Corn
Price action: December corn slid 5 1/4 cents to $3.99 3/4, ending the session below $4.00 for the first time since December 2020.
Fundamental analysis: Corn futures faced heavy selling early in the session, pressing below the crucial $4.00 level, though were able to rebound from the intraday low in step with SRW wheat futures around mid-morning. Nonetheless, today’s price action was quite disappointing given solid gains in crude oil futures, extended losses in the U.S. dollar and a daily sale of 104,572 MT to unknown destinations for 2024-25.
As widespread rains continue across most of the Midwest, production prospects remain solid, though the marketplace will be tuned in for USDA’s Crop Production Report, due out Aug. 12. The National Agricultural Statistics Service (NASS) reported earlier today a review of all available data, including survey data and the latest information from USDA’s Farm Service and Risk Management Agencies, for planted and harvested acreage. If NASS’s data review justifies any changes, NASS will publish updated planted and harvested acreage estimates in the Aug. 12 report.
Earlier today, the Energy Information Administration reported ethanol production averaged 1.109 million barrels per day (bpd), a new weekly record which topped the previous record of 1.108 million bpd during the week ended Dec. 1, 2017. Ethanol stocks rose during the week rose 250,000 barrels to 23.973 million barrels.
USDA will release weekly export sales data early Thursday morning, with analysts expecting net old-crop sales to have ranged from 275,000 to 600,000 MT and new-crop sales between 400,000 and 800,000 MT during the week ended July 25. Last week, net old-crop sales totaled 331,380 MT, while new-crop sales were reported at 745,193 MT for the previous week.
Technical analysis: December corn ended the session below psychological support at $4.00 for the first time since Dec. 2020 as bears continue to firmly grasp the near-term technical advantage. Initial support will now serve at $3.98 1/2, then at $3.93, with little support serving until $3.50. Conversely, initial resistance will now serve at $4.00, which is backed by resistance at $4.07 1/4 and the 10- and 20-day moving averages, each trading around $4.11, with solid resistance serving at the July high of $4.26 1/2.
What to do: Get current with advised sales.
Hedgers: You should be 60% sold in the cash market on 2023-crop.
Cash-only marketers: You should be 60% sold on 2023-crop.
Soybeans
Advice: We advise soybean hedgers to sell the final 25% of 2023-crop production to get to 100% sold in the cash market. We also advise reowning 25% of old-crop in October $10.50 short-dated serial call options, which keep upside potential open through mid-September. Our fill was 18 1/2 cents.
Price action: November soybeans rose 1 1/4 cents to $10.22 1/2, near mid-range and hit a 3.5-year low early on. September soybean meal fell $2.10 to $327.30 and nearer the session low. September soybean oil closed up 55 points at 43.26 cents and nearer the session high.
Fundamental analysis: The soybean complex futures markets saw pauses today, with buying interest limited by lower corn prices but selling interest limited by bullish outside markets that included sharp gains in crude oil and a weaker U.S. dollar index.
Weather in the U.S. leans bearish, suggesting a bountiful harvest this fall. World Weather Inc. today said “good growing weather is expected to continue in the U.S. Midwest, except in the southwestern soybean region, where steady drying is expected. Hot temperatures are expected again today in the middle and lower Missouri River Valley and possibly again briefly next week before cooler air spreads into the region. Limited rain and periodic heat in the southwest may stress some crops, but timely rainfall and less heat in most other Midwest areas should maintain a good environment for summer crop development.”
Thursday morning’s weekly USDA export sales report is expected to show U.S. soybean sales between 75,000 and 30,000 MT for 2023-24 and 300,000 to 900,000 MT for 2024-25. Last week, net sales of 88,649 MT were reported for 2023-24 and 829,675 for 2024-25.
Technical analysis: The soybean bears have the solid overall near-term technical advantage. Prices are in a nine-week-old downtrend on the daily bar chart. The next near-term upside technical objective for the soybean bulls is closing November prices above solid resistance at $10.86 3/4. The next downside price objective for the bears is closing prices below solid technical support at $10.00. First resistance is seen at this week’s high of $10.44 1/2 and then at $10.50. First support is seen at today’s low of $10.15 and then at $10.00.
The soybean meal bears have the firm overall near-term technical advantage. However, recent price action suggests a market bottom is in place. The next upside price objective for the meal bulls is to produce a close in September futures above solid technical resistance at the July high of $339.50. The next downside price objective for the bears is closing prices below solid technical support at the July low of $313.00. First resistance comes in at today’s high of $332.70 and then at this week’s high of $335.00. First support is seen at $325.00 and then at $322.50.
Soybean oil bears have the solid overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. The next upside price objective for the bean oil bulls is closing September prices above solid technical resistance at 45.00 cents. Bean oil bears’ next downside technical price objective is closing prices below solid technical support at 40.00 cents. First resistance is seen at this week’s high of 43.36 cents and then at 44.00 cents. First support is seen at today’s low of 42.55 cents and then at 42.00 cents.
What to do: Get current with advised sales.
