Corn
Price action: December corn rose 3/4 cent to $4.05, marking a near mid-range close.
Fundamental analysis: Corn futures faced pressure this morning, though corrective strength in soybeans combined with SRW wheat and crude oil strength spurred light gains as the session progressed. Traders are likely cautious ahead of USDA’s supply, demand and production updates, due out tomorrow at 11 a.m. CDT. On average, traders are expecting corn production of 15.154 billion bu., which would be up slightly from August. Meanwhile, new-crop ending stocks are expected at 2.009 billion bu., while old-crop ending stocks are anticipated at 1.853 billion bu., both which would be down from August figures, if realized. Meanwhile, world ending stocks are expected to be around 309.6 MMT.
The marketplace is keeping an eye on Hurricane Francine as the storm garners strength in the Gulf of Mexico, slightly east of the Texas/Mexico border. The system will move northeast and likely make landfall in the south-central Louisiana coast this evening. The system will then move up through the Delta later Wednesday through Thursday as it gradually weakens over land before dissipating Friday. World Weather Inc. reports damage will be greatest near the Louisiana coast and the impact to agriculture is expected to be relatively low.
Earlier today the Energy Information Administration reported ethanol production averaged 1.080 million barrels per day (bpd) during the week ended Sept. 6, up 19,000 bpd (1.8%) from the previous week and 41,000 bpd (3.9%) above last year. Ethanol stocks rose 360,000 barrels to 23.714 million barrels.
USDA will release its weekly Export Sales Report early Thursday morning. Analysts are expecting net sales to have ranged from net reductions of 50,000 to 50,000 MT for 2023-24 and between 700,000 MT and 1.6 MMT for 2024-25 during the week ended Sept. 5.
Technical analysis: December corn futures were able to rebound from session lows and hold a close above the 40- and 10-day moving averages of $4.02 3/4 and $4.04 1/4. Initial support continues to serve at $4.02 1/2 and is backed by the 20-day moving average of $3.99 1/2, though resistance at $4.06 3/4 continues to curb an earnest move to the upside. Bears continue to maintain the technical advantage, with sights set on the contract low of $3.85, while a successful bull effort will require a close above resistance at $4.23 3/4.
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 rose 3 1/2 cents to $10.00 3/4. December soybean meal closed up $2.50 at $322.30. Both markets closed near mid-range. December soybean oil fell 36 points to 39.27 cents, nearer the session low and hit a three-week low.
Fundamental analysis: The soybean and meal futures markets featured tepid short covering today. Gains were limited by this week’s gains in the U.S. dollar index and the recent slump in crude oil futures that saw Nymex crude hit a 16-month low Tuesday.
World Weather Inc. today said rain in the U.S. through Friday might prove to be favorable for some late double-cropped U.S. soybeans, “but most of it comes too late in the season to induce much change.” Most of the Midwest will continue to dry out this week and in eastern portions of the region again next week, resulting in faster summer crop maturation and harvesting. Meantime, in Brazil showers will continue to bypass the center-west region until late this month. However, that is not unusual and the impact on the soybean market “should be low unless forecasters start to project a more prolonged dryness issue more deeply into October, but that is not expected,” said World Weather.
Thursday morning’s weekly USDA export sales report is expected to show U.S. soybean sales of net reductions of 100,000 to zero MT for the 2023-24 marketing year, and sales of 900,000 MT to 1.6 MMT for the 2024-25 marketing year.
Traders are also awaiting Thursday’s monthly USDA supply and demand report. A Reuters poll of analysts shows the average forecast for U.S. soybean production this year at 4.589 billion bushels, with an average yield of 53.2 bushels per acre. The production and yield average analyst forecasts are the same as what USDA estimated in its August report.
Technical analysis: The soybean bean bears have the overall near-term technical advantage. However, recent price action begins to suggest a market bottom is in place. The next near-term upside technical objective for the soybean bulls is closing November prices above solid resistance at $10.50. The next downside price objective for the bears is closing prices below solid technical support at the contract low of $9.55. First resistance is seen at this week’s high of $10.20 1/4 and then at the September high of $10.31 1/4. First support is seen at $9.90 and then at $9.75.
Recent price action in soybean meal futures also suggests a market bottom is in place. The next upside price objective for the meal bulls is to produce a close in December futures above solid technical resistance at the August high of $335.00. The next downside price objective for the bears is closing prices below solid technical support at $308.00. First resistance comes in at today’s high of $322.20 and then at Tuesday’s high of $326.00. First support is seen at today’s low of $316.70 and then at $312.00.
