Market Briefs | March 29, 2023

Corn futures have been supported in recent weeks by renewed buying from China. In mid-March, China purchased over 80 million bushels during a four-day buying spree. However, weekly export commitments are still far below the five-year average and down 34% when compared to this date last year. Uncertainty regarding the South American crop is also weighing on the market. Argentina has received some rain, but it might have been too late to improve yields. Brazil’s weather has been more beneficial, and the crop there is still expected to be large, if not exactly a bin-buster. Slow movement in the country has resulted in higher old-crop futures. May needs to close above $6.50 to suggest further gains are possible. New-crop futures have not seen the same strength but are trying to build some upward momentum. December has resistance at $5.75. Corn seeding is just getting started-the deep south has made significant progress, with south Arkansas already seeing some activity despite wet conditions. On Friday, USDA will release its Quarterly Grain Stocks report and the first survey-based planting intentions report. Expectations are for a large corn crop, and that will likely keep a lid on prices for the time being.
Cotton futures have posted solid gains this week, with some contracts closing limit-up. Traders are reacting to pre-report estimates ahead of Friday’s planting intentions report. The average guess-timate is 11 million acres, within a range of 11.5-12.7 million, down from 13.8 million last year. A weaker dollar and improved export demand have also been supportive. USDA pegged the crop at 10.9 million acres in February, while in the National Cotton Council’s annual survey, farmers reported intentions of 11.4 million acres. 

Rice futures have been building some upward momentum, building on support at recent lows. May futures are trading at their highest level in four-weeks, but have found resistance at $18. New-crop September achieved an upside objective of closing the downward chart gap left on March 7 between $15.95 and $15.90, but has been unable to challenge the $16 mark. Pre-report estimates have pegged the rice crop at 2.5 million acres, with a range of 2.2-2.9 million. If realized, 2.5 million acres would be up 13% from the 2022 rice crop. Cool, wet conditions in the Mid-South mean the crop is off to a slow start in Arkansas, but it’s still early. USDA will begin releasing Weekly Crop Progress reports the first week of April.

Soybean futures have been locked in a sharp down-trend for the past couple of weeks. The market does seem to have found its bottom and has posted solid gains this week. Support for May is now at that low of $14.05, while November support is at $12.47. The selloff seems to be the result of the old adage “high prices cure high prices.” Demand has deteriorated due to high prices while those high prices encouraged producers in Brazil to plant a big crop. That means there will be lots of competition on the export market during this marketing year. The rebound this week is mostly due to technical buying as the market had become technically oversold. There could be some position evening ahead of Friday’s reports as well. In February, USDA estimated no change in soybean acres when compared with 2022, but there is still plenty of time for farmers to change course. 

Live cattle futures have been under pressure as general concerns about the economy and the potential impacts on demand sparked a selloff. The market has found strength in recent days, however, from firm cash markets. The October contract has posted sharp gains and closed a downward chart gap left on March 13 between $163.17 and $162.90. Cattle market fundamentals remain supportive for prices. The March Cattle on Feed report again confirmed that supplies in US feedlots continue to decline from 2022. February market the sixth-straight month of declining feedlot placements. 

June hog futures are attempting to recover after a selloff that took $16 off the market in the span of about seven trading days. The spike low of $87.80 should provide support. The market is oversold and there isn’t a lot of nearby resistance, which could help a potential recovery. 

In the March supply/demand report, USDA raised its forecast for 2023 milk production on a larger cow inventory. Import estimates were also raised, while export projections were reduced. The Class III price projections were lowered, while Class IV prices are projected higher. The all-milk price is projected lower at $20.45 per cwt.