Corn
Price action: Corn futures rose 2 cents to $4.06 3/4 after reaching the lowest intraday level since Aug. 30.
Fundamental analysis: Corn futures gave up earlier gains immediately after USDA’s late-morning data release, which included a 0.5 bu. per acre yield increase, but decided strength in soybeans and crude oil ultimately lifted corn from session lows.
The government now projects the new-crop production of 15.186 billion bu., up 39 million bu. from August, using a yield of 183.6 bu. per acre and harvested acres of 82.710, unchanged from last month. However, projected ending stocks were lowered 55 million bushels amid increases in exports (40 million bu.) and corn used for ethanol (15 million bu.) for 2023-24, which resulted in a modest decline in new-crop ending stocks to 2.057 billion bu., while old-crop ending stocks were lowered to 1.812 billion bu. Meanwhile, old-crop ending stocks rose 1.1 MMT from August to 309.6 MMT, while 2024-25 world ending stocks were pegged at 308.4 MMT, down from 310.2 MMT in August and below the average trade estimate.
New-crop corn demand continues to prove tepid, though USDA did report a daily sale of 118,626 MT to unknown destinations for 2024-25 first thing this morning, which was the first flash sale in over a week. Moreover, weekly sales data released this morning for the week ended Sept. 5 totaled 666,500 MT, missing analysts’ pre-report range of estimates from 700,000 MT to 1.6 MMT. While the marketing year began on Sept. 1, new-crop export sales continue to run well behind the same time a year ago and will remain a trade focus.
While Ukraine has been a steady world corn supplier, production woes in the country could provide the U.S. greater opportunities in the coming months. The Ukrainian Agrarian Council says Ukraine’s corn production could be lower than the ag ministry forecasts. The head of the farmers union said production could be as much as 8 MMT to 9 MMT below last year’s crop of more than 31 MMT, which would be well below the ag ministry’s forecast of no less than 25 MMT. The expected drop is due to extremely high temperatures that hit all of Ukraine since pollination.
Technical analysis: December corn was able to recover as the session progressed, ultimately holding a close above the 10-day moving average of $4.05 3/4 after trading the lowest intraday level since Aug. 30. Support at the 40- and 20-day moving averages of $4.02 3/4 and $3.99 3/4 ultimately held, though resistance will continue to serve at $4.07 3/4, with backing from $4.10 3/4 and $4.14, though a close above $4.23 3/4 will be required for bulls to regain the technical advantage. Meanwhile, bears will continue to focus on the August low of $3.85.
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 climbed 10 1/4 cents to $10.10 3/4 and settled nearer today’s highs. October meal futures closed $2.90 higher to $318.90, near session highs. October bean oil futures rallied 55 points to 40.33 cents.
Fundamental analysis: Soybeans saw heightened volatility as USDA updated production estimates and balance sheets but ultimately finished the day around where prices were trading before the release. USDA trimmed the old-crop balance sheet by 5 million bu. to 340 million bushels on a 5 million bu. increase to estimated use for crushing, leaving all other categories unchanged. The new-crop balance sheet was lowered by 10 million bu. to 550 million bushels. Lower carry-in and minor adjustments to production led total supplies down 8 million bu. The only change on the demand side of the new-crop balance sheet was a 2 million bu. adjustment to residual use, essential just to end new-crop ending stocks with a zero. Adjustments to the world balance sheets were slight as well, with USDA modestly trimming both old- and new-crop world balance sheets. New-crop ending stocks are still seen as rising to the highest mark on record, along with the stocks-to-use ratio.
Soybeans continue to show strength despite the continued growth in the balance sheet and a seeming abundance of supplies. Rebounding export demand likely plays a role in that strength. USDA reported soybean export sales of 1.47 MMT during the week ended Sept. 5, with the new marketing year beginning Sept. 1. Net sales were near the upper end of the pre-report range from 900,000 MT to 1.6 MMT. While outstanding sales are at the lowest mark since 2019 for the first week of the marketing year, sales for the 24-25 crop continue to come in near the top or above expectations week after week. That underlying demand has helped soybeans put in a bottom and has encouraged funds to cover at least a portion of their short position.
Technical analysis: Aside from some report driven selling, November soybeans showed remarkable strength today as bulls continue to hold the near-term technical advantage. Downtrend resistance from the early-September highs, the upper end of the bull flag technical pattern, continues to limit gains at $10.15. Further strength would have bulls eyeing the Sept. 6 high of $10.31 1/4. Continued consolidation would find support at $10.04 1/4, which is reinforced by the psychological $10.00 mark, then $9.95 1/2.
