Soybean Yield Expected At A Record 51.9 Bushels Per Acre
DAVID REINBOTT
BENTON, MISSOURI
The weather, USDA reports from August 12, and China all have influenced commodity price direction. The weather forecasts include more rain and less heat for the rest of the month for the Midwest and Mid-South. I believe the weather is the main reason prices are lower this week. The USDA reports were basically neutral with the yields, production, and ending stocks coming in line with the pre-report estimates. The only exceptions were the soybean yield at a record 51.9 bushels per acre and the updated cotton production numbers. The harvested acres for cotton in Texas was down more than expected and resulted in cotton ending stocks to go below 2.0 million bales. There is still a lot of uncertainty about the Chinese economy and their agricultural imports.
Corn
USDA projected the 2022 corn yield at 175.4 bushels per acre. This was slightly below the pre-report estimate and down 1.6 bushels from the July report. The crop ratings on Monday were down for most states.
This may signal lower yield estimates in future reports. The Pro Farmer Crop Tour is August 22 – 25. We will see if their yield estimates come in line with USDA or lower.
Also from the USDA report, the corn for ethanol for 2021-22 was cut 25 million bushels. For 2022-23, feed use was cut 25 million bushels and exports were also cut 25 million bushels.
At the close on Tuesday August 16, December futures closed below all the major moving averages. Prices need to hold $6.10 with the next price support at $5.90.
Soybeans
August weather has a big impact on soybean yields and the wetter forecasts with less heat should help yields. USDA projected the soybean yield at 51.9 bushels/acre. The trade guess was 51.1 and the July yield was 51.5. Ending stocks are still tight at 245 million bushels per acre.
On Tuesday’s close, November soybean futures were trading below the major moving averages and needs to hold $13.83. The next support level is at $13.60.
Wheat
Wheat ending stocks are projected at 610 million bushels. This is down over 30 million bushels from last month. Exports were increased 25 million bushels and accounted for most of the reduction in the ending stocks.
December Wheat futures continue to trade in a range between $7.70 and $8.50. With all the price volatility in corn and soybean prices, wheat prices have held together. Wheat futures could be making a low now that could lead to a rally going into the fall. December wheat futures need to hold the $7.70 price support.
Cotton
Cotton prices had the biggest run up the past two weeks. The 2022 -23 ending stocks were projected at 1.8 million bales down 0.6 million bales from last month. This will be the lowest ending stocks since 1980. The planted acres were left unchanged but the harvested acres were cut 1.42 million from July to 7.13 million acres. This is the lowest harvested acres since 1980. Texas is projected to plant 7.1 million acres but only harvest 2.2 million acres. Texas is projected to abandon 70 percent of their crop. The average abandonment acres for Texas is 27 percent since 2000. With the smaller U.S. cotton crop, USDA also reduced the demand for 2022 by 2.2 million bales.
December cotton futures on Tuesday put in a long legged doji which indicates indecision in price direction. I would not be surprised to see a pullback in prices on Wednesday. Price support is back in the price gap at around $1.10. Price resistance is at $1.25.
Rice
The ending stocks for 2022 was increased 1.0 million cwt to 36.5. September rice futures are trading in a range between $16.60 and $17.40. The 200-day moving average is at $16.80. If prices can close above $17.40, the next price target is at $17.88.
Pricing opportunities
For grain you will be selling at harvest and not storing, use the rallies as pricing opportunities. Keep a stop under the market to make sales if the weather forecasts change or some unexpected event happens.
Technically, I like to use trend lines to determine price support and resistance levels. From there, I use the moving averages for more intermediate to short term price support levels and pricing opportunities. For buys and sell signals, I use candlestick patterns and signals. I have found that closes below the 8 and 17 EMA are good signals to make sales when used in conjunction with the other technical indicators and make buys when prices close above 8 and 17 EMA.
Technical Analysis – August 17, 2022 for Corn, Soybeans, Wheat, Cotton and Rice.
Corn
December 2022 futures need to hold the $6.10 price resistance line. The next price support is at $5.90 and then $5.65. Price resistance is at $6.50. With the USDA report behind us, weather, exports and news from the crop tours will drive price direction. Prices maybe in a sideways trading range for the next several weeks and maybe into the fall unless there are major changes in the supply or demand. If you need to make sales, use closes below $6.10 or $5.90. If you are comfortable with your forward pricing, you may want to hold off on additional sales until later.
Soybeans
November 2022 soybean futures need to hold price support at the uptrend line at $13.81 with the next price support at $13.60 and then $13.00. Price resistance is at $14.60. As in corn, with the USDA report behind us, weather, exports and news from the crop tours will drive price direction. Prices maybe in a sideways trading range for the next several weeks and maybe into the fall unless there are major changes in the supply or demand. If you need to make sales, use closes below $13.60. If you are comfortable with your forward pricing, you may want to hold off on additional sales until later.
Wheat
July 2022 wheat futures are trading in a sideways trading range between $7.70 and $8.50. The 50 and 200 day MA are at $9.00. Prices maybe in a price range for the next several weeks until we get a better handle on the supply and demand.
Cotton
December Cotton futures put in a bullish key price reversal on July 15 at 83 cents. Since then, price have been climbing higher. The next price target is at $1.26 and then the contract high at $1.34. Price support is at the gap at around $1.10 and then the 200 day MA at $1.04. Tuesday’s close left a long legged doji which indicates price indecision. Therefore, a pullback is possible. The slow stochastics and RSI price momentum indicators are both overbought and that signals a possible pull back in prices. If you need to make sales, I would use the $1.26 to $1.34 price targets are a close below the price gap at around $1.10.
Rice
September rice futures are in a trading range between $16.75 and $17.40. The next price target is at $17.88. Price support is a $16.40. Just as in corn, soybeans, and wheat, prices could be in a sideways trading range for the next several weeks until we get a better idea on the supply and demand. If you need to make sales, I would use a rally in the $17.40 to $17.88 price range or a close below $16.75. ∆
DAVID REINBOTT: Agriculture Business Specialist, University of Missouri