Market Briefs | November 10, 2023

Rice futures have been under some pressure the last few days. General concerns about food security have underpinned the market, but Asian prices have declined as perhaps those fears have lessened for the time being. Weekly rice exports were impressive last week, with USDA reporting 93,500 metric tons, which is 78% higher than the previous four-week average. The majority of the rice went to Mexico and Colombia — the result of free trade agreements with those countries. Under the agreement with Colombia, the TRQ auction held in October was successful, with the entire available quota of 19,790 metric tons sold to exporters. The January contract has overhead resistance at $16.60 and is building some support around $15.80.

Cotton futures have fallen to new four-month lows. Harvest pressure is certainly a factor, with 57% of the crop out of the field. Disappointing export demand has also been a factor. Last week was the exception, though, with a marketing-year high of 457,100 bales sold to China and other foreign buyers. Recent weakness in the dollar is likely having a positive impact on cotton exports as U.S. cotton becomes more competitive. December has violated support at the June low, which means there is little technical support on the chart above 74.25 cents. March does still have support at the June low near 77 cents.

The soybean market faced the impact of potential planting delays in South America due to spotty weather conditions. The uncertainty surrounding planting progress in key soybean-producing regions like Brazil and Argentina added an element of volatility to soybean prices. China’s import volumes also played a role in shaping the market, as imports surged significantly compared to the previous year. However, U.S. exporters faced competition as Brazil, with surplus soybean stocks, was a primary supplier to China. This shift in import dynamics had implications for the soybean market. Furthermore, the anticipation of tight U.S. soybean supplies in the 2023-24 season, as reflected in USDA expectations, provided underlying support for soybean prices. Overall, the soybean market’s movements were influenced by a combination of factors, including export demand, weather-related planting concerns, changing import dynamics, and supply expectations.

Corn prices remained steady, failing to sustain an earlier rally. Key factors impacting the market included Brazil’s 66% planting progress for its first corn crop and the Ukrainian Grain Association’s raised production forecast, exceeding USDA export estimates. U.S. export inspections were in line with expectations, and year-to-date inspections surpassed the USDA forecast. Money managers extended their short position to over 144,000 contracts. However, 81% of the U.S. corn harvest had been completed, with some states lagging due to challenging weather conditions. The WASDE report is expected to maintain the corn-crop estimate at 15.0 billion bushels, with U.S. ending stocks above 2.1 billion bushels, weighing on corn prices. In South America, weather conditions in Brazil and Argentina influenced the market. The corn market experienced fluctuations driven by factors like a stronger dollar and easing oil prices, following a recent rally. Despite progress in corn harvest, challenges in the Upper Midwest and reduced grain quality affected prices, with certain states facing slow harvest conditions. The corn market awaited fresh news to guide price movements.

Wheat prices saw mixed movements driven by various factors. The USDA’s Crop Progress report revealed a surprising 3% weekly increase in wheat condition ratings, leading to bearish sentiment as global demand remains satisfied by rapid Russian exports. Ukraine’s winter crops were successfully planted and are in good shape, providing stability to the market. In the U.S., winter wheat conditions improved by 3% due to rains in the Southern Plains, surpassing analyst expectations. This positive development is favorable for 2024 wheat production, particularly in areas affected by drought in recent years. Additionally, the market faced challenges as U.S. export inspections hit a multi-year low, down 27% from the previous year. Saudi Arabia’s purchase of 710k mt of wheat from outside the kingdom, likely from Russian and Ukrainian sources, added to the dynamics. The upcoming WASDE report is anticipated to provide insights into international estimates, particularly regarding Russia’s wheat production. While prices fluctuated, factors like improved crop conditions, global demand, and export figures played pivotal roles in shaping the wheat market’s direction.

The rebound in hog futures continues after the February contract charted a key reversal and broke through downtrending resistance. The October low looks like a major bottom at this point, but the market is struggling to break through resistance at $78. From a fundamental perspective, ample hog supplies and expectations for higher production in 2024 will limit the upside potential.

The February live cattle chart looks extremely bearish at this point. The market gapped lower on Oct. 23, but a failed attempt to close that gap between $186.60 and $187.52 has resulted in another leg down as prices fell to new five-month lows.