Market Briefs | August 16, 2023

Corn futures moved lower following the most recent WASDE and Crop Conditions report. The projected production for the 2023/24 season stands at 15.1 billion bushels, showing a decline of 209 million compared to the July estimate. If realized, this would be the second-highest production on record. The anticipated yield is 175.1 bushels per acre, a decrease of 2.4 bushels from the previous months projection. Export expectations for 2023/24 have been lowered by 50 million bushels, now at 2.1 billion. With supply declining more than usage, ending stocks have been revised downward by 60 million bushels, reaching 2.2 billion. Consequently, the average price received by corn producers for the season is increased by 10 cents, totaling $4.90 per bushel. The U.S. corn crop’s condition has improved by 2% from 57% to 59% rated as Good/Excellent, while the crop condition in Arkansas witnessed a 4% decline week over week, now at 69% rated as Good/Excellent.

The August Supply and Demand report indicated higher initial stocks and reduced projections for production and exports in the 2023/24 season. Soybean production is expected to amount to 4.2 billion bushels, down by 95 million due to lower yields. The first survey-based forecast for the season anticipates a yield of 50.9 bushels per acre, marking a decrease of 1.1 bushels compared to the previous month. Soybean supplies are projected to decrease by 2% from the previous year, reaching 4.5 billion bushels for the 2023/24 season. As a result of decreased exports owing to lower supplies, ending stocks are projected at 245 million bushels, a reduction of 55 million from the previous month. The reported U.S. soybean crop condition has seen a 4% improvement week over week, with 59% of the crop being rated as Good/Excellent. In Arkansas, however, soybean conditions have deteriorated by 5% week over week, now standing at 67% rated as Good/Excellent.

Following the most recent WASDE and Crop Conditions report, wheat futures trended downward. The wheat outlook for the U.S. in the 2023/24 season involves a decrease in supplies, a minor decrease in domestic consumption, lower exports, and higher ending stocks. Projected production is set at 1,734 million bushels, down by 5 million compared to the previous month’s estimate, thereby reducing overall supplies. The average yield for all wheat was revised downward by 0.3 bushels to 45.8 bushels per acre. The projected ending stocks for 2023/24 have been raised by 23 million bushels to 615 million. The anticipated season-average farm price for 2023/24 remains unchanged at $7.50 per bushel.

In the Aug. 1 production report, USDA pegged the rice crop at 203.640 million cwt, up another 2.6 million cwt from the previous report. Projected all-rice carryout was increased to 31.2 million cwt from 29.6 million. The market reaction to the reports was muted, however, since it’s no surprise that we have a bigger crop this year.  The long-grain average farm price was increased by $1/cwt to $15.50/cwt. Harvest is now underway, with Louisiana and Texas sitting at 61% and 40% harvested respectively. In Arkansas, we have just begun, with 2% harvested as of Aug. 13. Crop condition ratings have dropped off sharply in recent weeks, with only 69% of Arkansas’s crop rated good to excellent. September futures have some support at the recent low of $15.36. Futures have already violated the uptrend and harvest pressure could limit the upside for the time being. 

The cotton market has seen strong gains as fundamentals continue to change. In the August report, USDA cut more than 2.5 million bales off the production forecast and cut harvested acreage by 910,000 acres. That leaves a production estimate of 13.99 million bales produced on 8.62 million acres. That is an average U.S. yield of just 779 lbs/ac. Old crop carryout was raised to 3.7 million bales, and exports were cut to 12.5 million. The net result was 23-24 carryout projected at 3.1 million bales, down from 3.8 million in the previous forecast. The U.S. season-average price for upland cotton was up 3¢ to 79¢/lb. The crop condition continues to deteriorate, with only 36% of the crop in good to excellent condition. December has charted a new 11-month high in recent days, at 88.83¢. 

After posting strong gains in recent weeks, cattle futures have settled into a more sideways trading pattern. Cash markets are expected to remain steady to higher as the overall outlook is for U.S. cattle supplies to continue to contract. Despite higher prices, beef demand is strong. In the most recent supply/demand report, USDA lowered its forecast for 2023 beef production. 2024 production is projected to be down 6.7% from 2023.

Lean hog futures appear to have topped. Recent trading has been volatile, with October futures falling to new 6-week lows and testing resistance just above $78. October is discounted more than $22 from the cash index as it becomes the lead contract, suggesting there could be some upside potential as traders roll positions.