Corn
Price action: December corn futures fell 3 cents to $4.04 1/4 and near the session low.
Fundamental analysis: The early-September rally in corn futures has fizzled, suggesting the bulls have run out of gas. A rally in the U.S. dollar index this week and slumping crude oil prices that today hit a 16-month low are bearish outside-market elements for the corn market. Solidly lower soybean and soybean meal futures prices today were also negative for corn.
USDA Monday afternoon rated 64% of the U.S. corn crop as “good” to “excellent” and 12% “poor” to “very poor.” On the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 being perfect), the corn crop rose 1.5 points to 368.2. Pro Farmer crop consultant Michael Cordonnier left his U.S. corn yield forecast at 182.5 bu. per acre and has a neutral-lower bias due to the recent dry weather in the Corn Belt. His U.S. production forecast remained at 15.09 billion bushels.
Corn traders are awaiting Thursday morning’s monthly USDA supply and demand report. A Reuters survey of analysts shows an average U.S. corn crop size this year of 15.076 billion bushels. That’s down just very slightly from the USDA August forecast.
Technical analysis: The corn futures bears have the overall near-term technical advantage. However, recent price action begins to suggest a market bottom is in place. The next upside price objective for the bulls is to close December prices above solid chart resistance at the July high of $4.23 3/4. The next downside target for the bears is closing prices below chart support at the contract low of $3.85. First resistance is seen at this week’s high of $4.08 and then at the September high of $4.16. First support is at $4.00 and then at $3.95.
What to do: Get current with advised sales.
Hedgers: You are 100% sold on 2023-crop production.
Cash-only marketers: You are 100% sold on 2023-crop.
Soybeans
Price action: November soybeans fell 20 3/4 cents to $9.97 1/4. December soymeal ended $7.20 lower at $317.80 and December soyoil closed down 92 points at 39.56 cents. Each ended near session lows.
Fundamental analysis: Soybeans succumbed to pressure stemming from soymeal futures, taking back all of Monday’s gains. Reports of rising meal stocks in China during August, to the highest level since early 2016, supplied bears some fodder, as did increasing crude palm oil stocks in Malaysia to the highest level in six months. Meanwhile, outside markets were no help as the U.S. dollar posted gains for the third straight session.
While China continues to face economic hurdles, the country imported a record 12.14 MMT of soybeans in August, up 23.3% from July and 29.7% above last year. The surge was driven by ships delayed at Chinese ports being cleared to unload and buyers preparing for a potential increase in trade tensions after the November U.S. elections. Through the first eight months of this year, China imported 70.48 MMT of soybeans, up 2.8% from the same period last year.
The U.S. soybean crop continues to hold its own despite recent heat and dry conditions through much of the Midwest as USDA rated the crop 65% “good” to “excellent” as of Sunday, unchanged from a week ago. Crop consultant Dr. Michael Cordonnier maintained his soybean yield forecast at 53 bu. per acre but favors a neutral to lower bias going forward. He noted lacking soil moisture could affect seed size and the latest set pods at the top of the plant.
Technical analysis: November soybeans ended the session below the 40- and 10-day moving averages of $10.11 1/4 and $10.03 1/4, with initial support now serving at $9.94 3/4. Meanwhile, initial resistance will serve at today’s failed support levels. Extended selling will face additional support at the 20-day moving average of $9.86 3/4 then at the Aug. 16 low of $9.55, while additional resistance stands at $10.24 3/4, $10.31 3/4 and $10.43 1/2.
December soymeal faced notable pressure into the close, ending the session below the 10-day moving average of $318.80. Initial support will now serve at the 40- and 20-day moving averages of $315.10 and $312.30, while initial resistance will now serve at the 10-day. A move below initial support will face additional support at the psychological $300.00 level, which is backed by the August low of $298.50. Conversely, a move back above the 10-day moving average will face additional resistance at $325.30, $329.00, $332.90 and the 100-day moving average of $337.40.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold in the cash market on 2023-crop. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Cash-only marketers: You should be 100% sold on 2023-crop. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Wheat
Price action: December SRW futures climbed 5 3/4 cents to $5.74 1/4, settling near mid-range. December HRW futures rallied 8 1/4 cents to $5.84, while December spring wheat rose 3 1/4 cents to $6.10.
