Corn
Price action: December corn futures sunk 2 3/4 cents to $4.15 3/4 and settled on session lows. Prices marked an 8 1/4 cent loss on the week.
5-day outlook: Corn futures were trading higher ahead of today’s updated Crop Production and Supply and Demand reports from USDA, which sparked some modest selling pressure and forced prices to settle near this week’s lows. USDA opted to leave most of the balance sheet unchanged today, making minor adjustments after incorporating ending stocks reported in the Quarterly Grain Stocks report last week. USDA raised 2024 production to 15.203 billion bu., above 15.186 billion bu. in September and expectations of 15.155 billion bu. That leaves the estimated yield at 183.8 bushels/acre, up 0.2 bushels from a month ago. Prices found modest strength into the close. Bulls managed to hold key support this week, which leaves the door open for a bounce next week. December futures have worked into a precarious position. That is, if prices continue to go much lower, it could negate the uptrend currently in place from the August low. Harvest selling and commercial hedge pressure has left the door open for extended weakness as of late, though we feel it is overdone.
30-day outlook: On the surface, today’s USDA reports look modestly bearish, which encouraged selling pressure intraday. A deeper dive into the objective yield data in the Crop Production report is quite puzzling. USDA raised yields in Iowa, Kansas, Missouri and Nebraska and cut estimated yields in Indiana and Ohio. Each of those states are part of the 10 objective yield data sets. Ear counts were down from September in eight of the ten objective yield states (Illinois, Indiana, Iowa, Kansas, Minnesota, Nebraska, Ohio, South Dakota and Wisconsin), with only Wisconsin and Minnesota showing increases. Huge drops in Iowa and Indiana were stunning. Population was a mixed bag for the states, though overall, were down as well. With population and ear counts both showing declines, implied ear weights are seen as smashing the prior record. The coming month will allow for additional objective data to be collected, giving a better idea of where production will end up. This continues to give us confidence that the current USDA yield forecast is too high, which is likely to shore up the balance sheet in the coming months.
90-day outlook: The world balance sheet will become more of a focus and price-action driver in the coming quarter. South America has begun planting and relatively dry soils have limited planting pace. But, fertilizer costs in Brazil are expensive relative to the price of corn. The high input costs of corn could lead to more producers opting to plant beans. While bearish for beans, which already see the world balance sheet at record levels, it could tighten up the corn balance sheet. If Brazil does not plant as much corn as currently expected, it could also drive additional importers to the U.S. market, including China, which currently does not have any sales on the book for U.S. origin corn. USDA lifted their export estimate 25 million bushels to 2.325 billion bushels in today’s report, reflecting their optimism for the export market.
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: November soybeans fell 9 1/4 cents to $10.05 1/2 and marked a 32 1/4 cent weekly loss, while December meal closed $1.00 lower at $315.10, and is down $15.40 on the week. December soyoil slid 43 points to 43.33 cents and is down 64 points week-over-week.
5-day outlook: Corrective strength across the soy complex was negated in the wake of USDA’s fresh production, supply and demand data released late morning. Old-crop soybean carryover of 342 million bu. was set by the Quarterly Grain Stocks Report as of Sept. 1, up 2 million from the September WASDE. USDA cut total supplies 2 million bu., with a 3-million-bu. reduction to the 2023 crop and a 1-million-bushel increase to estimated old-crop imports, while total use was cut 4 million bu. from last month with crush trimmed 8-million bu., residual use up 9-million bu. and exports down 5-million bu. For 2024-25, USDA lowered the average soybean yield 0.1 bu. to 53.1 bu. per acre, reducing production 4 million bu. from the September forecast, though the figure remains at a record high of 4.582 billion bushels and is still up 10% from 2023. Meanwhile, harvested area was unchanged at 86.3 million acres. On the demand side of the balance sheet, residual use was decreased by 2 million bu., with no changes to exports and crush, leaving ending stocks unchanged from last month at 550 million bushels. Traders will continue to mull over the data into next week, with technical pressure likely lingering across the complex. However, corrective gains in soymeal could ignite corrective strength following a string of losses since the Oct. 1 high.
30-day outlook: Weather in both the U.S. and South America will be a key focus over the next month. As of Oct. 6, USDA reported soybean harvest was 47% complete, notably ahead of the five-year average. World Weather Inc. maintains weather throughout the Midwest will allow for aggressive harvesting over the next two weeks amid mostly dry conditions. Meanwhile, after an extended period of hot, dry weather, Brazil will experience some needed moisture over the next couple of weeks that will eventually support some planting of early soybeans. The forecaster notes greater rainfall in the Oct. 19-25 period will be more helpful in raising topsoil moisture after this week’s sporadic rainfall.
