Grain And Commodity Updates
DAVID REINBOTT
BENTON, MISSOURI
The September 29, grain stocks and wheat production report was slightly bullish for corn, neutral to bearish for soybeans, and bearish for wheat. Since we are beginning the new marking year for corn and soybeans on September 1, the stocks in this report will be the ending stocks for the 2022-23 marketing year and the beginning stocks for the new crop 2023-24 marketing year.
The Corn stocks on September 1, 2023, were projected at 1.361 billion bushels. This is 68 million bushels less than the trade guess and 91 million bushels less than the ending stocks projected in last month’s WASDE report. Also, USDA updated the yield and production for the 2022 corn crop. The corn production was revised down 15 million bushels.
The soybean stocks on September 1, 2023, were projected at 268 million bushels. This is 26 million bushels larger than the trade guess and 18 million bushels larger than the ending stocks projected in last month’s WASDE report. In the updated numbers for the 2022 soybean crop, soybean production was revised down 6 million bushels. Overall, the numbers were negative soybeans.
The wheat stocks number of 1.78 billion bushels came in close to the average trade guess. However, the production estimate for the 2023 wheat crop was 1.812 billion bushels, which was 83 million bushels more than the trade estimate and 78 million bushels more that the September WASDE report. The big surprise was the spring wheat production was increased from 450 million bushels to 505 million bushels.
CORN
Taking in the stocks estimate and the revisions for the 2022 crop, ending stocks in the next USDA WASDE report will be approximately 2.130 billion bushels down 91 million bushels from the September WASDE report. This assumes no changes in production or demand. If the yield is trimmed 2.0 bushels/acre to 171.8 bu./ac. the ending stocks fall to 1.947 billion bushels. It the yield comes in 170 or less, the ending stocks fall below 1.8 billion bushels. This assumes no changes in demand. Exports remain slow even with the big export corn sell to Mexico last week.
With the slow exports, USDA may still need to cut exports another 50 - 100 million bushels in future reports. What we need to see is both a cut in yield and an increase in exports to get a significant rally from corn. With the big corn crop from Brazil this year, exports will remain slow. However, with the fear of a smaller corn crop than expected, it could bring in some buyers. We will just have to wait and see.
Corn Marketing
Due to the low river levels, make sure you are in close contact with your grain merchandiser. Friday’s price action was very negative even thought the report was slightly bullish. There is not a whole lot of positive news in the market at this time to push any of the commodities significantly higher. December futures is in a sideways trading range between $4.90 and $4.75. If the $4.75 low is taken out, the next price support from the weekly chart is at $4.50. For corn in storage, the first price targets are at $4.90 and then $5.10.
Soybeans
With the revisions in the 2022 crop and the stocks estimate, ending stocks in the next USDA WASDE report will be approximately 238 million bushels up 18 million bushels from the September WASDE report. This assumes no changes in production or demand. If the yield is trimmed 1.0 bushels/acre to 49.1 bu./ac. the ending stocks fall to 160 million bushels. However, if the yield increases 1.0 bu./ac to 51.1 bushels, the ending stocks jump to 325 million bushels. A one bushel per acre change can make a big difference in the ending stocks and prices.
Just as in corn, with the big soybean crop from Brazil this year, exports will remain slow. Usually, Brazil is running out exportable soybeans about this time of the year and our exports start to pick up from now until January. However, with their big crop, our exports will remain slow and that is how USDA could cut demand in the balance sheet.
Soybean Marketing
Due to the low river levels, make sure you are in close contact with your grain merchandiser.
If you have unpriced soybeans the best option right now is storage with the hope of a bounce in basis. If you need to make sales, look to re own with a call option if futures do find price support. Currently, $12.60 is the next major support area.
Wheat
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. For the July 2024 futures contract, the next major support is only a few cents away at $6.00. 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 significant price rallies.
Cotton
Some of the same production and export issues that are impacting corn and soybean futures are also impacting cotton prices. The uncertainty with the world economies and especially in China has a big impact on the global and domestic demand and cotton prices.
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. Currently 88 cents is a major price resistance in the December futures contract. A close above that level would open the possibility of a retest of 90 cents and possibly the summer of 2022’s high of 98 cents if the right fundamentals fall into place.
Rice Marketing
Stay in close contact with your rice buyer. Currently $16.20 is a major price resistance and $15.80 is major support on the November futures contract. If you need to make sales, use rallies back to $16.20 or above.
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. Reports from China of slowing demand and deflation due to problems in their housing economy is also causing uncertainty.
Technical Analysis – October 2, 2023, for Corn, Soybeans, Wheat, Cotton and Rice.
Corn –
December 2023 futures are in a sideways to downward trading range between $4.90 and $4.75. The low is at $4.68 and from the weekly chart the next support is at $4.50. Price resistance is at $5.10. The major moving averages are all trending down. The July high is at $5.72, and the June high is at $6.30. For corn you can store, you might want to look at a put option to set a price floor if futures continue to trend lower.
Soybeans –
November 2023 Soybean futures topped out at $14.10 in late August and has been in a down trend the entire month of September. First resistance is at $13.00 followed by the 200-day moving average at $13.26. Price support is at $12.60. Rallies will be limited until we either get some positive export news or a drop in the yield to 49 bushels or less.
Wheat-
July 2024 wheat futures from the weekly chart has been in a down trend since May of 2022. The next support level is at $6.00. First price resistance is at $6.50 and then every 50 cents higher until you reach $8.00. 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 significant price rallies.
Cotton-
December 2023 Cotton Futures broke out of a down trending channel back in July and have had a nice rally back to 90 cents. Futures have formed an ascending triangle with resistance at 88 cents and support at 86 cents. Break above 88 cents and the next resistance level above 90 cents is 94 cents followed by the high at 98 cents. Below 86 cents and the support is at 85 cents followed by 84 cents. Stay in close contact with your cotton buyer. I would use any rallies above 89 cents to make some new crop sales.
Rice-
November 2023 Rice futures are in a triangle price pattern with resistance at $16.20 and support at $15.80. A break above $16.20 and the next resistance levels are at $16.40 and the highs at $16.80. A close below $15.80 and the next support levels are at $15.60 and $15.40. Stay in close contact with your rice buyer. For new crop sales, I would use rallies back above 16.40. ∆
DAVID REINBOTT: University of Missouri