Fundamental analysis: Wheat futures saw relative strength today despite weaker corn and soy markets. Strength in wheat despite persistent strength in the U.S. dollar index is impressive. Heightening trade tensions between Europe/Canada and China might have traders optimistic that China might turn to the U.S. for wheat, especially given the crop struggles seen around the Black Sea.
Wheat futures have finally given credence to a tighter world balance sheet, that is brought back to the forefront by IKAR lowering their Russian production forecast by 1.6 MMT to 82.2 MMT. The agency lowered their export forecast for Russia by 500,000 MT to 44.0 MMT. The drought that limited production this year persists, leaving southern Russia and Ukraine in need of rain to ensure winter wheat has enough moisture to be established favorably, says World Weather Inc. The U.S. Plains see a similar moisture deficit, but with winter seeding just underway at just 6%, the need for precip is less urgent.
USDA reported spring wheat harvest at 85% done, two points ahead of the five-year average. Harvest was equal to or ahead of average in each of the six states. Top producer North Dakota’s harvest stood at 79% (78% average).
Technical analysis: December SRW futures built off Monday’s strength and closed near recent highs as bulls continue to hold the near-term technical advantage. Prices continue to consolidate in a bull flag pattern on the daily bar chart. Resistance stems from $5.80 3/4, then the psychological $5.85 mark. Further strength finds resistance at $5.98. Bulls are seeking to hold support at $5.66 1/2, the 40-day moving average, then $5.60 1/2.
December HRW futures continue to track SRW price action tightly. Bulls are seeking to close prices above $5.93 resistance, which is reinforced by the psychological $6.00 mark. Support stems from $5.76 1/2 then yesterday’s low of $5.70.
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
Price action: December cotton rose 52 points to 68.21 cents, nearer the session high.
Fundamental analysis: Cotton futures were able to eke out modest gains despite no outside market support amid heavy selling in crude oil and equities combined with U.S. dollar strength. The marketplace is likely positioning ahead of tomorrow’s Consumer Price Index (CPI) reading for August, which is expected to be up 2.6% year-over-year, following the 2.9% increase in the July report. Meanwhile, the “core” CPI (excluding food and energy) for August is expected to rise 3.2% annually, compared to arise of 3.2% in the July report. Moreover, the U.S. Producer Price Index (PPI) will be out Thursday.
World Weather Inc. reports west Texas rainfall is not likely to be very great during the next ten days and the same is expected of the Blacklands and interior Coastal Bend. Weather in the Delta will deteriorate later this week as Tropical storm Francine moves inland Wednesday and moves up the Delta Thursday and Friday. Cotton in the southeastern states may also experience greater rainfall later this week after already experiencing rain during the weekend. Some fiber quality decline may occur because of wet weather in the Delta and southeastern states while west Texas and the Blacklands of Texas continue to be poised for good late season crop development.
In its weekly Crop Progress Report, USDA rated the cotton crop as 40% “good” to “excellent,” down four points from the previous week, while the “poor” to “very poor” rating rose four points to 28%. The Texas crop was rated 29% in the top two categories and 39% in the bottom two.
Technical analysis: December cotton continues to be pressured by the 10- and 20-day moving averages of 69.07 cents and 871.54 cents, while initial support remains at 67.36 cents, which is backed by last week’s low of 66.26 cents. A move above current resistance will face minimal resistance until the 40-day moving average of 76.33 cents, while a move below support will face light support until 60.00 cents.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.
Cash-only marketers: You should be 100% sold on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.