Market Briefs | May 15, 2024

Planting progress is still significantly ahead of the average pace, despite heavy rains in recent weeks. Arkansas farmers have planted 94% of intended acres, compared to a 5-year average of 72%. As of May 12, 75% of the state crop was rated good to excellent. The first WASDE estimates for the 2024/25 marketing year saw U.S. beginning stocks lowered to 40.8 million cwt. However, carryout is expected to grow to 45.5 million cwt. by the end of the 2024/25 marketing year. July is now the lead contract, and trading has been volatile as traders rolled positions out of expiring May. The market has run into resistance at $19.50 and has support at $18.25. New-crop September futures charted a bearish reversal on Monday, but that signal was negated on Tuesday when the market finally closed above previous resistance of $15.50. The market will now need to close above $15.60 to suggest further gains are possible.

Cotton futures have resumed their decline after a brief bounce last week. Both old-and-new crop contracts are trading at 18-month lows. Demand has been soft for some time, and recent declines in crude oil prices mean synthetic fibers will be cheaper competition for cotton. The dollar has also lost value, though, and that could bolster demand a bit. The cotton crop was 33% planted nationwide on May 12, on pace with the 5-year average. However, heavy rains across much of the south could delay further planting. Drought conditions through West Texas are also intensifying again after some respite earlier in the year. December futures are currently testing support just above 74 cents. The market will find resistance between 76 and 78 cents on an upswing. 

Sep24 and Dec24 both reached a new four-month high before retracing. Resistance levels for September and December are now at $4.99 and $5.05 respectively. U.S. planting progress stands at 49%, in line with expectations but behind last year’s pace of 60% and the five-year average of 54%. Given the current forecast, traders will normally be looking for the bulk of U.S. corn being planted by the end of May, which doesn’t look likely. Nonetheless, the upward trend in September and December corn prices persists. The USDA’s May WASDE report projects a 3% decline in U.S. corn production from last year, while total supplies are anticipated to reach highs not seen since 2017/18. World corn production is expected to decrease from last year’s record levels.

Nov24 soybeans continue to find support, holding above $12.00 per bushel. U.S. planting progress has only advanced by 10% since last week, reaching 35% completion. This falls slightly below expectations but aligns with the five-year average. Notably, Arkansas reports significant progress, with 76% of the soybean crop planted, marking an 11% increase from last week, 9% higher than last year, and 30% above the five-year average. The May supply and demand report forecasts a 4.45 billion bushel increase in U.S. soybeans, attributed to expanded planted areas and trend yield. Global production is on the rise, led by increases in South America, the U.S., and South Africa.

Jul24 Chicago wheat recently reached a fresh nine-month high but struggled to surpass $7.00, indicating resistance at that level. Support remains steady at $6.66. Winter wheat ratings remain stable at 50% Good to Excellent (G/E), significantly higher than the 29% G/E reported a year ago, marking the highest ratings since 2020. Currently, 57% of the crop is headed, surpassing last year’s 46% and the five-year average of 44%. The May WASDE report raises expectations for larger supplies in the U.S., projecting a 6% increase from the previous year, driven by a 3% rise in production and slightly higher yields. Globally, wheat supplies are expected to decrease due to reduced carry-in stocks despite higher production.

Livestock, Poultry and Dairy
In the first monthly WASDE providing estimates for the 2024/25 marketing year, USDA has estimated lower beef production for 2025. This is due to tighter cattle supplies and increased heifer and cow retention. Pork production is forecast to increase on growth in pigs per litter. Broiler and turkey production are expected to increase on lower feed costs and as the industry recovers from HPAI. 

The 2024 milk production forecast was raised on an increase in dairy cows and more rapid growth in output per cow. The Class III and Class IV price forecasts were lowered. The all-milk price is forecast at $20.90/cwt.