Corn
Advice: We advise corn hedgers and cash-only marketers to sell an initial 20% of 2024-crop production.
Price action: December corn futures climbed 4 3/4 cents to $4.18, ending near this week’s highs and marking a 10 3/4 cent gain on the week.
5-day outlook: Corn futures ended the week on a high note, closing on this week’s highs. The technical posture for corn futures remains quite bullish as prices are in a month-long uptrend on the daily bar chart. We took advantage of the rally by initiating 2024 sales today, understanding that Monday’s USDA quarterly Grain Stocks Report could bring some volatility into the market. A Reuters poll of analysts pegged old-crop corn ending stocks of 1.844 billion bushels. That is up from the September WASDE estimate at 1.812 billion bushels and above our estimate of 1.809 billion bushels. Ethanol dipped late in the marketing year while exports came in higher than expected. The biggest differentiators will be feed and residual use, which is historically hard to peg, and any potential adjustments to old-crop production. An adjustment to production does not seem obvious at this juncture, but USDA did adjust yield 2.4 bushels per acre higher last January, a large change historically, so a modest adjustment to that would not be unprecedented. Monday’s reports are likely to set the tone for price action next week. If prices reverse lower, a close eye will be kept $4.05 and psychological $4.00 support, a close below those levels could point to a trend reversal.
30-day outlook: The coming month will give key insights into how the supply side of the 2024-25 balance sheet will turn out. Harvest reports continue to roll in across the Corn Belt, with the crop proving to be better than expected in many areas. The early planted crop has proven to be impressive, but a big question remains as to whether the late planted corn will be able to keep that train rolling or not. Late planted corn will have been greatly affected by recent dryness. A record yield is almost certain at this juncture, but by how much is yet to be seen. USDA is anticipating a jump of 6.3 bushels per acre from last year’s record, which seems optimistic, especially given ear counts being down from a year ago as noted in the September Crop Production Report from USDA. If the late planted crop proves disappointing, it could help spur prices higher in the medium term.
90-day outlook: Election season is upon us, which draws concerns over the futures of ag exports. Former President Trump has vowed to bring China back to the U.S. market, saying they have not fulfilled trade agreements made during his prior presidency. China continues to heighten trade tensions with several trade partners, which draws concern to whether or not (or by how much) they will escalate tensions with the U.S. Given potential closures of U.S. ports on the eastern seaboard, a strike in Vancouver, Canada, and slowing exports due to a glut of supplies heading into Mexico, some valid concerns are rising over how much of the 2024 crop will be able to be exported. Much clarity over these matters will occur over the coming quarter, but if exports do not live up to current expectations, prices could struggle to garner much bullish momentum unless domestic use makes up a significant portion of that lost demand.
What to do: Get current with advised sales.
Hedgers: No sales recommended yet for 2024-crop.
Cash-only marketers: No sales recommended yet for 2024-crop.
Soybeans
Price action: November soybeans rallied 24 3/4 cents to $10.65 3/4 and surged 53 3/4 cents on the week, while December soymeal closed $17.30 higher at $344.10, marking a three-month high close and a $24.90 week-over-week gain. December soyoil slid 54 points to 42.36 cents but notched a 100-point weekly gain.
5-day outlook: Soybeans caught a bid to end the week as surging soymeal futures led the grain complex higher. Soymeal strength has recently been pared by resistance at the 100-day moving average, a level not breached since mid-June, though a seeming short squeeze prompted a further move above the 200-day moving average for the first time since the end of May. While today’s price movement is certainly promising, it could mean profit-taking early next week, especially ahead of USDA’s Quarterly Stocks Report, due out Monday at 11 a.m. CT. A Reuters poll indicates analysts expect Sept. 1 soybean stocks of 351 million bu., which would be a four-year high and up 32.9% from year-ago. The report will drive markets early next week, though movement in meal futures will likely continue to drive prices over the near term.
30-day outlook: South American weather has been at the forefront of the market as of late, as dryness has prevailed throughout many key growing areas. While September is a customary dry season, World Weather Inc. reports the recent weather pattern will prevail in October. The forecaster notes significant rain will not likely impact key soybean or corn production areas for a while, although recent rain in the south of Brazil was good for planting a few early soybeans. Improved rainfall in center west Brazil is still ten days to two weeks away, while Argentina weather will continue dry biased in west-central and some northwestern areas. Look for an increasing focus on weather conditions as planting efforts progress throughout the region.
90-day outlook: An aggressive move by China’s central bank this week to prop up the country’s economy has improved global demand prospects and considered the biggest easing move since the pandemic. The global economy has largely been on edge as the world’s largest importer has persistently battled deflationary conditions, though this week’s move has fueled the biggest weekly rally in Chinese equities since 2008. While export demand for U.S. soybeans has been proven solid in recent weeks, traders will maintain a close eye on exports to China, especially as the presidential election inches closer.
