Market Briefs | March 1, 2023

Both old and new crop corn futures have sold off sharply since last week’s Ag Outlook Forum, where USDA updates its projections for the upcoming crop. The projections are not survey-based, but based upon weather forecasts, price trends, etc.The first survey-based report will be the Prospective Plantings report released on March 31. They projected a trendline yield of 181.5 bushels per acre as the drought in the mid-west has eased over the winter. Total production is estimated to be 15.085 billion bushels. The average on-farm price for the 2023 crop is estimated to come in at $5.60, down $1.10 from the 2022 crop. Carryout is projected to be 1.887 billion bushels. Export inspections for the week ending Feb. 23 were only 22.5 million bushels. That was down slightly from the previous week and significantly from the year go total of 61.2 million bushels. Cumulative marketing year export inspections are down 38.3% from a year ago. Technically, old-crop May has support at the December low of $6.36¾. Below that, there is little support above the $6 level. New-crop December is in position to test support near $5.60 after falling through previous support at $5.75 earlier in the week.

USDA pegged cotton seedings at 10.9 million acres, reflecting an expected shift away from cotton and into corn throughout the Mid-South. That estimate is not survey-based, though. The National Cotton Council recently released the results of its 2023 grower survey, which revealed that farmers intend to plant 11.2 million acres of upland cotton. That’s down 17.3% from 2022, but significantly higher than the USDA estimate. Arkansas farmers reported planting intentions are down 17.7% from last year. It is worth noting, though, that with a more average abandonment rate, the 2023 crop could still be bigger than the crop in 2022, which saw sharply higher abandoned acres. The market reacted sharply to the initial USDA numbers, and the weekly export report, which showed 425,300 bales sold. That was up 97% from the prior four-week average. The upside has been limited, however, and December has resistance at 85¢ and at 87¢. 

Rice futures have charted significant losses in recent weeks, taking over $1.50 off the market in short order before retracing a portion of those losses early this week. For the 2023/24 outlook, USDA pegged acreage at 2.5 million, up close to 13% from the previous year. All rice production is projected to be 185 million hundredweight, up 15%. Average yields were estimated to be 2% higher than last year at 7,523 lb/acre. The all-rice season average farm price for 2023/24 is projected to be down $1 from 2022/23 at $18.40/cwt. Soft export demand and expectations of a larger crop have resulted in the recent weakness. There has been some support from firm Asian prices.

Soybean futures are under pressure as Brazil harvests a big crop. Strength in the dollar has also been a negative as it makes U.S. commodities less competitive. USDA has pegged soybean seedings at 87.5 million acres, which is unchanged from last year but over a million acres below average trade guesses. Total production for 2023/24 is projected to be 4.5 billion bushels, up 5% from a year earlier, mostly due to a yield forecast of 52 bu/acre. Soybean crush is projected to set a record at 2.31 billion bushels, supported by meal demand growth and high prices for biofuel feedstocks in the U.S. Ending stocks for 2023/24 are projected to be 290 million bushels, up 65 million from the 2022/23 forecast. The season average farm price is projected to be $12.90/bushel. Technically, May futures have broken out of their up-trend and are in position to test support around $14.70. December has also violated the up-trend and has support just above $13.30.

Live cattle futures continue to trend higher. Strength in the cash cattle market has been supportive. The February Cattle-on-Feed report was also supportive, pegging the Feb. 1 feedlot inventory at 95.9% of the year ago total. Both the Feb. 1 inventory and the January placement totals were at the low end of trade expectations, while January marketings were at the high end of expectations. That all combines to underscore the relatively tight cattle supply outlook. Technically, the June contract charted a bearish reversal late last week, but there has been very little follow-through selling. A close below $160 would signal further losses, though.

Hog futures are under pressure from weak pork prices and packer margins. Some seasonal strength should come into play soon, though. June futures have established resistance at $106, and looks to be headed for a retest of support at $98.57½.