Market Briefs | June 12, 2024

New crop September futures continue to be capped by resistance at the triple top of $15.80. The market charted a huge outside day last week, establishing support at $15.20, and the market is consolidating between those levels at this point. The June WASDE report showed a one million hundredweight reduction in supplies for 2024/25, thanks to a reduction in carryover from the 2023/24 marketing year. With the rest of the report unchanged, this carried through to ending stocks. It should be noted, however, that ending stocks are projected to increase 5 million hundredweight year over year, from 39.5 million cwt. in 2023/24 to 44.5 million cwt. in 2024/25. The average on-farm price is also reduced significantly. The average long-grain price is forecasted to be down $1.30/cwt to $14.50. Southern medium-grain is forecasted to be down $2.90/cwt to $15.00.

As of June 9, 80% of intended cotton acres have been seeded. Most of what is left is in Texas and Oklahoma, where drought continues to be a factor. Currently, 61% of the crop nationwide is in good to excellent condition, which is significantly better than last year’s 49%, and well above the five-year average. The relative condition of the crop is pressuring futures as the prospect for a big crop looms over the market. The monthly WASDE did not change the production estimate, but the supply estimate was up 400,000 bales to 4.1 million, thanks to an increase in beginning stocks. The season average on-farm price for upland cotton was down 4 cents to 70 cents/lb.

The June WASDE report made no changes to the U.S. corn balance sheet, and corn prices remained positive. Traders appear skeptical of the USDA’s unchanged South American corn estimates from May. Despite discussions about the bullish impact of stunt disease in Argentine corn, which some private crop scouts believe may have significantly reduced production, and flooding in southern Brazil, CONAB’s May forecast is nearly 9 million metric tons lower than the USDA’s. Additionally, the expanding drought in Mexico and concerns from China about the effects of extreme heat and dryness add to the bullish outlook. Nevertheless, the WASDE report left China’s global numbers unchanged. December 2024 corn is currently just below the 100-day moving average resistance at $4.72.

The Wednesday WASDE report reduced the old-crop soy crush by 10 million bushels to 2.290 billion bushels, increasing new-crop ending stocks by the same amount to 455 million bushels. This was the only change to the U.S. balance sheet. Globally, Brazil’s production was lowered by just 1 million metric ton to 153 million metric tons, falling short of trade expectations, while Argentine soy production remained unchanged at 50 million metric tons. With the USDA’s WASDE report being largely neutral for soybeans and little other market news, soybean prices remain flat. November 2024 soybeans appear to have support at $11.41 and resistance at $11.60.

The WASDE report indicated a rise in U.S. winter wheat production by 17 million bushels to 1.295 billion bushels, aligning with estimates. There were no changes to old crop stocks, which remained at 688 million bushels, while new crop stocks fell by 7 million bushels. This decline was due to a 25-million bushel increase in exports, reaching 800 million bushels. Globally, Russian wheat production was reduced by 5 million metric tons to 83 million metric tons. With the market still attempting to determine an accurate figure for Russia’s 2024/25 wheat harvest, prices have begun to consolidate just above $6.00 for the July 2024 contract.

Livestock and Poultry
The June WASDE report raised the estimate for total U.S. red meat and poultry production for 2024. While beef production was mostly unchanged, pork production was raised on higher weights and broiler and turkey production were raised on higher bird weights and recent hatchery data. The egg production forecast was lowered due to recent discoveries of Highly Pathogenic Avian Influenza in commercial laying flocks. For 2025, the red meat and poultry production forecast was raised on higher expected beef production. The forecast for pork exports was raised due to strong demand. Broiler forecasts for 2024 and 2025 were lowered as U.S. prices are less competitive at current levels.

Milk production forecasts for both 2024 and 2025 were unchanged from last month. Class III and Class IV price forecasts were higher on higher prices for butter, cheese, whey, and nonfat dry milk. The all-milk price forecast was raised to $21.60/cwt. Strong demand is expected to carry into 2025, and the all-milk price forecast for 2025 is $21.50/cwt.