Corn
Price action: December corn futures fell 4 cents to $4.01 3/4, marking an 11 1/2 cent loss on the week.
5-day outlook: Corn futures experienced selling pressure for the second consecutive session despite relative strength seen in the wheat and soybean markets. The selling pressure to end the week has bulls going into the weekend dejected. Prices will need to rebound early next week as a close below the psychological $4.00 mark would indicate a technical breakdown with a test of the contract low at $3.85 likely. The relative demand destruction in the export market this week was seemingly the catalyst that pushed prices lower, as a bounce from the mid-August slowed export purchases. Harvest has picked up as well, leading to some producers clearing bin space for new crop and selling grain from the combine, leading to some price pressure from harvest. September is historically one of the most bearish month’s out of the year for corn futures as harvest ramps up, but in recent years, prices have faced less selling pressure than historically normal. If prices do continue lower next week, we expect a bottom at the end of the month before prices move higher through harvest. Any downside pressure over the coming week should be limited, but the eroding technical posture has bulls fighting an uphill battle.
30-day outlook: As combines continue to roll over the coming month, more attention will be placed on production. Harvest is picking up at a rapid pace given dry weather, though some interruptions are expected late next week with storms rolling through the Corn Belt. Still, harvest reports will give a good idea as to whether the crop is as big as anticipated. While we anticipate a record yield, we feel USDA is too optimistic with their 183.6 bushel/acre estimate at this juncture. That is especially true given ear counts, as noted in the September Crop Production Report, coming in lower year-over-year. Ear counts historically correlate remarkably well with yield. Lower ear counts imply ear weights jumping 6.6% year-over-year and 3.7% above the 2016 record. We anticipate lower production, which could prove to be price supportive over the coming month, especially considering the improvements seen in demand in the past several months that continue to lower new-crop ending stocks.
90-day outlook: The Sept. 30 quarterly Grain Stocks Report will give final ending stocks for the 2023-24 marketing year. While some use is implied, such as exports and ethanol use, feed and residual use, historically the largest use category, is rather ambiguous, with less frequent updates than the former two use categories. Cheaper corn tends to get fed more than expensive corn and the recent downturn in prices could have feeders using ample amounts of corn, which could tighten the old crop balance sheet more than expected. We anticipate new-crop ending stocks below the psychological 2.0 billion bushel mark already, but confirmation of even higher use than anticipated for old crop corn would continue to confirm that prices have reached low enough levels to spark a significant increase in demand, potentially putting a floor under prices.
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 1 1/4 cents to $10.12 but rose 5 3/4 cents on the week. December soymeal fell $2.40 to $319.20 and marked a $3.70 decline from a week ago. December soyoil rose 43 points to 41.36 cents, notching a 243-point gain week-over-week.
5-day outlook: Soymeal losses cast a shadow over the soybean complex to end the week, though technical support at the nearly converged 20- and 40-day moving averages curbed traders’ appetite to sell. However, looming resistance at around $10.19 continues to curb earnest buying efforts, with the marketplace seemingly focused on the Federal Reserve’s rate cut this week, which ultimately sent equities soaring. Recent consolidative price action is indicative of a larger move, with solid support and today’s rebound from the session low increasing odds of buying efforts into next week, though near-term overbought conditions could ignite a corrective move lower following a notable rally from the mid-August low.
30-day outlook: U.S. harvest weather will continue to be of note into October, with an increasing focus on South American weather as planting efforts gain momentum. The U.S. Midwest has faced unseasonably warm and dry conditions as of late, which could have had an impact to later planted soybeans, though conditions have been ideal for harvesting of earlier planted crops. On Monday, USDA reported the U.S. soybean harvest was 6% complete as of Sept. 15, 3% ahead of the five-year average. While soybean harvest can advance rapidly, weather conditions will certainly dictate the pace in the coming weeks.
In South America, west-central and northern Argentina along with center west Brazil continue to be drier than usual, which is expected through the end of September, though favorable rainfall is expected in southern Brazil and some southern and east-central parts of Argentina.
