Market Briefs | Jaurary 24, 2023

Rice futures continue to be supported by global food supply concerns. High prices for Asian rice are making U.S. rice more competitive, as recent export reports show. Last week, 110,000 metric tons of rice were sold for export. Mexico and Venezuela were the top buyers. Export shipments were also strong at 89,000 metric tons. The January production and WASDE reports had a little something for the bulls and the bears. In the annual production report, the final look at the 2023 crop, the U.S. production estimate was cut by 1.4 million cwt to 218.3 million, but up significantly from the 160,041 million cwt produced in 2022. March futures began the year by charting a huge bearish reversal, but there has been little follow-through selling. That high of $18.14 looks like a significant top, but the market has support at $17.21. 

Cotton futures have broken out of the recent sideways pattern thanks to improving export demand. March is now testing resistance at 85 cents after breaking above previous resistance at 82 cents last week. USDA reported weekly net export sales of 420,000 bales, with China the primary buyer. Weekly shipments of 257,700 bales were a marketing year high. The January reports contained some bullish news and some bearish news. On the bullish side, USDA lowered the U.S. crop estimate to 12.43 million bales and cut the carryout estimate to 2.9 million bales. However, the world balance sheet held negative fundamental news (a 2 million-bale increase in carryout) that resulted in a one-cent cut to the expected U.S. on-farm price. 

Soybean futures are attempting to bottom. November could build support at the recent low of $11.85. The market has seen pressure in recent weeks from the January annual production report and the monthly WASDE. The production estimate was raised 35 million bushels to 4.2 billion, which, coupled with slightly lower beginning stocks, raised the supply estimate to 31 million bushels. Ending stocks are now projected to be 280 million bushels. The U.S. season-average soybean price was down 15 cents from last month and is now projected to be $12.75. 

Corn futures also appear to be bottoming. Old crop March is building support at $4.35, while new-crop December is building on support at $4.71. The January annual production report increased the 2023 production estimate by 108 million bushels to a record-setting 15.3 billion bushels. That increase comes from an increase in yield, which also set a record, to 177.3 bushels per acre. Supply increased more than use on the WASDE balance sheet, and ending stocks were up 31 million bushels. The season-average corn price was lowered by a nickel to $4.80.

Livestock and Poultry
In the monthly WASDE, red meat and poultry production estimates for 2023 were raised from the previous report as November production data and preliminary slaughter estimates and weights for December were considered.

For 2024, the beef forecast was raised with higher expected first-half slaughter totals and higher dressed weights. The January Cattle report will provide an indication of the number of cattle available for placement during 2024 as well as producer intentions for retaining heifers for breeding. First-half pork production was increased on pig crop data for the second half of 2023. Production in the second half reflects first-half 2024 farrowing intentions reported in the Quarterly Hogs and Pigs report. Broiler production was raised for the first half of the year based on recent hatchery data. Turkey production was lowered on hatchery data and lower prices. 

Beef export estimates for 2023 were lowered and imports were raised on recent trade data. For 2024, beef imports were raised largely on higher expected imports from Oceania. The export forecast was lowered on weaker sales, mostly to Asia. Pork exports for 2024 were raised slightly, as were broiler export projections. 

In the monthly WASDE, milk production estimates for 2023 were lowered from last month on lower milk cow inventories and lower expected milk per cow. For 2024, prices for cheese were lowered due to recent price weakness, while butter, non-fat dry milk and whey prices were all projected to be higher. The 2023 all-milk price forecast was unchanged at $20.60 per cwt, and the 2024 price was lowered to $20.00 per cwt.