Hedgers: NEW ADVICE -- Sell the final 25% of 2023-crop production to get to 100% sold in the cash market. Reown 25% of old-crop in October $10.50 short-dated serial call options. Our fill was 18 1/2 cents. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Cash-only marketers: You should be 70% sold on 2023-crop. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Wheat
Price action: December wheat rose 3 cents to $5.52, ending near mid-range, while December HRW wheat closed 1/2 cent lower at $5.65 3/4, with both forging a high-range close. September spring wheat fell 3 cents to $5.81 1/2.
Fundamental analysis: Wheat futures were able to rally from the session lows around mid-morning as extended weakness in the U.S. dollar lent support, as did global production concerns. Ukrainian grain traders union UGA cut Ukraine’s 2024 combined grain and oilseed forecast by 2.8 MMT to 71.8 MMT due to a heatwave across the country, while French wheat crop prospects continue to fade. However, rains across much of Australia this much have improved wheat production prospects in the country, with private forecasters now calling for the crop to be as big as 30 MMT, up from 26 MMT in 2023-24. While production prospects have improved, demand from China is expected to weaken significantly.
Meanwhile, concerns are lingering due to dryness in Canada and the northwestern U.S. Plains, as well as around the spring wheat crop in Russia and Ukraine, although recent cool weather and forecasts for “some” showers has reduced some of the concern. Warming will return to Russia and Ukraine late next week, while Canada trends cooler, according to World Weather Inc. In South America, Argentina needs rain to improve winter crop establishment and Brazil might benefit from less rain in the far south.
USDA will release its weekly Export Sales Report early Thursday morning, with analysts expecting net sales to have ranged from 250,000 to 550,000 MT during the week ended July 25. Last week, net sales of 309,319 MT were reported for the previous week, which were down 47% from the previous week and 46% from the four-week average.
Technical analysis: December wheat futures edged sideways in consolidative trade, with initial support at $5.42 1/4, backed by Monday’s low of $5.39 1/2, curbing selling efforts. However, initial resistance at the 10-day moving average of $5.60 1/2 continued to limit a move higher, with additional resistance serving at the 20-day moving average of $5.71 3/4. From there resistance stands at the psychological $6.00 level, which is backed by the 40-day moving average of $6.03 1/2.
December HRW wheat ended the session mostly unchanged following sideways trade throughout today’s session. Initial support continued to serve at $5.55 1/4, and is backed by Tuesday’s low of $5.51 1/4, while resistance at the 10- and 20-day moving averages of $5.82 3/4 and $5.76 1/4 limiting buying interest. Additional support serves at $5.44 1/4 and $5.37 1/4, while a further resistance stands at $5.91 1/4 and again at $6.00 and the 40-day moving average of $6.14 1/4.
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
Advice: We advise cotton hedgers and cash-only marketers to sell the final 10% of 2023-crop production to get to 100% sold.
Price action: December cotton closed down 56 points at 68.99 cents and near mid-range.
Fundamental analysis: The cotton market bulls had to be extra disappointed today, as futures saw selling pressure despite a strong rally in the U.S. stock market, sharply higher crude oil prices and a lower U.S. dollar index.
The FOMC today left U.S. interest rates unchanged, as expected, while saying U.S. economic growth has moderated but inflation remains “somewhat elevated.” The marketplace read the latest FOMC meeting results as being about as expected, and suggesting the Federal Reserve will cut interest rates at its September meeting. That rallied the U.S. stock market and is in turn positive news for cotton market bulls.
Weather in U.S. cotton country favors the bears at present. World Weather Inc. today said U.S. southeastern states “are a little too wet and cloudy and this trend will continue for a little while. The Delta will dry down beneficially and a good mix of rain and sunshine is expected for most of the Texas crop areas.” Harvesting in south Texas will advance well in the absence of rain. Less heat in California will reduce some of the plant stress that has been prevailing for weeks, “although boll sizes are still destined to be a little smaller than usual because of that heat.” Some hotter weather will return later this week into next week. West Texas may receive a few weekend showers, but the next chance for more meaningful rain will hold off until late next week, said the forecaster.
Thursday morning’s weekly USDA export sales report will be closely scrutinized by cotton traders, especially demand coming from China. Last week’s export sales numbers were dismal, with net sales reductions of 74,200 running bales for 2023-24 a marketing-year low.
Technical analysis: The cotton futures bears have the solid overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. A bear flag pattern has also formed on the daily chart. The next upside price objective for the cotton bulls is to produce a close in December futures above technical resistance at 73.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 65.00 cents. First resistance is seen at today’s high of 69.64 cents and then at this week’s high of 70.20 cents. First support is seen at today’s low of 68.29 cents and then at the contract low of 67.50 cents.
What to do: Get current with advised sales.
Hedgers: NEW ADVICE -- Sell the final 10% of 2023-crop production to get to 100% sold. You should have 25% of expected 2024-crop production forward sold for harvest delivery.
Cash-only marketers: NEW ADVICE -- Sell the final 10% of 2023-crop production to get to 100% sold. You should have 25% of expected 2024-crop production forward sold for harvest delivery.