Market Briefs | May 29, 2024

After reaching a four-month high in mid-May, corn prices fell below $4.70 on the September 2024 contract. Support for the September and December 2024 contracts appears to be at the 50-day moving averages of $4.62 and $4.76, respectively. Last week’s price increase, driven by higher wheat prices and weather news, has lost momentum. However, potential support for corn prices could come from the Corn Belt’s expected rainfall, which might prevent corn plantings from reaching 90 million acres in 2024. Notably, corn prices typically rally in May and June, often peaking in the third week of June.

November soybeans have dropped from their highest price in five months due to concerns that plantings may exceed the USDA’s early estimate of 86.5 million acres. Nearby support remains at $12, while resistance is around the 200-day moving average of $12.29. Despite a bearish sentiment among traders, the trend for November soybeans is still upward. Planting progress shows soybeans at 68%, which is 5% above the five-year average, with Arkansas and Mississippi leading at 88% and 92% planted, respectively. A warmer, drier outlook for Brazil will allow farmers to finish their harvest and better evaluate production losses from recent flooding.

Chicago and Kansas City July 2024 contracts both reached nine-month highs before pulling back. Nearby support for July 2024 is at last week’s low of $6.82. Concerns about dry wheat conditions in Ukraine and southern Russia continue to support prices. The International Grains Council forecasts a 6% decline in Russia’s wheat output this year. Meanwhile, U.S. wheat stocks are expected to increase for the second consecutive year, up 11% from last year and reaching a four-year high. Wheat exports are projected to total 775 million bushels, an increase of 55 million bushels and the largest in three years, as U.S. prices are expected to be more competitive globally. The season average farm price is estimated at $6, down $1.10 from the previous season. Wheat condition ratings fell by one point to 48% good to excellent, still the best since 2021.

This week’s crop progress report shows rice conditions continue to be strong, with 80% of the crop rated as “good/excellent” and only 3% as “poor/very poor,” a slight downgrade from the previous week. In Arkansas, 78% of the crop is rated “good/excellent.” The September rice chart has pulled back slightly after reaching a recent high of $15.80, which now acts as resistance. On Wednesday morning, the chart gapped lower, touching the 20-day moving average. If support holds at this level, prices are likely to fill the gap most of the time.

Cotton prices have seen positive movement over the past week due to fund short covering and active U.S. cotton purchases by China. After hitting an 18-month low of 73.75 on May 15, the December 2024 contract increased its trading limit from 300 to 400 points last week and is now approaching 80 cents, which appears to be resistance. Some traders believe prices are moderately overbought, while others are looking to book profits as the month ends. Crop progress is better this year, with 59% of the crop planted, 3% more than last year at this time and 2% above the five-year average. In Arkansas, 86% of the crop has been planted, 4% lower than last year but 4% above the five-year average.

Last week, July hogs fell below the 0.618 retracement of their rally and the 200-day moving average, marking bearish technical action. As future prices cannot find sufficient buying interest to support the market. However, traders may hesitate to push prices lower after four consecutive weeks of decline. The Commitments of Traders report showed managed money traders reduced their net long positions by 12,631 contracts to 43,497, the lowest since Feb. 13. The Cattle on Feed report was neutral, with numbers aligning with expectations. New bird flu concerns arose as USDA detected virus particles in a slaughtered dairy cow, preventing affected meat from entering the food supply. However, strong demand should keep packers aggressive with slaughter and buying in the country. This will give feedlots confidence to hold for higher cash again this week. Cash live cattle prices ended last week about $2/cwt higher, with a five-day, five-area weighted average price of $190.24, up from $188.31.