Corn
Price action: March corn futures fell a penny today to $4.35 1/4, steady with a week-ago.
5-day outlook: March corn futures had a lackluster end to the week, ending the week nearer this week’s lows. March futures traded in a relatively tight range all week, with the overarching trend pointing to tightening prices. That consolidation pattern is getting long in the teeth on the daily bar chart. That is to say, the downtrend stemming from the early October higher has capped nearly all of the upside and the uptrend stemming from the mid-October low has limited nearly all of the downside. Those trendlines are converging. The break of either one will likely dictate the medium-term trend. Given the holiday next week and traders likely opting to make it a four-day weekend taking Friday off, price action is likely to continue sideways over the coming week, though the technical outlook will continue to garner attention in the longer-term timeframes.
30-day outlook: Demand has had a strong start to the marketing year, with total commitments (export sales plus shipments) coming in at the highest mark since 2021-22. Exports sales have been above the five-year average for eight weeks in a row now, giving a much needed home to some of this year’s bumper crop. Domestic demand has proven quite strong as well, with ethanol use for the first two months of the marketing year coming in at what is likely the highest mark since 2017-18. One can only assume that feed use has been robust as well, though that will not be known until mid-January when the Quarterly Grain Stocks report is released from USDA. The uptick seen across demand categories is helping mitigate the expansion of the balance sheet, likely keeping a solid floor under prices.
90-day outlook: South American weather will play a key role in the world balance sheet over the coming quarter. Following first-crop soybean harvests, producers in Brazil will begin planting their safrinha corn crop. Given favorable first-crop bean plantings, most of the safrinha crop should be able to be planted within the ideal window, but the return of La Nina and unpredictable weather could eventually change that. Low corn prices also pressure producers to find alternative, more profitable crops. Any change to the planted acreage in Brazil could send additional demand to the U.S. market, further providing a floor under prices, but given abundant supplies under current assumptions, corn prices are likely to face persistent selling on any sustained rally.
What to do: Get current with advised sales.
Hedgers: You should be 20% sold in the cash market on 2024-crop.
Cash-only marketers: You should be 20% sold on 2024-crop.
Soybeans
Price action: January soybeans rose 5 3/4 cents to $9.83 1/2, but lost 15 cents on the week. January meal rose $2.10 to $291.50 and gained 70 points on the week. January soyoil closed 44 points lower at 41.84 cents and lost a notable 365 points on the week.
5-day outlook: Soybean futures were able to score modest corrective gains after sellers prevailed over the past three sessions, aided by plunging soyoil and a soaring U.S. dollar. Today’s short-covering gains were modest in nature, however, as strong technical resistance hovers over current prices. Moreover, mostly favorable conditions in South America have paved the way for a hasty advance in planting efforts in both Brazil and Argentina, offering ease to the marketplace. However, a bounce off the session lows as trade progressed indicates solid support at the August low of $9.73 1/2, which could induce some additional short-covering into next week. This could be compounded if meal and soyoil futures climb amid bargain buying.
30-day outlook: Weather in South America will continue to be the focus into next year as the growing season progresses. Currently, conditions are mostly favorable, with forecasts indicating Brazil will receive a good balance of rain and sunshine during the next couple of weeks, although some drying is expected from Bolivia, northern Paraguay and Mato Grosso do Sul into Sao Paulo. Meanwhile, in Argentina, the central parts of the nation, which are the driest, will receive rain late this weekend and early next week. Other areas of the country will see periods of rain and sunshine, favoring crops and fieldwork. Presently, conditions favor the bears, though changing weather patterns could transpire rather quickly.
90-day outlook: Demand for U.S. soybeans has been quite notable as of late, with USDA reporting frequent daily sales, which have included rare soyoil purchases from India. However, as the year ends and the baton is passed to the new administration, traders will closely monitor trade relations, tariffs and potential retaliation efforts. China continues to anchor itself to Brazil, demonstrated this week by negotiations between the two countries, which included the signing of 37 wide-ranging agreements. Traders will closely monitor if and when additional tariffs are enacted, which could reignite inflation and continue to prop up the U.S. dollar as well as interest rates.
