Market Briefs | May 10, 2023

Rice planting continues to move along with, 72% of the crop being planted for this year. This is 9% more than last week, last year, and the five-year average. Arkansas is reporting that 79% of its crop has been planted, 11% more than last week and 16% ahead of the five-year average. Technically, July is trending sharply higher. However, the market could be running out of steam with prices above $18. If the bears succeed in pushing the market below that level, there isn’t much support above the $17 level. September futures, however, are trading is a sideways pattern just below resistance near $15.50.

The roller-coaster ride in cotton futures continues. Daily movement has seen some wide swings. This week has seen sharp gains, only for futures to be stopped cold by trendline resistance drawn off the January high. For July, that resistance is near 85¢ and new-crop December it’s near 84¢. Recent strength in the dollar continues to have a negative impact on demand, but last week’s export sales totals were a bright spot in the market. Cotton planting has reached 22% completion for 2023, a 7% increase from last week and 1% behind last year’s progress and the five-year average. Arkansas has planted 30% of its cotton crop, ahead of the five-year average of 21%. The market continues to watch the weather in west Texas, as conditions there remain dry. Combined with reduced acres in the mid-south, a short crop in Texas could have a big impact on the market this fall.

Farmers have made impressive progress in recent weeks, according to USDA. The May 8 progress report indicates 49% of intended acres are now seeded. That is up from 26% the week prior, and well ahead of the five-year average of 42%. In Iowa, farmers planted 40% of the crop last week. They are now 70% planted compared with a five-year average of 53%. This kind of progress has not been favorable for futures prices. New-crop December charted a bullish reversal last week, and it looked like the market was trying to establish support at that low of $5.12. The market then found resistance at $5.37 two days in a row and is again testing support at $5.12. Failure to hold that support would negate the bullish chart signal and suggest that further losses are possible. Market focus will shift to the supply/demand report at the end of the week. Pre-report estimates are predicting an increase in ending stocks for both the 2022/23 and the 2023/24 marketing year. 

Soybean farmers have also taken advantage of good weather and have seeded 35% of planned acres, an increase of 16% from last week and 24% from last year. We are now well ahead of the five-year average of 21%. In Arkansas, 58% of the crop is in the ground, which is 22% higher than last year and 24% higher than the five-year average of 34%. Just like corn, planting progress and good weather continues to weigh on soybean prices. New-crop November is testing support at the low of $12.47½. Weakness has carried over into the product markets as well, with both oil and meal posting sharp losses this week.The supply/demand report is expected to show a significant increase in the 2023/24 carryout, adding to the negartive undertone. 

July wheat futures charted a bullish reversal last week, signaling that the market has finally found its low at $6.03 ¾. However, the market has found some resistance at $6.70. Carryover weakness from other markets is affecting wheat futures. USDA is reporting 59% of the Arkansas wheat crop is in good to excellent shape while only 7% is very poor to poor. Nationwide, only 29% of the crop is in good to excellent shape while 44% is poor to very poor. 

June hog futures have moved to new contract lows after charting a bearish reversal last week. As future’s premium over cash prices narrows, selling interest will likely diminish. Stronger wholesale pork prices this week has helped the market find some support. On Tuesday of this week, June charted a bullish outside day, potentially establishing support at the low of $82.72½. 

Live cattle futures look to have charted a significant top in mid-April. Follow-through selling has been somewhat limited, with June moving higher after finding some support around $161.50. Weaker cash trade and general concerns about the U.S. economy are contributing to the negative undertone. A recent rally in wholesale beef values has slowed, and packer demand is expected to be slower in the coming week.