Corn
Price action: December corn futures surged 4 cents to $4.14 3/4, but still lost 9 1/4 cents on the week.
5-day outlook: Corn futures surged on today’s updated USDA supply and demand estimates, which showed tighter than expected endings stocks for both old-crop and new-crop. Ending stocks for 2023-24 totaled 1.877 billion bushels, down 145 million bushels from a month ago and 172 million bushels below the average pre-report estimate. Both exports and feed saw a 75 million bushel increase from the June estimate. We have reported that feed use was historically low and an upward adjustment was likely to come at some point. Strong sales through June and robust export shipments led USDA to increase exports as well. Lower carry-in and increased expectations for both feed and exports led USDA to cut new-crop ending stocks 5 million bushels from a month ago to 2.097 billion bushels—shocking given the 240 million bushel increase in production. Use increasing as corn prices fall is a good sign for bulls—signs that prices have gotten cheap enough to potentially put in a floor. Bulls are seeking to build on that strength in the coming week, ultimately seeking to overcome resistance at $4.25 to show an interim low could be in place.
30-day outlook: Funds hold a heavily, if not record, net short position in corn futures. Many are looking at 2014 for an analog study for corn prices, though funds were net long at this point a decade ago, which left plenty of room for prices to fall. That key difference could spark additional buying efforts in the coming month. If bulls can get funds to cover a portion of their position, it could lead to additional “snow balling” and further corrective buying. Weather over the coming month will play a role in price action as well. Favorable soil moisture is currently in place and a lack of widespread heat over the next ten days is likely to keep crop conditions favorable despite a drier weather pattern in the next few weeks, says World Weather Inc. Most of the Corn Belt is forecast to receive rain in the next week at some point, slowing drying and further boosting production potential.
90-day outlook: The longer-term outlook in corn prices will of course be partially dictated by production, but demand will come more into focus as production prospects are better realized. USDA is penciling in record use for 2024-25 and a large portion of that demand comes from exports. The election is quickly coming into focus with both frontrunning candidates being tough on trade. Trade deals will continue to play an important role, particularly with China. China is one of the top importers of U.S. corn, though they have favored purchases of sorghum and South American corn the last few years. If the U.S. can keep China (and their bloc partners) in the U.S. market, it could be supportive for prices, though if the election spurs additional trade wars, it could drive the balance sheet wider, weighing heavily on corn prices.
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 soybeans fell 2 1/2 cents to $10.65 1/4 and marked a 64 1/2-cent weekly loss. August soymeal fell $3.60 to $338.80 and edged $18.50 lower on the week. August soyoil fell 47 points to 46.65 cents and for the week fell 290 points.
5-day outlook: Soybean futures responded to USDA’s supply and demand update rather mutedly, despite lower-than-expected old- and new-crop ending stocks figures, as selling in meal futures limited buying interest. USDA pegged old-crop ending stocks at 345 million bu., down 5 million bu. from last month and 10 million bu. below the average pre-report guess. Old-crop supplies were trimmed 5 million bu. to 4.449 billion bu. amid a 5-million-bu. cut to estimated imports. Total old-crop use rose 1 million bu. from June. Meanwhile, 2024-25 ending stocks were lowered by 20 million bu. to 435 million bu. Total supplies were trimmed 20 million bu. month-over-month amid lower beginning stocks and a 15 million bu. reduction to the 2024 soybean crop projection. Old-crop global soybean carryover rose 180,000 MT from June to 111.3 MMT, while new-crop global carryover fell 140,000 MT to 127.8 MMT.
Look for traders to continue to mull over the government’s update and continue to trade the numbers into next week.
30-day outlook: Mother nature has proven quite variable throughout the Corn Belt in recent weeks, though remnants of Hurricane Beryl ultimately provided moisture for some of the driest areas. Moreover, mild temps in much of Midwest have also proven favorable for growing crops in many areas, though World Weather Inc. reports a drier weather pattern is expected during the next two weeks that will leave many areas much drier than today.
90-day outlook: U.S. soybean exports and crush will continue to be the long-term focus as the new marketing-year approaches. The marketplace will remain fixed on the Federal Reserve’s inflation battle, which is seemingly proving effective given this week’s Consumer Price Index reading for June. Rate cuts in September are becoming a more likely prospect following this week’s data, pressuring the U.S. dollar. Meanwhile, U.S./China relations will certainly hold the marketplace’s attention as Brazil begins to ramp up plantings, which will begin in September.
