Market Briefs | April 12, 2023

USDA, in its first survey-based report of the 2023 growing season, has pegged the cotton crop at 11.26 million acres. Farmers reported intentions to plant 11.1 million acres of upland cotton, and 154,000 acres of American Pima. That total is down 18% from last year’s 13.8 million acres. In the National Cotton Council survey earlier this year, farmers reported planting intentions of 11.4 million acres, meaning market factors have changed a few minds since the first of the year. Arkansas farmers are planning to seed 480,000 acres of cotton, down 25% from the 640,000 acres planted in 2022. The total was at the upper end of pre-report estimates, though, and after two days of near-limit gains ahead of the report, the market gave back a portion of those gains. December is now building on support around 81 cents, with overhead resistance at 84.15¢. Export sales have been supportive, and that was reflected also in the April Supply/Demand report. 2022/23 exports were raised 200,000 bales to 12.2 million, and ending stocks were lowered to 4.1 million bales. 

Rice farmers provided bearish news for the market as they reported their prospective plantings to USDA. Plantings are now pegged at 2.583 million acres nationwide, up 16% from a year ago. Arkansas farmers reported intentions of 1.3 million acres, up 18% from 2022. Of that, 1.14 million acres will be seeded to long grain and 160,000 acres will be seeded to medium grain. The report was well within the average pre-report guess, but that didn’t stop the selloff that occurred after the report. Futures took nearly $1.50 off the market in short order. However, the market has begun to retrace those losses after finding support at $16.43-$16.44 for July, and $14.51 for September. The monthly Supply/Demand report helped the market find that support when released on April 11. There will be tough overhead resistance for July at $17.95. New crop September will have resistance just below $16. Smaller supplies, increased domestic and residual use, and higher exports all led to a reduced ending stocks number for the 2022/23 marketing year. Despite a 2 million cwt. increase, the export forecast of 61 million cwt. is the smallest export total since 1985/86. 

Corn farmers reported intentions to plant nearly 92 million acres of corn this year, an increase of 4% over 2022. Arkansas farmers intend to plant 810,000 acres of corn, up 14% from last year, mostly at the expense of cotton acres. Corn futures have been supported in recent weeks by renewed buying from China. However, total corn sales for the marketing year are not 324 million bushels. That is down from 500 million at this time last year. The market has been choppy lately as a result. December charted a huge key-reversal to open the week, though, signaling that a potential bottom has been made. The market will have nearby resistance in the $5.75 area and additional resistance above that level around $5.95.

Soybean farmers intend to plant 87.5 million acres this year, unchanged from 2022. In Arkansas, farmers are expected to plant 4% fewer acres this year when compared to last year, with total planting intentions of 3.05 million acres. The market does seem to have found its bottom for the time being and has posted solid gains this week. Support for May is now at a low of $14.05, while November support is at $12.47. Continued wet weather throughout the corn belt is causing some concern. A slow start to the planting season is likely to result in a shift of acres away from corn and into soybeans. 

In the USDA Prospective Plantings report, Arkansas farmers and ranchers reported plans to plant 1.13 acres of hay, up 3% from 2022. 

Live cattle futures have exploded to the upside this week, with April futures moving to new eight-year highs. The recent selloff was speculative in nature based upon general economic concerns, but now cash market fundamentals are the focus of the market. The March Cattle on Feed report again confirmed that supplies in U.S. feedlots continue to decline from 2022. February marks the sixth-straight month of declining feedlot placements. Seasonal demand should improve wholesale beef prices in the upcoming weeks, providing additional support. 

Weak cash market fundamentals continue to weigh on hog futures. June futures have moved to new lows after charting a bearish outside day last week. Support is building around $87.

In the April supply/demand report, USDA raised its forecast for 2023 milk production on a larger cow inventory. Cheese and butter price forecasts were raised based upon current market data. Whey prices were also raised as demand is expected to strengthen. Class III prices are expected higher, while Class IV prices were projected lower. The all-milk price was projected higher at $20.65/cwt.