Corn
Price action: December corn futures closed 2 cents lower at $4.10 3/4, closing well off intraday lows.
Fundamental analysis: Corn futures closed lower for the first time in five sessions but closed well off session lows. Seller interest was limited below yesterday’s low and prices rebounding into the close was a healthy sign higher prices are likely.
Widespread rains are not expected over the next two weeks, though parts of the northern and eastern Corn Belts should see some rain into the end of the week, says World Weather Inc. Dry conditions and healthy soil moisture should allow of favorable conditions for crop maturation. Early harvesting is likely to occur in parts of the Midwest as maturation is sped up by slightly warmer than average temps.
Continued high use for ethanol points to a likely beat of the current USDA estimate for old crop. Ethanol production averaged 1.061 million barrels per day (bpd) during the week ended Aug. 30, down 10,000 bpd (0.9%) from the previous week but up 49,000 bpd (4.8%) from last year. Based on the weekly data, ethanol production averaged 1.074 bpd during August, up 4.1% from last year. Ethanol stocks declined 218,000 barrels to 23.354 million barrels. While ethanol topping previous expectations has been a good sign that lower prices have spurred demand, ethanol use is largely limited. Traders will keep a close eye on feed use in next week’s WASDE and implied feed use in the quarterly Grain Stocks Report at the end of the month to see if low prices boosted harder-to-track feed and residual usage.
Low water conditions have led to several barges running aground along a key stretch of the lower Mississippi River, the U.S. Coast Guard told Reuters. The Coast Guard said in an email it has received reports and responded to several groundings over the last week along the Greenville-Vicksburg sections of the lower Mississippi River.
USDA will release their weekly Export Sales Report tomorrow morning, a day later than usual due to Monday’s holiday. Traders expect old crop sales between -100,000 and 100,000 and 2024-25 sales between 700,000 MT and 1.4 MMT. Last week, new crop sales totaled 1.494 MMT.
Technical analysis: December corn futures faced profit-taking today but the near-term uptrend remains intact. Bulls are targeting initial resistance at $4.12 3/4 before tackling resistance at $4.17 1/2, which is firmly backed by $4.20. Support stems from the 40-day moving average at $4.07 3/4, which limited losses today, then $4.02.
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 2 cents to $10.23 1/2, while December soymeal sunk $2.80 to $326.50. December soyoil rose 101 points to 41.17 cents. Each notched high-range closes.
Fundamental analysis: A third consecutive test of the illustrious 40-day moving average proved fruitful for soybean bulls today, a feat not achieved since the end of May. Corrective pressure in soymeal kept momentum a bit subdued, though rallying soyoil, in apparent spread-trading, certainly contributed to a high-range close across soybean futures. Moreover, persisting export demand continues to fuel demand hopes as USDA reported another round of daily sales, consisting of 126,000 MT to China and 189,700 MT to unknown destinations for delivery during 2024-25. While a weaker U.S. dollar has positively impacted U.S. export business as of late, improving Chinese crush margins are also playing a role. A report from Shanghai JC Intelligence Co. stated that while crush margins remain negative, they have recovered to levels not seen in over two months.
Meanwhile, global supply concerns are heightening as Ukraine and Russia continue to battle dry weather, while Center South and Center West Brazil continue to face net drying conditions, which are expected for the next ten days. World Weather Inc. reports some shower activity is expected late this month, although resulting rainfall will be lighter than usual. Improved soil moisture for early planting must occur in late September and October for favorable planting and early season crop development potential.
USDA will release its weekly Export Sales Report, delayed a day due to Monday’s holiday. Traders are expecting net soybean sales to have ranged from net reductions of 200,000 MT to 200,000 MT for 2023-24 and from 800,000 MT to 2.0 MMT for 2024-25 during the week ended Aug. 29.