What to do: Get current with advised sales.
Hedgers: You should be 20% sold in the cash market on 2024-crop.
Cash-only marketers: You should be 20% sold on 2024-crop.
Wheat
Price action: December SRW wheat futures fell 4 1/4 cents to $5.80, near mid-range and on the week up 12 1/2 cents. December HRW wheat futures dipped 2 1/4 cents to $5.76 3/4, nearer the daily high and for the week up 12 3/4 cents. December spring wheat futures fell 3 1/4 cents to $6.08 1/4 and rose 1/4 cent on the week.
5-day outlook: Another week of mostly sideways and choppy trading for the winter wheat futures markets, with neither the bulls nor the bears gaining much traction. The looming harvest of large U.S. corn and soybean crops and the likely related commercial hedging pressure this fall will likely keep a lid on any good upside price action in the wheat futures markets in the coming weeks. Indeed, wheat futures traders in the near term will be looking to the corn futures market for daily price direction. Wheat traders will closely examine Monday’s USDA quarterly grain stocks report, which is expected to show an up-tick in U.S. wheat stocks and possibly to a four-year high.
30-day outlook: Weather patterns in major world wheat-growing regions will continue to be monitored closely by wheat traders in the coming weeks. World Weather Inc. today said recent rain in the U.S. central Plains “was a boon to wheat planting, emergence and establishment, although more is needed.” Rain in the Midwest this weekend will improve soil moisture for autumn planting. The Pacific Northwest needs moisture to improve autumn planting conditions. Meantime, favorable spring wheat harvest conditions have occurred in the CIS while improved conditions are seen in Eastern Europe. Winter wheat conditions “remain tenuous in Western Australia and they remain good for New South Wales, Victoria and possibly in South Australia if rain falls as advertised in the coming week.” Dryness remains a worry for Russia’s southern region, Kazakhstan and eastern Ukraine as well as a part of Russia’s central region. Rains in South Africa and southern Brazil has been supporting good winter crop development. Argentina still needs significant rain soon to protect its wheat production potential.
90-day outlook: USDA Thursday reported disappointing weekly U.S. wheat export sales of 158,900 MT for 2024-25, a marketing-year low and down 36% from the previous week and down 60% from the four-week average. However, U.S. wheat exports during the latest reporting week totaled 710,500 MT, the second-highest for the marketing year. U.S. wheat sales to foreign customers will have to pick up in the coming months in order for wheat futures markets to sustain any significant price uptrends. One element working in favor of better U.S. wheat export sales is the depreciating value of the U.S. dollar on the foreign exchange market. The U.S. dollar index today hit a 14-month low and the USDX is trending lower on the daily bar chart, suggesting more downside price pressure in the near term.
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 30 points to 72.72 cents and gave up 80 points on the week.
5-day outlook: Cotton futures posted mild losses to end the week, though technical support and modest outside market support curbed a move lower. Hurricane Helene has been a focus this week as the storm which made landfall as a Category 4 hurricane raised concern as the storm was originally headed for the Georgia cotton crop, which was only one percent harvested, according to USDA as of September 22. However, concerns have eased as the storm swung more to the east than anticipated after making landfall, which may reduce damage to the cotton crop, though the timing and intensity of the storm is reminiscent of Hurricane Michael in 2018, which resulted in a 1.35 million-bale reduction in the cotton crop. Next week will bring greater insight as crop damages are assessed.
30-day outlook: As harvest ramps up across the U.S., weather will remain a focus. While Hurricane Helene did not impact the cotton crop as negatively as expected, though there is some potential for another tropical cyclone in the Gulf of Mexico late next week or the following weekend, though World Weather Inc. notes confidence for this particular storm is low. Meanwhile, in Texas, conditions will remain dry for a while with late season bolls still developing in the wet where significant rain fell in early September. Earlier this week, USDA reported the cotton crop as 37% “good” to “excellent,” down two points from the week prior, while the “poor” to “very poor” rating rose seven points to 33%.
90-day outlook: Export demand for U.S. cotton has certainly proven lackluster, though a recent economic stimulus in China has bolstered sentiments of improved demand as the country has poured the largest stimulus since the pandemic into the deflationary afflicted economy. A rally in Chinese equities could bring more robust demand in the coming months, though the upcoming presidential election could ultimately have implications amid teetering trade ties.
What to do: Get current with advised sales.
Hedgers: You should also have 25% of expected 2024-crop production forward sold for harvest delivery.
Cash-only marketers: You should also have 25% of expected 2024-crop production forward sold for harvest delivery.