90-day outlook: U.S. export demand will continue to hang in the spotlight as the year progresses. Soybean exports have proven quite robust, as China continues to ramp up purchases despite a fading economy. However, according to the General Administration of Customs (GACC), U.S. soybean sales to China continue to wane, accounting for 18.2% of the country’s soybean imports, down from 24.8% from year-ago, while Brazil’s share has jumped to 76.3%, up from 70% last year. A perpetual drop in the U.S. market share could largely be impacted by the results of the presidential election, which will certainly have a larger effect on broader markets.
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 3 cents to $5.68 1/2 and nearer the daily low. For the week, December SRW lost 26 1/4 cents. December HRW wheat dipped 1/2 cent to $5.64, nearer the daily low and hit a three-week low. For the week, December HRW fell 36 cents. December spring wheat futures rose 1/4 cent to $6.08 and fell 27 1/2 cents on the week.
5-day outlook: The winter wheat futures bulls fizzled this week as prices closed at technically bearish weekly low closes today and near-term price uptrends on the daily charts were negated, to suggest more technical selling pressure from the speculators early next week. Wheat traders will continue to look to the corn futures market for daily price direction. With a big U.S. corn harvest looming and corn’s poor performance this week, that does not bode well for the wheat market bulls in the near term.
30-day outlook: Weather patterns in major global wheat-growing regions will continue to get close trader scrutiny in the coming weeks. World Weather Inc. today said rain in U.S. hard red winter wheat areas overnight and that expected periodically in the coming week will be welcome. Rain is needed for winter crop establishment in southern Russia and parts of Ukraine, but none is expected for a while. There is still some concern about drying in western Australia while timely rain occurs in New South Wales, Victoria and South Australia. Rain this week as will benefit the crops in far southern Brazil and southern and eastern Argentina. Dryness remains a concern for west-central Argentina and too much rain could threaten wheat in Parana, Brazil.
90-day outlook: The key “outside markets” for the grains look to be friendlier in the coming months. The U.S. dollar index this week hit a 14-month low and is trending lower, following the Federal Reserve’s aggressive 0.5% rate cut this week that will put pressure on some other major central banks around the globe to lower their interest rates—potentially making for some better world demand for wheat. And crude oil prices have been trending up the past two weeks after hitting a 15-month low in early September. A continued uptrend in crude oil prices will work to lift price prospects for much of the raw commodity sector, including the grains.
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 49 points to 73.52 cents and gained 370 points on the week.
5-day outlook: Cotton futures extended gains to mark a near three-month high close, despite a stronger dollar and general weakness across equities. However, this week’s half-point rate cut from the Federal Reserve bolstered sentiments of improved domestic demand for apparel this fall and into the holiday season. However, next week could bring some corrective selling amid near-term overbought conditions, but solid technical support should limit a hefty downside move.
30-day outlook: U.S. harvest weather will continue to prove noteworthy as harvest progresses in key production areas. World Weather Inc. reports conditions in West Texas remain good, though a few showers in the coming week will be welcome and beneficial for late season boll development. Meanwhile, drier weather has returned to the Delta this week and that will help crops improve after recent rain. Too much rain may have also occurred during the weekend in part of Alabama, southwestern Georgia and northwestern Florida, although situations should improve this week as drier weather resumes. Good harvest weather continued in the Texas Coastal end and the Blacklands crop continues to be rated favorably. On Monday, USDA reported 10% of the U.S. cotton crop was harvested, two points ahead of the five-year average.
90-day outlook: Fading cotton purchases from China, as noted in USDA’s weekly export data, will continue to be closely monitored as the marketing-year progresses. Persisting deflationary conditions in the country have had implications on demand for the natural fiber, combined with increasing trade ties with Brazil. This week, USDA reported net upland sales of 108,600 RB for the week ended Sept. 12, down 8% from the previous week and 23% from the four-week average, with Vietnam, Pakistan and India notching the top spots for purchases during the week. Meanwhile, exports dropped 40% from the previous week and from the four-week average, with India, Vietnam and China the top destinations.
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.