Corn
Price action: December corn futures sunk 2 cents to $4.04 3/4, marking an 11-cent loss on the week.
5-day outlook: Corn futures saw followthrough selling following a test of downtrend resistance stemming from the early October peak this morning. The confirmation of downtrend resistance at $4.09 is concerning, considering how steep the technical resistance is and bulls inability to break above it. Some followthrough selling seems likely early next week, but strong support at the psychological $4.00 mark remains intact. We anticipate the downside being largely overdone, especially considering we anticipate a cut to the production forecast in the future, with more on that below. The recent uptick in demand, as noted by yesterday’s huge daily export sale to Mexico and another daily sale of 125,000 MT of corn for delivery to unknown destinations today, indicate prices have reached a value level with importers increasing their book, taking advantage of low prices. USDA reported corn export sales of 2.226 MMT for the week ended Oct. 10, up 82% from the previous week and up noticeably from the four-week average. Net sales exceeded pre-report expectations ranging from 1.2 MMT to 2.2 MMT.
30-day outlook: We continue to anticipate production coming in below USDA’s estimate, though still expect yield to boast a record. Both ear counts and populations came in below the September counts in the USDA Crop Production Report and are below a year-ago October counts as well. Still, USDA anticipates a record corn yield, driven almost entirely by ear weights. The market seems to have grasped that production may not be what USDA anticipates, which could be driving calendar spreads higher. The spread between December and July futures has shrunk a dime since the Sept. 12 low. Historically, spreads tend to lead price action, with flat futures following at some point. We feel this gives reason to be bullish ahead of the December contract’s expiration next month.
90-day outlook: While the domestic balance sheet has tightened over the past four months, the world balance sheet has been concerning. There is some concern that Brazil will top the U.S. as the world’s top exporter as China continues to essentially boycott U.S. origin corn. USDA sees Brazilian production as rebounding strongly from a year ago, though Conab is less optimistic. The world balance sheet is seen as tightening year-over-year, but it will be largely dictated by how the growing season progresses in South America. If fruitful weather returns to Brazil for safrinha corn, corn futures could continue to fall under pressure. On the other hand, prices have reached value levels and have faced very little followthrough selling, so it is possible that the downside is already largely in place.
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 slid 18 3/4 cents to $9.70 and closed down 35 1/2 cents on the week. December soymeal fell $2.50 to $315.60 but notched a 50-cent week-over-week gain. December soyoil fell 77 points to 41.82 cents and marked a weekly loss of 151 points.
5-day outlook: Soybean futures continued to combat technical pressure combined with soyoil weakness which succumbed to extended selling in crude oil futures to end the week. Additional daily sales of U.S. soybeans totaling 292,800 MT to unknown destinations and a soyoil sale of 21,000 to Mexico failed to provide much of a boost to the complex, nor did USDA’s weekly export sales total 1.7 MMT for the week ended Oct. 10. For the week, net sales were up 35% from the previous week and 16% from the four-week average.
A risk-off tone has hovered over the grain and soy complexes as of late amid looming geopolitical tensions and the upcoming presidential election, with improving South American weather also reducing potential supply concerns. Next week is likely to include sideways trade as technical resistance continues to curb earnest buyer interest, while near-term oversold conditions are likely to curb a notable downside move.
30-day outlook: As U.S. harvest winds down, South American weather will gain increasing attention as producers plant first season crops. An extended stretch of hot, dry weather has mostly been halted amid rains which have fallen in Brazil’s center west and center south crop areas. World Weather Inc. reports the area will continue to receive needed moisture for planting early soybeans in the driest areas of center west. Earlier this week, Conab released its initial 2024-25 estimate for the Brazilian soybean crop at 166.05 MMT, which would be up 12.7% from the previous season, if realized. The agency estimated the area planted to grow 2.8% to 116.9 million acres, the lowest year-on-year increase in six years due to lower global prices last season and expectations for a further drop in 2025.
90-day outlook: While an appreciating U.S. dollar has seemingly failed to curb export demand in recent weeks, a persisting rise into the new year could ultimately weigh on the appetite of importing countries. A lengthier battle against inflation could continue underpin the greenback, making U.S. products less competitive on the global marketplace, though the upcoming election could have a role in its direction, as well as trade relations with top importer, China.