October meal futures rose in tandem with soybeans today, grinding higher on the daily bar chart. A daily close above resistance at $320.00 would open the door to $325.0 resistance, which is reinforced by the 100-day moving average at $327.50. Support lies at $316.10, the 40-day moving average, then $314.50. A close below that mark would have bears targeting this week’s low of $312.30.
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 fell 3/4 cent to $5.78 1/2, nearer the daily low after hitting a a two-month high early on. December HRW wheat fell 2 cents to $5.86 1/4 and nearer the session low. December spring wheat futures rose 5 1/4 cents to $6.21 3/4.
Fundamental analysis: The winter wheat futures bulls were out of the gate strong in early trading but faded as the session progressed. Some profit-taking pressure from the shorter-term futures traders was featured today after recent price gains. Corn futures prices backed off their daily highs following the late-morning USDA monthly supply and demand report, which saw some selling spill over into wheat futures.
USDA left projected 2024-25 U.S. wheat ending stocks unchanged from last month. The agency made no changes to supply or usage forecasts. Wheat ending stocks saw the eighth time in the last nine years with no change in September numbers. USDA kept its 2024-25 average cash wheat price projection at $5.70.
Earlier this morning, USDA reported wheat export sales of 474,900 MT for the week ended Sept. 5, up 40% from the previous week and up 11% from the four-week average. Net sales were near the upper end of the pre-report estimates.
World Weather Inc. today said planting moisture is limited in southern Russia and parts of Ukraine, where rain will be needed soon. Planting moisture is also needed in the U.S. Plains, “although there is plenty of time for that to evolve and some is expected next week.” Spring wheat in parts of Europe may be suffering from too much moisture and the same occurred in the eastern CIS New Lands earlier this month and in late August, said the forecaster. Meantime, Brazil’s wheat crop is looking good. Canada’s Prairies will experience increasing rain frequency and amounts over the next week, resulting in slower crop maturation and harvest progress. The moisture will be good for winter crops produced in that region.
Technical analysis: Recent price action suggests the winter wheat futures markets have put in near-term lows. Prices are trending higher on the daily bar charts. SRW bulls’ next upside price objective is closing December prices above solid chart resistance at $6.00. The bears’ next downside objective is closing prices below solid technical support at $5.50. First resistance is seen at today’s high of $5.91 3/4 and then at $6.00. First support is seen at this week’s low of $5.60 1/2 and then at $5.50. The HRW bulls’ next upside price objective is closing December prices above solid technical resistance at $6.00. The bears’ next downside objective is closing prices below solid technical support at $5.50. First resistance is seen at $6.00 and then at $6.15. First support is seen at this week’s low of $5.70 and then at $5.60.
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 77 cents to 70.38 cents, ending nearer the session high.
Fundamental analysis: Cotton futures extended gains for a third straight session amid an improving technical posture combined with bullish production data in USDA’s monthly update and outside market support.
USDA trimmed production by 596,000 bales from last month, using an average yield of 807 lbs. per acre, down 33 lbs. from August. Harvested area was unchanged at 8.635 million acres. Texas and Georgia received the largest yield cuts, down 53 lbs. and 44 lbs., respectively. Meanwhile, old-crop ending stocks were unchanged at 3.15 million bales, but adjustments were made to prior years’ exports and residual use from census revisions, increasing old-crop carry-in by 400,000 bales, though that was offset by a cut in imports and an increase in unaccounted use. Projected new-crop ending stocks were lowered by 500,0000 bales to 4.0 million amid a 600,000- bale decline in supply due to the smaller crop estimate. However, exports were lowered 200,000 bales to 11.8 million bales while unaccounted use was upped 110,000 bales to -30,000 bales. Moreover, old-crop world ending stocks were lowered to 75.61 million bales, down from 75.78 million in August, while 2024-25 ending stocks were pegged at 76.49 million bales, down 1.12 million bales from last month.
Earlier this morning, USDA released its weekly export sales data for the week ended Sept. 5, which showed net sales of 116,100 RB for the week. Net sales were down 44% from the previous week and 15% from the four-week average. Top purchasers included Vietnam, Pakistan and Bangladesh. Exports for the week totaled 119,100 RB, down 27% from the previous week and 22% from the four-week average.
Technical analysis: Cotton futures ended the session above initial resistance of 70.27 cents, a level that has been difficult to overcome since July. First resistance will now serve at 70.93 cents, then at 72.04 cents, which is backed by the 100-day moving average of 72.24 cents. Conversely, solid support will continue to serve at 10-, 20- and 40-day moving averages of 69.35 cents, 69.27 cents and 69.00 cents, which are backed by 68.50 cents, 67.39 cents and the August low of 66.26 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.