Grain and Commodity Updates
DAVID REINBOTT
BENTON, MISSOURI
You can find more detailed and frequent commodity updates including charts and tables on the University of Missouri Extension – Scott County and David Reinbott’ s Facebook pages.
CORN
The November 9, USDA report increased the corn yield 1.9 bushels/acre to 174.9 bushels. However, USDA increased the use or demand by 125 million which only bumped up ending stocks by 45 million bushels to 2.156 billion. USDA is projecting that demand will increase by almost 800 million bushels over last year with over half of that increase will be in exports.
We are starting to see some rebound in the demand numbers. Exports will be the key. We need to see countries other than China to come in and buy corn.
Also, weather in South America will need to be watched. Corn production in Argentina should rebound from the bad crop last year. Brazil has been dry in the central and northern growing regions. This impacts their planting of soybeans and the double crop corn acres. Prices were down hard last Thursday and Friday on the forecast of rainfall in the dry regions. This will impact the opening prices Sunday night.
Corn Marketing
Corn futures since mid-August have drifted sideways to lower. December futures pulled back to $4.60 where the September futures went off the board. It is going to be important for futures to hold this price support level. There is some minor price support at $4.25 and the next price level is $4.00. Due to the positive spread in the futures, it may keep futures above $4.60 unless demand turns negative or the weather in South America improves significantly. Price resistance is at the moving averages at $4.80 followed by the October high at $5.10.
Soybeans
The ending stock of soybeans were increased 25 million bushels to 245 million bushels on a 0.3-bushel yield increase to 49.9 bushels/acre. Just as in corn, it is important for exports to rebound, and we need to watch the weather in South America. Exports have rebounded the past few weeks, but we need to see it continue. China has been a big buyer recently, but it could be based on concerns about South American weather. That means those purchases could be cancelled. Therefore, we need to see other counties to come in and buy our soybeans. Meal prices are strong based on the short soybean crop in Argentina last year.
Weather in South America has been wet in southern Brazil and dry in the central and northern growing regions. However, the forecast for rain this week in those dry areas probably contribute to the sell off on Thursday and Friday.
Soybean Marketing
January futures rallied up to $14.00, before pulling back 60 cents on the forecast of rain in the dryer Brazilian soybean growing regions. There is some good technical price support at $13.20. The next support level is at $13.00. Price resistance is at $14.00 and $14.20. Sunday night’s open will be determined if the rains come in as expected and how much precipitation they may receive.
Wheat
The U.S. and world ending stocks saw only small changes in the November USDA report. U.S. wheat ending stocks are projected at 684 million bushels. This is still considered low when compared to the 2016-2019 marketing years when the ending stocks were over 1.0 billion bushels.
While there has been bombings and the escalation of hostilities and confrontations in the Black Sea region, it has not had a positive impact on wheat prices. Continue to monitor the El Nino weather pattern and how it will pact the wheat crops in Australia and Argentina.
Wheat Marketing
Since the invasion of Russia into Ukraine in February of 2022, prices peaked over $14.00 in March and have been in a down trend ever since. The July 2024 futures contract continues to trade below all the major moving averages. Futures made a new low on Friday at $6.05. The next major support is at $5.75. However, with the uncertainty with the corn and soybean crops in the U.S., the El Nino weather pattern and its impact on the southern hemisphere wheat production, and the uncertainty with the Black Sea region, there are still the possibility of higher prices. But currently none of these events have come together to rally wheat prices.
Cotton
Cotton endings stocks were increased 400,00 bales to 3.2 million bales. Production was increased 270,000 bales based on an increase in the yield from 767 to 783 pounds per acre. The exports were left unchanged and domestic use was cut 100,000 bales. World ending stocks were increased 1.58 million bales to 81.50 million. Price direction will continue to be impacted by global, and domestic demand for cotton and especially in China.
John Robinson, Texas A&M marketing specialist has a good summary on what is going on with the world supply and demand situation with cotton. You can read his latest article by clicking here.
Cotton Marketing
Stay in close contact with your cotton buyer.
December 2023 futures are rebounding off the 75-cent futures price. First price resistance is at 79 cents followed by 83 cents.
Rice Marketing
Rice ending stocks were cut again in November to 40.9 million cwt from 41.8 million. The yield was decreased 20 pounds to 7,707 pounds per acre and the exports were left unchanged.
Stay in close contact with your rice buyer. The January futures have rallied off the low of $15.80 on November 7 to $17.40 on Friday. The next resistance level is at $18.00 followed by $19.00. Price support is at $17.00 followed by $16.60.
Marketing Plans
In the Technical Analysis section, I outlined some price targets you can use to make for new crop sales if prices continue to rally. For crops you have already priced, you could buy call options to take advantage of any price appreciation. A put option can be used to lock in price floors to protect and minimize the downside risk.
Demand
The uncertain demand in both the U.S. and world is also keeping a lid on price rallies. We need to see some good economic data that indicates that consumers in the U.S. and world are positive on the future. In the U.S. economy, we need to find that balance between economic growth without an increase in inflation to keep the Federal Reserve from increasing interest rates. The Federal Reserve is signaling they will not raise interest rates in December.
Technical Analysis – November 19, 2023, for Corn, Soybeans, Wheat, Cotton and Rice.
Corn –
December 2023 futures pulled back to $4.60 where the September futures went off the board. It is going to be important for futures to hold this price support level. There is some minor price support at $4.25 and the next price level is $4.00. Due to the positive spread in the futures, it may keep futures above $4.60 unless demand turns negative or the weather in South America improves significantly. Price resistance is at the moving averages at $4.80 followed by the October high at $5.10.
Soybeans –
January 2024 Soybean futures rallied up to $14.00, before pulling back 60 cents to $13.40 on the forecast of rain in the dryer Brazilian soybean growing regions. There is some good technical price support at $13.20 with the 200 and 50 day moving averages coming together. Futures are still holding the uptrend line at $13.40. The next support level is at $13.00. Price resistance is at $14.00 and $14.20. Sunday night’s futures open will be impacted if the rains come in as expected and how much precipitation they receive.
Wheat-
July 2024 wheat futures continues to trade below all the major moving averages. Futures made a new low on Friday at $6.05. The next major support is at $5.75. With the uncertainty with the corn and soybean crops in the U.S., the El Nino weather pattern and its impact on the southern hemisphere wheat production, and the uncertainty with the Black Sea region, there are still the possibility of price rallies. But currently none of these events have come together to rally wheat prices.
Cotton-
December 2023 Cotton Futures are rebounding off the 75-cent futures price. First price resistance is at 79 cents followed by 82 cents. The 200-day moving average is at 83 cents. If the 75-cent low does not hold, the next price support is at 70 cents.
Rice-
November 2023 Rice futures have rallied off the low of $15.80 on November 7 to $17.40 on Friday. The next resistance level is at $18.00 followed by $19.00. Price support is at $17.00 followed by $16.60. ∆
DAVID REINBOTT: University of Missouri