Grain and Commodity Updates
David Reinbott
BENTON, MISSOURI
Corn
USDA on Friday March 31, will release the U.S. 2023 prospective plantings report and the quarterly grain stock report as of March 1. The trade is expecting increases in planted acres for most crops from last year except for cotton. Corn acres are projected to be up 2.3 million acres to 90.9 million. Soybean acres are expected to be increased 800,000 to 88.3 million acres and all wheat acres are expected to be up 3.3 million to 48.9 million acres. The traded is expecting cotton acres to be down 2.8 million to 11.0 million acres compared to 13.8 million in 2022.
Farm Futures released their acreage and production forecasts from their reader survey. They are projecting some major differences from the trade estimates. Their survey indicates corn acres will be 87.7 million acres down 931,000 from last year. Soybean acres will be up 2.2 million acres to 89.6 million. They are not projecting an increase in total wheat acres. Cotton acres are projected at 11.6 million acres, which is 600,000 acres more than the trade estimate. The survey is projecting grain sorghum acres will be up 2.2 million acres to 8.5 million.
Farm Futures are projecting corn ending stocks for 2023 at 1.2 billion bushels compared to 1.3 billion bushels for 2022. They are using a corn yield of 177.6 bushels per acre. Using the trade estimate of 90.9 million acres and a trendline yield of 181.5 bushels per acre, the ending stocks for 2023 would be over 2.0 billion bushels.
For soybeans, ending stocks are projected to go from 210 million bushels in 2022 to 380 million bushels for 2023 based on the Farm Futures planting estimate. Using the trade estimate of 88.3 million acres, the ending stocks would increase from 210 million in 2022 to 300 million bushels. The new crop 2023-24 balance sheets will not be released until May. USDA will use the March 31 planted acres and quarterly stocks in their balance sheet projections.
Corn
Corn prices have rallied the past several weeks on improved exports including more imports of U.S. corn from China. If the exports remain strong, USDA will need to increase exports in future reports. With the potential of a big corn crop from Brazil, we need exports to remain strong. Weather will play a big role on the final planted acres. With the heavy snowpack in the Dakotas and Minnesota and wet weather in the South, it could delay plantings and increase prevented planted acres.
Soybeans
Soybean prices have also rallied. However, going forward I am concerned about the direction in prices due to the big soybean crop coming out of Brazil. China continues to import soybeans from Brazil. For new crop, ending stocks could easily go over 300 million bushels which will pressure prices. Weather will continue to be important as we enter the planting season and then the growing season.
Wheat
While there is not a lot of bullish news for wheat, the ending stocks are still down from past years. With the poor hard red winter crop, wheat could still have a good price story if we can get some positive demand news. The news from Russia about their wheat exports have helped in supporting wheat prices.
Cotton
The cotton acres will be watched closely. Many are projecting cotton acres in the 11-to-12-million-acre range. However, the December Cotton and Corn ratio projects acres to be closer to 10 million. At 10 million acres, ending stocks will be around 3.0 million bales. If acres are 11.0 million or more, then ending stocks will be in the 4.5 to 5.0 million bale range. In 2022, cotton use was 14.1 million bales down from 17.2 million in 2021 and 18.8 million in 2020. At the USDA’s annual outlook forum back in February they projected use or demand at 16.1 million. Cotton needs growing world economies especially in the U.S. and China to lift prices higher.
Economy and interest rates
The general uncertainty of the U.S. and world economies, the conflicts in Ukraine, and the shaky U.S. relationship with China and Russia are all part of a risk off mentality for many assets that are traded. This may be part of the reasons we have not seen positive response in prices in agriculture commodities when we do get bullish news.
Technical Analysis – March 30, 2023 for Corn, Soybeans, Wheat, Cotton and Rice.
Corn –
May 2023 futures have been in a down trend since fall. Futures did find price support at $6.10 and we have had a nice bounce. The price resistance is at the 50% retracement at $6.50, followed by the 50-day MA at $6.55. There is also price resistance at the 200-day MA at $6.60 and at the down trend line at $6.70. The slow stochastics price momentum indicator is overbought; therefore, a pullback could happen at any time. If you have still had corn in storage, consider making sales when prices close above $6.30.
December 2023 futures have been in a down trend since October. Futures have rebounded off the low at $5.50. The first price target is at the 50-day MA at $5.80. The next price target is at the old support and now new resistance and the down trend line at $5.85. The 200-day MA is at $5.98. For new crop sales, I would not recommend any sales at this time until prices trade above $5.85.
Soybeans –
May 2023 soybean futures found price support at $14.20. The first price target is the old support and now new resistance at $14.80. The next price targe is at the 50 day MA at $15.03. Price support is at the 200 day MA at $14.56. The contract high from last summer is $15.72. If you still have old crop soybeans, making sales above $14.80 is a good strategy.
November 2023 Soybean futures put in a low at $12.60. The 50% retracement of this price drop is $13.30. The 50- and 200-day MAs are around $13.50. The potential of a record soybean production from South American and an increase in planted acres will pressure prices over the next few months. The $13.30 to $13.80 price range would be a good place to make some new crop sales.
Wheat-
July 2023 wheat futures may have put in a double bottom low around $6.70. First resistance is at $7.40 where the 50-day MA, the down trend line, and the old support and new resistance are all converging. The next resistance is at $8.00. Seasonally, prices tend to rally into February and then make a second rally in May before harvest. I would focus sales on rallies above $7.40.
Cotton-
May 2023 Cotton futures are trying to hold price support at 76 cents. First resistance is at 84 cents. The top of the price channel is at 88 cents.
December 2023 Cotton Futures closed above the 50-day MA at 83 cents. The next price resistance is at 86 cents. Price support is at 78 cents. Projections are for cotton acres to be around 11.5 to 12.0 million acres but the December corn and cotton ratio projects acres around 10 million. Prices will need to rally to buy back some acres. Summer highs are at 98 cents.
Rice-
May 2023 Rice futures have been on a roller coaster ride the past six months. Price support is $17.50 at the trend line with the next price support at $17.20. Price resistance at $18.00 and at the top of the price channel at $18.60. Stay in close contact with your rice buyer and consider making sales in rallies approach $18.60.
September 2023 Rice futures are trying to rally off the low at $15.30. The 50% retracement off this $1.80 price decline is at $16.20. The 50-day MA us at $16.30. Price resistance is at the contract highs at $17.10. ∆
DAVID REINBOTT: University of Missouri Extension