90-day outlook: U.S. exports will be closely monitored as the year progresses, with an increased focus following recent stimulus measures in China and ahead of the November election. Moreover, lingering inflation could continue to prop up the U.S. dollar making U.S. commodities less competitive on the global marketplace.
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: December SRW wheat futures fell 4 3/4 cents to $5.99, nearer the session low and for the week rose 9 1/4 cents. December HRW wheat futures dropped 6 1/2 cents to $6.04 1/2, nearer the daily low, and for the week rose 6 1/2 cents. December spring wheat futures fell 6 1/2 cents to $6.43 3/4 but rose 5 1/4 cents on the week.
5-day outlook: The winter wheat futures saw some mild profit-taking and weak long liquidation heading into the weekend. Lower corn and soybean futures prices today also spilled over into some selling pressure in the wheat markets.
USDA today forecast U.S. wheat carryover for 2024-25 at 812 million bu., down 16 million bu. from the September report and 7 million bu. below the average pre-report trade estimate. The agency put the national average on-farm cash wheat price for 2024-25 at $5.70, unchanged from last month. The report was deemed neutral for wheat. However, look for the wheat futures markets to continue to look to the corn and soybean markets for daily price direction in the near term. Commercial hedging pressure in corn and soybeans as both crops’ harvests progress will likely limit the upside in corn and beans, and in turn do the same for winter wheat prices.
30-day outlook: Weather patterns in major wheat-growing regions around the globe will remain on traders’ minds in the coming weeks. World Weather Inc. today said U.S. wheat regions are expected to remain “quite dry in the Great Plains for one more week, while recent drier conditions in the lower Midwest, Delta and southeastern states were good for future planting. Rain is needed soon in the Great Plains, Pacific Northwest and northern and western parts of the Midwest, where crop moisture stress is expected for a while in early planted areas while emergence and establishment are delayed until significant rain falls.” Meantime, partial relief from dryness is expected next week in eastern Ukraine and western Russia. Western Europe rainy weather will delay fieldwork of all kinds including the planting of winter crops. Australia still needs greater rain in western and south Australia. Argentina will benefit from rain in the next ten days, although a full restoration of yield potential may not be possible. Southern Brazil wheat should remain favorably rated, said the forecaster.
90-day outlook: Russia this week fired missiles on several occasions at Ukraine’s Odesa region, including an important grain port hub. Reports said Russia is attempting to disrupt Ukraine’s grain exports. If the Russian attacks on Ukraine’s grain and shipping infrastructures continue, such will likely at least keep a floor under wheat prices in the coming months. On the bearish side, the U.S. dollar index this week rallied to a 2.5-month high. The charts have turned more bullish for the USDX, suggesting still more price upside to come. If the USDX continues to appreciate in the coming months, such would make U.S. wheat less competitive on the world trade markets.
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: December cotton fell 45 points to 72.21 cents, and down 106 points on the week.
5-day outlook: Cotton futures ended the week lower as USDA’s production, supply and demand data ignited selling. Old-crop cotton carryover was unchanged from last month, with no changes to supply or demand from September. However, new-crop carryover increased 100,000 bales from September, despite a 310,000-bale cut to supplies due to a smaller crop estimate. USDA trimmed cotton use 400,000 bales, with domestic use down 100,000 bales to 1.8 million bales and exports down 300,000 bales to 11.5 million bales. Unaccounted use was also cut 10,000 bales to -40,000 bales. Look for recent consolidation to continue as technical resistance looms and near-term oversold conditions likely curb heavy selling pressure.
30-day outlook: As of Oct. 6, USDA reported 26% of the cotton crop was harvested, making the next several weeks crucial as harvest efforts continue to progress across the country. World Weather Inc. notes cotton areas will experience dry biased weather for the next week, favoring crop maturation and some harvesting, though cool temps next week may bring a threat of soft frost to the northern Delta, Virginia and North Carolina, but mostly likely the airmass will moderate prior to getting into those areas. The forecaster notes showers will return to a large part of western Texas and southwestern Oklahoma Oct. 18-19, which may discolor come cotton, though drier weather is expected shortly after, which should improve the situation.
90-day outlook: USDA’s 300,000-bale cut to 2024-25 exports in today’s supply and demand update certainly set the tone for exports as the marketing-year progresses. While the drop was not all that surprising, it certainly hardened prospects of reduced cotton demand for the foreseeable future. However, traders will continue to monitor stimulus measures in China, which could prop up purchases from the country, though any escalation in trade tensions and lingering inflation could kibosh any potential optimism should extended measures transpire.
What to do: Get current with advised sales.
Hedgers: You should also have 25% of expected 2024-crop production forward sold for harvest delivery.
Cash-only marketers: You should also have 25% of expected 2024-crop production forward sold for harvest delivery.