Corn
Price action: December corn futures surged 7 1/4 cents to $4.13 1/4 and closed on session highs, marking a 7-cent gain on the week.
5-day outlook: Corn futures shrugged off weakness from the soybean market and closed near this week’s highs. Strong gains in the wheat market helped out corn bulls today as well. The reaction seen after yesterday’s reports has bulls optimistic that an interim low could be in place in corn futures. The weak finish to the week in the soy market is a bit concerning for corn bulls but spread action and limited losses in soy points to the downside likely being limited, leaving the door open for corn prices to work higher next week as well. Bulls are looking to overcome the early September highs before working near our initial sales target around $4.25.
30-day outlook: This week’s updated Crop Production Report showed an unexpected bump in corn yield to 183.6 bu. per acre. Despite an increase in the estimated yield, ears per acre, which correlate highly with yield, are actually down 1.5% from year-ago in the 10 objective yield states tracked by USDA. The objective data implies a 6.6% year-over-year jump in ear weights. Our analysis indicates USDA is likely too optimistic on corn yield at this time and we are sticking to our Crop Tour estimate of 181.1 bushels per acre at this juncture. When paired with continued improvements in demand, that tightens the new-crop balance sheet up and is likely playing a role in recent strength. Reports from the combine over the coming month and continued clarity over production is likely to fuel price action over the coming month (and then some). We anticipate the top-end of the yield is likely in place, but it will be another month before another update from USDA.
90-day outlook: As prices came to and below the psychological $4.00 mark in late summer, demand has markedly picked up, a sign that prices have become “cheap enough.” The $4.00 mark has plenty of historical significance, acting as a ceiling for prices from 2014 to 2019 most recently and very limited strength above $4.00 from its initial test in 1980 until 2008. Prices bouncing from that level could indicate a new floor, a claim that is likely to be challenged in the next couple of months. While improving demand has pared losses below $4.00 recently, the true test will occur over the coming quarter as South American crop prospects come to focus.
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 4 1/2 cents to $10.06 1/4 but gained 1 1/4 cents on the week. December soymeal closed down 30 cents at $322.90 and down $1.60 from a week ago. December soyoil fell 86 points to 38.93 cents, marking a 71-point weekly loss.
5-day outlook: Soybeans failed to extend Thursday’s gains despite relative strength across the grain complex and a weaker U.S dollar. The marketplace has seemingly shrugged off Thursday’s USDA data, with a likely focus on moisture through much of the Midwest as remnants of Hurricane Francine move through the region, inducing some relief to later-planted soybeans. Meanwhile, a weakening Chinese economy continues to weigh on demand sentiments, though USDA did report a daily flash sale of 100,000 MT to the country earlier today. Look for soybeans to continue to be limited by technical resistance into next week, though follow-through buying in grains could provoke some short covering.
30-day outlook: U.S. weather will certainly be a market driver over the next month, though traders are increasing their focus on South America. World Weather Inc. reports the U.S. Midwest will have a variety of impacts. The eastern Midwest will not see large amounts of moisture for a while, while the western Midwest is expected to see a boost in rainfall that may slow crop maturation and delay fieldwork, though most will be absorbed relatively quickly. In Brazil, showers will continue to elude center west Brazil until late this month, though that isn’t unusual and the impact on market mentality should low unless forecasters start to project a more prolonged dryness issue more deeply in October, though that isn’t expected by World Weather.
90-day outlook: Export demand will continue to serve as the longer-term focus, especially as the U.S. Presidential election approaches and China’s economy continues to struggle. Recent purchases from the top importer indicate China is preparing for escalating trade tensions, depending on the outcome of the election, though deflationary pressures could limit China’s interest in U.S. soy products, nonetheless. Look for traders to continue to tread cautiously into the election, with a intense focus on global trade relations and China’s economy.
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 futures rose 16 1/4 cents to $5.94 3/4, nearer the daily high and hit a two-month high. On the week, December SRW rose 27 3/4 cents. December HRW wheat gained 13 3/4 cents to $6.00, nearer the daily high and also hit a two-month high. For the week, December HRW was up 22 1/2 cents. December spring wheat futures rose 13 3/4 cents to $6.35 1/2 and picked 21 3/4 cents on the week.
5-day outlook: The winter wheat bulls had a very good week, including near-term price uptrends being confirmed and technically bullish weekly high closes on Friday that suggest follow-through chart-based buying from the speculators early next week. Focus next week will be on rising tensions between Russia and the West. Romania’s foreign ministry said an attack on a grain ship by Russia was an “unprecedented escalation” in its war against Ukraine. Ukraine said the Russian attack Thursday was on a civilian grain vessel in neutral Black Sea waters near Romania. Meantime, Russian President Putin has threatened retaliation as the U.S. and U.K. discuss allowing Ukraine to use Western missiles to strike targets inside Russia. This situation is likely to keep a bid in the wheat futures markets in the near term.
30-day outlook: Weather patterns in major global wheat-producing regions will continue to garner trader attention in the coming weeks. World Weather Inc. today said planting moisture is limited in southern Russia and parts of Ukraine, “where rain will be needed soon to ensure the crops get established favorably prior to winter dormancy.” 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 coming week of flooding in central Europe may delay planting of some winter crops or possibly warrant some replanting. China’s winter wheat planting prospects are likely to be good. Australia’s wheat crop “will produce poorly in unirrigated areas of Queensland and more favorably in most other areas as long as timely rain continues in the south.” Brazil’s wheat crop is looking good. Canada’s Prairies will experience increasing rain frequency and amounts over the next week resulting in slower harvest progress, said the forecaster.
90-day outlook: This fall will likely see wheat traders looking more to the corn and soybean markets for daily price direction, given the impending U.S. corn and soybean harvests. The key “outside markets”—the U.S. dollar index and crude oil--will also have daily price impacts on wheat. The USDX is on a downward price trajectory at present, with likely lower U.S. interest rates this fall keeping the greenback under pressure and in turn favoring the wheat market bulls. However, the crude oil market has slumped recently due to notions of decelerating global energy demand growth. Weaker crude oil prices into the end of the year would likely mostly offset the benefit of a weaker U.S. dollar for the wheat markets.
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 fell 56 points to 69.82 cents but rose 194 points on the week.
5-day outlook: Cotton futures gave up most of Thursday’s gains to end the week, though underlying technical support limited sellers combined with support from a weaker U.S. dollar and strength in equities. However, today’s price action was largely due to profit-taking following three straight days of gains, with a boost from Thursday’s updated production data from USDA. Look for cotton to continue to favor the upside next week, though technical resistance at the 100-day moving average could limit an earnest move higher.
30-day outlook: U.S. cotton areas dodged any potential damage from Hurricane Francine, with World Weather Inc. reporting the Delta has had no negative impact to the cotton crop, aside from some reduced cotton quality. Though the forecaster notes drier weather next week will help improve the situation once again. Meanwhile, rain in portions of the southeast will maintain a little concern over open boll cotton fiber quality, although most of the precip is not expected to be problematic. Heavy rain is expected in North Carolina and Virginia next week. The forecaster notes West Texas rainfall may resume during the middle of next week and continue periodically into the following weekend.
90-day outlook: U.S. cotton exports will serve as the longer-term focus amid global economic uncertainties, which are compounded by the upcoming Presidential election. This week, USDA reported net cotton sales of 116,100 RB for the week ended Sept. 5, which were down 44% from the previous week and 15% from the four-week average. Exports also faded during the week, dropping 27% from the previous week to 119,100 RB. Look for traders to continue to closely monitor economic conditions, which will correlate with demand.
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.