Corn
Price action: December corn futures traded on both sides of unchanged before settling 1 3/4 cents lower to $4.19 1/2.
5-day outlook: Corn futures continue to see muted volatility as prices continue to consolidate following last week’s steep selloff. December futures continue to be oversold on the daily bar chart, which could render some corrective buying next week. Corn’s inability to rally this week despite moderate strength in the soybean market is a bit concerning, though it is worth noting that volume has been poor all week long and lessening each day. Friday is likely to be another low volume day which is likely to yield little meaningful price action. Next week could see a corrective bounce, though traders will quickly focus on the updates to the balance sheet in USDA’s monthly Supply and Demand reports, which are unlikely to show a yield change from June, but acres will reflect the June Acreage Report numbers. That will yield an increase to production which will only be partially offset by an increase in use.
30-day outlook: Weather is likely to dictate most of the price action in the coming month. Periodic rainfall and seasonal temperatures are expected across the Corn Belt from the Fourth of July through the end of next week before a drier forecast persists, says World Weather Inc. Soil moisture levels are expected to be abundant enough to carry the crop through pollination at that point. Still, late summer dryness could spur some buying interest, especially considering funds are currently heavily short corn prices. The current forecast continues to point to fruitful growing conditions for the majority of the Corn Belt, indicating any rally should be sold in the meantime.
90-day outlook: The market has priced in an expanding balance sheet and seems to have priced in higher production due to an increase in planted acres. Some demand concerns have risen, as feed use continues to take up a smaller portion of production compared to historical norms. Part of that can be attributed to a shrinking cattle herd and switching to more of a grass-based diet. Some concerns are rising surrounding exports as well. China has not yet made initial 2024-25 purchases for any crop except wheat. Both front-running presidential candidates have taken a “tough on China” approach and it appears that China is seemingly preparing for another trade war. USDA is currently penciling in “historically normal” demand levels, but if that proves to be too optimistic, the expanding balance sheet could continue to weigh heavily on corn prices in the coming quarter as combines begin hitting fields. USDA will release the weekly export sales report on Friday due to tomorrow’s holiday. Traders expect sales between 500,000 and 900,000 MT for the week ended June 27.
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 rose 8 1/2 cents to $11.21 1/2, marking the highest close since June 24. August soymeal fell 20 cents to $350.10, closing near the session low. August soyoil surged 160 points to 48.64 cents, ending the session above the 200-day moving average for the first time since Sept. 27.
5-day outlook: Soybeans extended short-covering for a third straight session, though volumes ahead of the July Fourth holiday and looming technical resistance limited upside momentum. Soyoil strength has underpinned the soy complex throughout the week, though a test of the 200-day moving average for the first time since last September and a push into near-term overbought territory could provoke profit-taking in the coming sessions, though bulls certainly hold the technical advantage. Meanwhile, comments from Fed Chair Jerome Powell Tuesday, leaned dovish on U.S. monetary policy Tuesday, which sent the U.S. dollar spiraling lower and easing pressure across commodities. Look for soyoil to continue to lead the soy complex into next week, with special attention remaining on the direction of the U.S. dollar as well as competing currencies.
30-day outlook: USDA’s supply and demand update, due out July 12, combined with U.S. weather will have the greatest impact on prices over the next month. USDA will update balance sheets to reflect old-crop demand forecasts based on June 1 stocks as well as notable changes to the new-crop balance sheet to reflect the agency’s June 28 acreage data. However, weather will remain a particular focus in the wake of recent rains in the upper Midwest, while other areas of the Midwest are lacking moisture. World Weather Inc. indicates a drier weather pattern will return next Tuesday through July 17, drying down much of the Midwest significantly. The forecaster reports there is some potential for warmer temps to return late next week into the following weekend, increasing evaporation rates and raising the need for rain in the third week of the month as soybeans begin to approach their most important phase of reproduction.
90-day outlook: The dollar will continue to be at the forefront of the marketplace as the Federal Reserve continues its battle against inflation. The dollar has remained elevated throughout the marketing-year, curbing U.S. soybean exports as importing countries look to cheaper sources as inflation has lingered longer than previous expectations. Moreover, look for traders to maintain a close watch on China, a top soybean importing country, which hasn’t booked any new-crop soybeans to date. USDA will release weekly export sales data on Friday due to this week’s holiday. Traders are expecting net sales to have ranged from 200,000 to 600,000 MT for 2023-24 and 50,000 to 150,000 for 2024-25 during the week ended June 27.
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 6 3/4 cents to $5.98. December HRW wheat futures lost 7 3/4 cents to $6.01. Both markets closed nearer their daily lows. December spring wheat futures closed 8 1/4 cents lower at $6.41.
5-day outlook: This week’s choppy price action gives the bulls some better hope that the winter wheat markets are “basing” and at or near market bottoms. However, recent price action has formed bearish pennant or flag patterns on the daily charts for December winter wheat futures. That sets up next week as an extra important trading week from a chart perspective. Fundamentally, with U.S. winter wheat harvest in full swing and around half-way done, commercial hedging pressure will likely continue to keep a lid on significant upside price action in futures. Friday morning’s weekly USDA export sales report is expected to show U.S. wheat export sales of 350,000 to 700,000 MT for the 2024-25 marketing year.
30-day outlook: As the corn and soybean crops in the U.S. see the critical growing months of July and August, look for the wheat markets to look more to corn and beans for daily price direction. Weather in global wheat regions will also be markets-sensitive. World Weather Inc. today said Canada’s wheat crop is “performing relatively well.” The U.S. Midwest wheat crops are faring favorably, “which might benefit from some drier weather in the next two weeks.” Russia’s winter crops will have a chance to fill and mature in a favorable weather environment during the next ten days. Wheat in Australia, Argentina and South Africa is being planted in a favorable environment “with establishment expected to proceed favorably,” said the forecaster.
90-day outlook: The trajectory of the U.S. dollar index will remain a key “outside market” in determining daily U.S. wheat futures price action in the coming months. The USDX today hit a three-week low on ideas a more dovish Federal Reserve will lower interest rates in the coming months. If the greenback continues to depreciate on notions of an easier Fed monetary policy, such would be good news for the wheat market bulls, making U.S. wheat more competitively priced 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 fell 34 points to 72.36 cents, closing near the session low.
5-day outlook: Cotton trade continued to consolidate in narrow trade ahead of the Fourth of July holiday as technical resistance continued to minimize gains despite support from a weaker U.S. dollar. Meanwhile, recent support around 72.08 cents has limited a move lower since the June 17 low of 70.00 cents. However, recent consolidation suggests a more pronounced move is imminent, with last week’s bearish acreage data lending bears a leg up, though the June multi-year low could limit earnest selling efforts.
30-day outlook: U.S. weather and USDA’s July 12 supply and demand update will drive the markets over the next month. Changes to the U.S. balance sheet will be made following the agency’s June 28 acreage data. Meanwhile, however, weather will be the ultimate deciding factor in cotton production. World Weather Inc. notes West Texas weather will improve over the next ten days, especially if rain evolves this weekend into next week as expected. The Delta and southeastern states may continue to get some timely rain, supporting good cotton development.
90-day outlook: U.S. cotton exports have been persistently uninspiring over the past few months as an elevated U.S. dollar and weak economy in top importer, China, has dampened sales of the natural fiber. Look for traders to continue to monitor the Federal Reserve’s actions as well as the global economy. Moreover, harvest efforts in South America could cast a further shadow on U.S. cotton exports. USDA will release its weekly export sales data Friday, delayed a day due to the observance of Independence Day on Thursday.
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.