Technical analysis: November soybeans managed to secure a close above the 40-day moving average, which had formerly served as notable resistance, further improving bulls’ technical posture. Extended upside will face additional resistance at $10.29 1/2, then at $10.37 1/4 and $10.51 1/2, with more solid resistance serving at the psychological $11.00 level, which is backed by the 100-day moving average $11.04 1/2. Conversely, the 40-day moving average will now lie at the 40-day moving average, then at $10.07 and again at $10.00, which is backed by the 10- and 20-day moving averages of $9.92 3/4 and $9.85 3/4.
December soymeal ended the session well off the session lows, with support serving first at $321.40, with notable support lying at the 40-, 10- and 20-day moving averages of $314.40, $313.80 and $310.50. Meanwhile, however, stiff resistance stands at the 100-day moving average of $338.00 and again at the 200-day moving average of $349.20.
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 6 cents to $5.74 3/4, while December HRW closed 4 1/4 cents lower at $5.88 3/4, though each marked high-range closes. December HRS showed relative strength, rising 2 1/4 cents to $6.25 3/4.
Fundamental analysis: Corrective selling was the theme across the wheat complex following a string of solid gains since the end of August. However, a close was held off of session lows indicating additional short-covering may ensue, though the today’s price action could largely be credited to continued weakness in the U.S. dollar.
Global supply uncertainties are certainly increasing for wheat as hot, dry conditions remain in much of Russia and Ukraine, combined with a subpar French crop, which is expected to dip 17% from year-ago to a 40-year low, according to France’s Ag Ministry. Meanwhile, in the U.S. SRW and HRW wheat areas continue to face dry conditions and need a boost in rainfall as the fall planting season quickly approaches.
The marketplace will get an inside look into export demand in USDA’s Weekly Export Sales Report Friday morning. Traders anticipating net sales during the week ended Aug. 29 totaled ranged from 300,000 to 600,000 MT. Last week, net sales of 532,079 MT were reported for the previous week.
Technical analysis: December SRW wheat marked a high-range close, as support at $5.68 1/2 limited selling efforts. A push higher will continue to face initial resistance at Wednesday’s high of $5.82 3/4, then at $5.87 3/4, $5.95 and the psychological $6.00 level, which is backed by the 100- and 200-day moving averages of $6.18 1/2 and $6.22 3/4.
December HRW spent the session trading within the previous session’s range, though initial support stood at $5.79 1/2, which is backed by the 40-day moving average of $5.68 1/2 as well as the 10- and 20-day moving averages, each trading at $5.60 1/4. Meanwhile, an extension of recent strength will continue to face initial resistance at Wednesday’s high of $5.94, then at $6.00, $6.07 and $6.20 1/2, with notable resistance looming at the 100- and 200-day moving averages of $6.28 1/4 and $6.30 1/2.
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 futures fell 37 points to 69.44 cents, nearer session lows.
Fundamental analysis: Cotton futures continue to undergo selling pressure as traders are unable to overcome downtrend resistance stemming from early April highs. Stabilizing crude oil futures failed to lend support to the cotton market today amid persisting concerns over both the U.S. and world economies, with traders worried about long-term demand for the natural fiber. Crude oil traded higher early in the session but struggled to maintain gains and eventually traded near the nine and a half month low. Automatic Data Processing, Inc. (ADP) released private sector jobs market data this morning, noting the US added 99K workers to their payrolls in August 2024, the lowest number since January 2021 and well below July’s figures and expectations. Traders will closely eye the jobs data released by BLS tomorrow morning. Weaker jobs data could provoke the Federal Reserve to cut interest rates more than previously expected in their upcoming meeting, where traders are currently split between expecting a cut of 25 basis points or 50 basis points.
Recent rains in West Texas were impressive and new bolls may be set, but the growing season will have to last longer than usual to get those bolls to open and mature properly before a freeze occurs, says World Weather Inc. Rains forecast in the Delta should be beneficial for southeastern crops as well, easing recent dryness.
Technical analysis: December cotton futures are trading in the upper end of the recent range though bears still continue to hold the technical advantage. Initial resistance stands at 69.90 cents, the 40-day moving average, which is reinforced by 70.50 cents. Bulls are seeking to keep prices above support at 69.25 cents, while further selling finds support at 68.55 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.