: You should be 90% sold on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.