Corn
Price action: December corn futures fell 6 1/4 cents to $4.15 1/4, though still marked a 10 1/2 cent gain on the week.
5-day outlook: Corn futures endured heavy selling pressure today that can largely be chalked up to profit-taking following solid gains earlier this week.Weakness in the wheat market weighed heavily on corn prices today as winter wheat futures gave up all of this week’s gains and then some. Despite today’s weakness in corn, the technical reversal remains intact with bulls still owning a slight advantage. Bulls continue to be encouraged by robust demand, most obviously by increased export sales. USDA has announced daily sales for eight consecutive days. This week, daily sales totaled 1.486 MMT and the total for the week ended Oct. 17 totaled over 3.6 MMT, the most since May 2021. The broad array of different countries purchasing U.S. corn has been encouraging as well. It is not just the usual top importers increasing purchases but end users across the board are taking advantage of cheaper prices.
30-day outlook: Harvest continues at a rapid clip with minimal disruption. We continue to anticipate a cut to the USDA corn production number based on a lower yield. 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. Demand continues to improve, but some concerns have risen that importers are shoring up purchases ahead of the election. If USDA cuts yield as we anticipate and demand continues to prove robust following the election, the downside is likely in place in corn prices.
90-day outlook: Brazilian soy planting is off to a slow start, especially in Mato Grosso. That delay will ultimately lead to delayed planting of safrinha (second crop) corn, which led to a substantial decline in corn yields in 2020-21, the last time soy planting was this delayed in Mato Grosso. South American production is likely to play a big role over the coming quarter, with attention on both Brazil and Argentina, which is coming off a year that saw corn production severely impacted by corn leaf hopper and corn stunt disease.
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 8 1/2 cents to $9.87 3/4 but rose 17 3/4 cents on the week. December soymeal closed $4.60 lower at $305.80, marking a $9.80 week-over-week loss. December soyoil fell 18 points but rose 233 points on the week.
5-day outlook: Soybeans faced extended selling pressure to end the week following a poor close on Thursday as looming technical pressure and fading soymeal continued to cast a shadow over prices. Meanwhile, today served as expiration for November options, which also played a role in today’s price action, and will likely continue to into next week. Today’s spread action included widening of the Nov/Jan spread as wide as 12 cents after narrowing to 2 3/4 cents on Thursday morning. The recent trade in soybean calendar spreads has been quite perplexing given projections of a sizeable crop, though today’s option expiration and futures expiration next week could bring extended volatility and price pressure in both spreads and futures as commercials roll basis and futures contracts to a deferred month.
30-day outlook: As harvest winds down in the U.S. weather and planting progress in South America will serve as a main market driver. Efforts to plant early soybeans in Brazil remain well behind schedule, with the country estimated to be 18% planted as of last Thursday, in AgRural’s latest report, which compares to 30% last year. Central Brazil continues to face the largest hurdles, however, with top producing state, Mato Grosso estimated to be 25% planted late last week, compared to 60% last year and the average of 44.4%. Crop consultant Dr. Michael Cordonnier reports soybean plantings up until Oct. 25 will allow enough time to plant safrinha corn within the ideal window. Moreover, the delayed start of soybean planting has already pushed the safrinha cotton planting past the ideal window, therefore some farmers have indicated they will not plant their intended soybeans and instead go directly to planting cotton, which is what happened last year when soybean planting was delayed.
90-day outlook: U.S. export demand has been rather robust as of late as importers take advantage of fresh U.S. production. Meanwhile, the month of October has seen the U.S. dollar rise notably from the Sept. low, which has had little effect on demand. Moreover, recent economic data indicates inflation is likely going to linger for a lengthier period than anticipated, which could continue to support the greenback and ultimately affect the competitiveness of U.S. commodities in the longer-term.
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 12 1/2 cents to $5.69, nearer the session low and closed at a five-week low close. For the week, December SRW fell 3 3/4 cents. December HRW wheat lost 15 cents to $5.72, nearer the daily low and hit a four-week low. On the week, December HRW fell 8 3/4 cents. December spring wheat futures fell 12 3/4 cents to $6.39 1/2.
5-day outlook: Today’s losses in the winter wheat futures produced significant near-term technical damage, including bearish weekly low closes, closing below the key 40-day moving averages, and near-term price downtrends on the daily charts being restarted. That suggests follow-through chart-based selling pressure early next week. Wheat traders will again be looking to the corn futures market for daily price direction.
30-day outlook: Weather in global wheat-producing regions presently leans price-friendly. World Weather Inc. today said, “dryness remains a concern for U.S. hard red winter wheat production areas, the U.S. Pacific Northwest in unirrigated areas, Western Australia and crop areas from eastern Ukraine into western Kazakhstan.” Rain is also needed in some U.S. Midwest soft red wheat production areas. Meantime, with the U.S. corn and soybean harvests winding down, the coming weeks will find wheat traders focusing more on wheat supply and demand fundamentals, and less on what’s going on with corn and soybean markets.
90-day outlook: USDA this morning reported U.S. wheat export sales of 532,900 MT for the week ended Oct. 17, up 6% from the previous week and up 38% from the four-week average. U.S. wheat sales abroad will need to continue to improve in the coming months for U.S. prices to come out of their slumps. With the U.S. dollar index trending higher and this week hitting a 3.5-month high, such will make it even more challenging for U.S. wheat to be price competitive with other global suppliers. On the positive side, major central banks have been easing their monetary policies the past several weeks in efforts to boost consumer and commercial demand in their respective countries. Such may work to stimulate better global demand for wheat in the months ahead. Meantime, the tightening global supply situation and improved export demand are supporting U.S. hard red spring wheat prices.
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 87 points to 70.66 cents and gave up 33 points on the week.
5-day outlook: Cotton futures extended Thursday’s losses as technical pressure plagued the natural fiber along with limited outside market support. However, a reach back into oversold territory limited selling today, though a catalyst will be needed to spur earnest buying interest above the 100-, 10-, 40- and 20-day moving averages. Look for sideways to lower price action to continue into next week, though support around 70.00 cents will likely stifle selling efforts in the near-term.
30-day outlook: USDA reported cotton harvest advanced to 44% complete as of October 20, which was a ten-point advance on the week and six points ahead of the five-year average. With harvest likely to be around half finished, weather will continue to be a market focus. World Weather Inc. maintains U.S. cotton areas should not be plagued with rain issues in the coming week. Some rain is expected late next week into the following weekend in West Texas and the Texas Blacklands, although the impact should be low outside of some delay to fieldwork. The Delta may also get some rain in the second weekend, while most of the Delta and southeastern states should be dry until at least Nov. 3
90-day outlook: Cotton exports have improved somewhat lately, though lingering concerns around deflationary economic conditions in China continue to strap optimism around longer-term demand. Recent stimulus efforts have proven mostly futile, with International Monetary Fund (IMF) and U.S. Treasure Secretary noting separately they had not yet seen any stimulus announcements from Beijing that would boost demand enough to absorb excess production and spur economic growth. Meanwhile, delayed soybean plantings in South America could increase safrinha cotton plantings, which could potentially increase global supply in an environment where demand for U.S. cotton has proven mostly lackluster over the past several months.
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.