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 16 3/4 cents to $5.72 3/4, nearer the session low and hit a three-week low. On the week, December SRW lost 26 1/4 cents. December HRW futures dropped 15 1/4 cents to $5.80 3/4, near the daily low and on the week down 23 3/4 cents. December spring wheat fell 12 1/2 cents to $6.16 1/4 and lost 27 1/4 cents on the week.
5-day outlook: December SRW and HRW wheat futures today scored bearish “outside days” down on the daily charts and closed at technically bearish weekly low closes. That sets the table for follow-through, chart-based selling pressure early next week. The price downtrends presently in place in corn and soybean futures markets will also limit buying interest in wheat futures for at least the near term.
30-day outlook: Wheat traders will continue to monitor weather patterns in major global wheat-producing regions in the coming weeks. World Weather Inc. today said “some important” rain will occur in the western part of the U.S. HRW region late today into early Monday. The latest National Weather Service long-term forecast maps suggest hot, dry conditions in the Southern Plains over the next three months. Meantime, partial relief from dryness is expected through the weekend in eastern Ukraine and Russia’s southern region. “Follow-up rain will still be imperative, but there is not much being advertised.” Argentina’s central wheat production areas are seeing improved winter crop conditions after recent rain. Southern Brazil wheat should remain favorably rated. Recent rainy weather in western Europe has delayed fieldwork of all kinds including the planting of winter crops and drier and warmer weather is needed. Australia still needs greater volumes of rain in western and south Australia, while conditions in Victoria and New South Wales “are quite favorable,” said the forecaster.
90-day outlook: USDA reported U.S. wheat export sales of 504,100 MT for the week ended Oct. 10, up 16% from the previous week and up 57% from the four-week average. Net sales were near the upper end of the pre-report range of expectations. That’s good news for wheat market bulls this week, but better U.S. wheat sales abroad will need to continue in the coming months in order for wheat markets to sustain price uptrends. This week’s climb in the U.S. dollar index to a 2.5-month high will not help the bulls’ cause for better U.S. wheat exports being sustained.
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 rose 23 points to 70.99 cents but lost 122 points on the week.
5-day outlook: December cotton edged sideways in consolidative trade to end the week as technical resistance continued to pare buying. However, a weaker U.S. dollar did offset some pressure stemming from diving crude oil futures as did an uptick in weekly export sales data, released earlier this morning. USDA reported net upland sales of 159,800 RB for the week ended Oct. 10, which were up 78% from the previous week and 68% from the four-week average. Look for extended consolidation into next week, though looming technicals could pressure a larger downside move. Near-term oversold conditions could curb seller interest.
30-day outlook: Cotton harvest in the U.S. was estimated to be 34% complete as of Oct. 13, an 8-point advance from the previous week and 4 points ahead of average. With a good portion of harvest remaining, weather will continue to be a market focus. World Weather Inc. notes cotton areas in the Delta and southeastern states will receive a limited amount of rain during the next ten days, favoring crop maturation and some harvesting. Cotton areas in Texas and southwestern Oklahoma will see dry and favorable conditions for cotton maturation and harvesting through much of the next two weeks with a notable exception Friday through Sunday when heavy rain falls on parts of the Panhandle and lighter rain falls on most of the remainder of western Texas. While the significant rain has been reduced, some cotton is expected to be at least temporarily discolored, with some stringing out of cotton possible in the northwestern Panhandle where some heavy rain is likely.
90-day outlook: U.S. cotton exports will maintain the longer-term focus of the marketplace, along with production updates as harvest progresses in the U.S. Cotton sales have waned thus far in the marketing-year, with future demand prospects somewhat grim at this juncture. Traders have recently been unimpressed by the lack of details regarding additional stimulus measures in China, which has limited buying interest in the natural fiber, with persisting dollar strength reducing its competitiveness in the global marketplace. Look for traders to continue to monitor additional stimulus efforts in China as well as U.S. economic data, which will provide insight into the Fed’s fiscal policy in the coming year.
What to do: Get current with advised sales.
Hedgers: You should be 35% sold in the cash market on 2024-crop.
Cash-only marketers: You should be 35% sold on 2024-crop.