What to do: Get current with advised sales.
Hedgers: You should be 20% sold in the cash market on 2024-crop.
Cash-only marketers: You should be 20% sold on 2024-crop.
Wheat
Price action: March SRW wheat futures fell 4 3/4 cents to $5.64 3/4 and nearer the daily low. For the week, March SRW rose 10 3/4 cents. March HRW wheat lost 1 3/4 cents to $5.65 1/2, near mid-range and on the week up 13 1/4 cents. March spring wheat futures closed down 3/4 cent at $6.01 1/2 and gave up 3/4 cent on the week.
5-day outlook: The closes Friday in winter wheat futures near their weekly low closes suggest some follow-through, chart-based selling pressure early next week as technicals remain overall bearish. Price action in corn and soybean futures will also heavily influence the wheat markets. On the price-positive side, the escalation in the Russia-Ukraine war recently has prompted heightened concerns about wheat supplies coming out of the Black Sea region.
30-day outlook: The coming weeks will see continued focus on weather conditions in major global wheat regions. World Weather Inc. today said U.S. hard red winter wheat areas have benefited from recent weeks of rain with good root and tiller systems expected in many production areas. Much of central and northern Europe and the western CIS are now cool enough for most winter crops to be dormant or semi-dormant. The majority are well established. The lower Danube River Basin, eastern Ukraine, Russia’s Southern Region and western Kazakhstan see poorly established winter crop areas but with no extreme cold weather in the forecast. Australia’s wheat harvest should be advancing relatively well, although rain in the coming week in south Australia, Victoria and southwestern crop areas of New South Wales will slow the process. No grain quality issues are anticipated. Argentina’s wheat region continues to get a good mix of rain and sunshine for its late season crop in the south. Southern Brazil’s late-season harvest will advance around periodic rain, said the forecaster.
90-day outlook: The bearish 800-pound gorilla in the wheat trading arena is a surging U.S. dollar index that this week hit a two-year high and shows no signs of topping out. Price trends in the currency markets tend to be stronger and longer-lasting than price trends in other markets. This suggests U.S. wheat, which had already been struggling to be price-competitive on world trade markets, will remain even less desirable among world wheat buyers into the new year.
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 rose 34 points to 70.77 cents and notched a 186-point weekly gain.
5-day outlook: Cotton futures edged higher for the fourth straight session amid short-covering from the three-month low carved earlier this week despite a surging U.S. dollar. Strength in equities likely underpinned the natural fiber, along with a notable uptick in export sales, as reported Thursday in USDA’s weekly Export Sales Report. Recent price erosion has apparently piqued importer interest, which could persist as technical resistance likely curbs strong buyer interest in the near-term.
30-day outlook: USDA reported cotton harvest was 77% complete as of Nov. 17, which reflected a six-point advance on the week. While harvest efforts are on the downhill slide, weather will be crucial as producers wrap up across the U.S. World Weather Inc. reports West Texas and the Texas Blacklands will be dry for the next week to possibly ten days. Recent rain disrupted the harvest, induced some fiber quality concerns and strung some fiber out of the bolls. However, the drier weather will attempt to improve the situation. Recent rain in the Delta and that which impacted the southeastern states Tuesday and today disrupted fieldwork and may have reduced fiber quality in a few areas. The forecaster maintains most of harvest in the Delta is complete, keeping the impact of recent low. Rain in Alabama, Georgia and the Florida Panhandle will delay harvesting for a while and there will be some quality decline resulting from the moisture.
90-day outlook: On Thursday, USDA reported weekly upland cotton sales of 318,500 RB, a marketing-year high. Net sales were up noticeably from the previous week and 72% from the four-week average. Importers have obviously found U.S. cotton to be a bargain after recent selling efforts, though a climbing U.S. dollar could crimp importer interest. However, the incoming administration could continue to bolster buying interest in equities, which could increase buying interest in cotton as well.
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.