Grain and Commodity Updates
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May 23, 2023, Commentary.
We are getting a rebound in the corn and wheat futures on Tuesday while soybeans, cotton and rice are trading lower. Prices are being pressured on good planting weather in the U.S. and slow demand. Corn exports did have a good week, but we need several more or USDA will have to cut corn exports in future USDA reports. To have any significant rally currently it will need to be weather driven. Currently hot and dry is the weather forecast for the rest of May for the major corn and soybean growing areas. This will help finish up planting in some of the wetter regions. However, for this to be a big market mover it will need to continue into at least mid-June.
Will need to continue to monitor the corn crop in Brazil. It has been dry in some regions and rainfall is needed to finish up the crop.
Unless there is some other major event that enters the market, weather will be the major event to drive price direction and magnitude for the summer. We are entering an El Nino weather pattern which normally is associated with good growing conditions in the summer and trendline crop yields in the U.S. However, remember there are many other climatic factors that can impact our weather this summer and result in below average yields. Currently use any weather rallies to make sales.
Technical Analysis – May 23, 2023 for Corn, Soybeans, Wheat, Cotton and Rice.
Corn –
July 2023 futures broke the $5.80 price support level which was the 50% retracement from the November 2020 low of $4.00 to the May 2022 high of $7.60. If the $5.50 low from last week does not hold, the next price support level is the 62% retracement at $5.37. Price resistance is back at old price support levels at $5.80 and $6.00. The 50-day MA is at $6.08. While the futures made a new low, the stochastics momentum indicator did not, which could give a technical signal of a price rebound. The trend is still down, and price rebounds need to be sold into at this time. If you are still holding old crop corn in storage, consider making sales if prices close below $5.50 and/or retracements back into the $5.80 to $6.10 price range.
December 2023 futures have been in a down trend since October. Futures put in a low of $4.91 last Thursday which is within a few pennies of the 62% retracement of the price move from the August 2020 low to the June 2022 high. First major resistance is at $5.30 which is the 50% retracement of the price drop that began in mid-April. The next price resistance levels are at $5.50 and followed by the down trend line at $5.60. The next price support level is at $4.60. Price rallies will be limited unless we get news of less supply, adverse weather, or better demand, China. For corn you need to sell at harvest, consider making some new crop sales if futures close below $4.90 and/or if prices rebound back into the $5.30 to $5.60 price range.
Soybeans –
July 2023 soybean futures have been in a down trend since March and broke below the important price support level at $14.00. The next major price support level is at $12.88 which is the 38% retracement of the 2020 low and 2020 high. The 50% retracement is at $12.05. The first major price resistance of this $3.00 price drop since mid-April is the 50% retracement at $14.00. The trend is still down, and price rebounds need to be sold into. If you are still holding old crop soybeans in storage, consider making sales if prices close below $13.05 and/or retracements back into the $13.60 to $14.40 price range.
November 2023 Soybean futures continued to trend lower and is attempting to put in a low at $11.72. The 38% retracement from the 2020 low to 2022 high was at $12.07. The 50% retracement is at $11.40. With the record soybean production from South American and U.S. plantings off to a good start, prices will continue to be under pressure. We need a weather problem to cut supply or a better demand news. For soybeans you need to sell at harvest, consider making some new crop sales if futures close below $11.72 and/or if prices rebound back into the $12.40 to $12.80 price range.
Wheat- July 2023 wheat futures have been in a steady down trend since peaking back in October. Futures are attempting to hold the low at $5.96. Price resistance is at $6.60 and price support is at $5.50. I would focus sales on rallies back above $6.60 or if futures close below $5.96.
Cotton-
July 2023 Cotton futures have been in a trading range between 88 and 78 cents since last fall. Stay in close contact with your cotton buyer. Futures have rallied back to the top of the trading range at 88 cents and with the price stochastics over sold above 80, making some old crop sales maybe a good idea.
December 2023 Cotton Futures have been in a down trend for 2023 with resistance at 84.3 cents. Price support is at 78.5 cents. The next price support is at 76 cents and the fall low is at 70 cents. Last year’s summer highs are at 98 cents. Stay in close contact with your cotton buyer. With futures rallying back up to the down trend line at 84.3 cents, you may want to consider making a few sales and especially if prices would rally back to 86 cents.
Rice-
July 2023 Rice futures continue to have large price swings. Futures need to hold support at $16.80 with the lows at $16.40. Stay in close contact with your rice buyer. For old crop sales, I would consider making sales on a close below $16.40 or rallies back over $17.60.
September 2023 Rice futures could not break above the downtrend line at $15.50 that has been in place since February. Price support is at the April low at $14.60. Price resistance is at $15.00 and at $15.50. Stay in close contact with your rice buyer. For new crop sales, I would use rallies back above $15.50 or a close below $14.60. ∆
DAVID REINBOTT: Agriculture Business Specialist, University of Missouri