Soybean oil bears have the firm overall near-term technical advantage. The next upside price objective for the bean oil bulls is closing December prices above solid technical resistance at the September high of 42.68 cents. Bean oil bears’ next downside technical price objective is closing prices below solid technical support at the contract low of 37.66 cents. First resistance is seen at this week’s high of 40.67 cents and then at 42.00 cents. First support is seen at today’s low of 39.06 cents and then at 38.00 cents.
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 wheat rose a nickel to $5.79 1/4, while December HRW rose 4 1/4 cents to $5.88 1/4, each closing nearer the session high. December HRS futures closed 6 1/2 cents higher at $6.16 1/2.
Fundamental analysis: SRW wheat futures notched gains for the third straight session as technical buying continues to prove price supportive. However, persisting global supply concerns are certainly underpinning the wheat complex as southern Russia and Ukraine continue to experience dry conditions. World Weather Inc. reports the area will need moisture soon to ensure the crops get established favorably prior to winter dormancy. Meanwhile, the U.S. Plains are also in need of rain, although there is plenty of time for that to evolve and some is expected next week.
It was reported earlier today that Russia’s Rostov region will export less grain this year due to extreme weather and the sudden market exit of a major grain trader that previously exported nearly half of the region’s grain, according to a regional governor. The Rostov region accounted for over 11% of the country’s total grain harvest last year but was affected by early spring frosts and then by drought. This year’s harvest is expected to be down 30% from year-ago. Moreover, in Ukraine, domestic and export wheat prices are expected to rise in the coming weeks amid much smaller wheat stocks, according to major agricultural producers’ group the Ukraine Agrarian Council (UAC) and analysts.
USDA will release its weekly export sales data on Thursday morning, with analysts expecting net sales to have ranged from 300,000 to 550,000 MT during the week ended Sept. 5. Last week, net sales totaled 340,032 MT, down 36% from the previous week and 17% from the four-week average.
Technical analysis: December SRW wheat futures continued to face resistance at $5.79 3/4, though the downside was limited by support at $5.72 3/4, which is backed by the 10, 40- and 20-day moving averages of $5.66 1/4, $5.57 3/4 and $5.54 3/4. A move above initial resistance will face an additional battle at $5.85 1/2, then $5.92 1/2 and again at the psychological $6.00 level, with notable backing from the 100- and 200-day moving averages of $6.17 1/2 and $6.21 1/2.
December HRW futures continue to be supported by 10-, 40- and 20-day moving averages of $5.76 1/2, $5.68 1/2 and $5.63 1/2, while initial resistance stands at $5.88 3/4. A move higher, however, will face additional resistance at $5.93 1/2, then at $6.01 1/4 and the 100- and 200-day moving averages of $6.27 and $6.29. Meanwhile, longer-term support lies at the August low of $5.27 1/4.
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 140 points to 69.61 cents and nearer the daily high.
Fundamental analysis: The cotton market today saw short covering and perceived bargain hunting. A rebound in the crude oil market today also seemingly helped the cotton market bulls.
The consumer price index in August fell for the fifth consecutive month to 2.5%, year-on-year, the lowest since February of 2021. That’s a positive for better consumer demand for apparel in the coming months and heading into the holidays. Traders are reckoning the Fed will cut its main interest rate by 25 basis points next week.
World Weather Inc. today said west Texas rainfall is not likely to be great during the next 10 days and the same is expected of the Blacklands and interior Coastal Bend. Weather in the Delta “will deteriorate later this week as Hurricane Francine will move inland this evening and move up the Delta Thursday and Friday. Cotton in the southeastern states may also experience greater rainfall later this week after already experiencing rain last 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 poised for a good late-season crop development,” said the forecaster.
Thursday morning’s weekly USDA export sales report will be scrutinized by cotton traders. While U.S. cotton sales to China have been lackluster, the cotton bulls point out the other countries are stepping up to buy the U.S. fiber, including India and Pakistan.
Traders are also awaiting Thursday’s monthly USDA supply and demand report, which a Reuters survey shows the average of analysts’ estimates for U.S. cotton production at 15.31 million bales. That’s slightly above what USDA forecast in its August S&D report.
Technical analysis: The cotton futures bears still have the overall near-term technical advantage as prices chop in a trading range at lower levels. The next upside price objective for the cotton bulls is to produce a close in December futures above technical resistance at the August high of 71.36 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at the August low of 66.26 cents. First resistance is seen at 70.00 cents and then at 71.00 cents. First support is seen at 69.00 cents and then at today’s low of 68.05 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.