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 futures fell 19 1/4 cents to $5.75 3/4, near the session low and hit a four-month low. On the week, December SRW lost 37 3/4 cents. December HRW wheat futures dropped 15 1/4 cents to $5.86 1/2, nearer the daily low and on the week down 29 1/2 cents. December spring wheat fell 20 1/4 cents to $6.17 1/4 and marked a weekly loss of 33 3/4 cents.
5-day outlook: The wheat futures markets got a bearish USDA monthly supply and demand report today that is likely to prompt more downside price pressure early next week. The agency’s first all-U.S. wheat production estimate increased 133 million bu. from the June projection and was 99 million bu. higher than market expectations. Old-crop U.S. wheat carryover of 702 million bu. was up 14 million bu. from last month. Wheat carryover for 2024-25 increased 98 million bu. from last month and is 68 million bu. above the pre-report trade expectations. Technicals in the wheat markets remain bearish and today’s futures closes at or near the weekly lows will also likely prompt more speculator, chart-based selling interest next week.
30-day outlook: The winter wheat harvest is past the half-way point and will start to wind down in the coming weeks. That should alleviate the seasonal commercial hedge pressure that comes with the winter wheat harvest. Weather in global wheat regions will remain near the front burner of the marketplace. World Weather Inc. today said central and northern Europe rain may slow winter grain harvest progress and could restore worry over the quality of unharvested crops in some areas. Crops in Russia and Ukraine may be at risk of lower yields due to building dry and warm weather. Canada’s wheat production “is looking very good, despite some hotter and drier weather in the west this week.” Concern about dryness in the southwestern U.S. will build over the next ten days, said World Weather.
90-day outlook: The U.S. spring wheat market may face additional selling pressure in the coming few months. This week’s USDA crop condition ratings at 75% “good” to “excellent” suggest this year’s spring wheat crop will be a big one. The market will also face harvest pressure down the road. On the positive side, the U.S. dollar index today hit a four-week low and is now trending down on the daily bar chart. If the greenback continues to weaken on the foreign exchange market in the coming weeks/months, such would be a bullish element that makes U.S. wheat more price-competitive on the world trade markets.
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 rose 40 points to 71.27 cents and marked a 29-point gain on the week.
5-day outlook: Cotton seemed relatively unphased by USDA’s mostly bearish update today, as continued weakness in the U.S. dollar likely lent support. In its monthly supply and demand update, the government increased old-crop ending stocks 200,000 bales from last month, while supplies were unchanged at 16.32 million bales. Meanwhile, use was lowered 200,000 bales amid a decline in estimated exports. Meanwhile, 2024-25 carryover rose 1.2 million bales from June, due to a 200,000 increase in beginning stocks and 1-million-bale increase in the crop projection to 17 million. Total use was unchanged at 14.9 million bales. However, lending support the natural fiber, were larger than expected reduction in global carryover figures. Old-crop global carryover was reduced 1.66 million bales from last month to 79.31 million bales, while 2024-25 global carryover was pegged at 82.63 million bales, down from 83.49 million bales in June. Look for traders to continue to mull over today’s data into next week and monitor the direction of the dollar.
30-day outlook: The marketplace will continue to monitor weather closely over the next month as the growing season progresses, especially given notable reductions in crop conditions, as evidenced by USDA’s weekly condition rating. World Weather Inc. reports Western Texas and southwestern Oklahoma will be mostly dry during the next two weeks and stress to dryland cotton will increase in many areas, with showers Tuesday into Thursday temporarily easing crop stress in some areas and buying the crop more time before greater stress evolves. Meanwhile, the Coastal Bend and south Texas will see isolated showers through Saturday that will slow drying rates and keep conditions for cotton mostly favorable when drier weather occurs Sunday through July 26. The Blacklands will see infrequent showers through the next two weeks and stress to cotton should steadily increase and expand with one round of rain expected Thursday into Saturday, July 20, though drier weather is expected to return July 21-26.
90-day outlook: U.S. cotton exports will continue to provide market direction as traders continue to monitor the U.S. dollar in the coming months. The greenback will take direction in the Federal Reserve’s actions amid the persisting fight against inflation. However, this week’s weaker-than-expected Consumer Price Index (CPI) reading increased sentiments of future rate cuts, which has sent the dollar to a more than one-month low.
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.