Market Briefs | October 11, 2023

Rice harvest in the Midsouth is winding down. Arkansas farmers have 89% of the crop in the bins. Yield reports are impressive, but milling yields are reportedly disappointing. Harvest pressure has limited the upside for futures prices but concerns about global rice supplies are providing underlying support. Indonesia has announced plans to import an additional 1.5 million metric tons as drought has impacted its harvest. That brings its total imports to 3.5 million metric tons. U.S. prices remain favorable and export sales have been steady in recent weeks. Nearby November futures are underpinned by support at $15.60. The upside target for bulls is the recent high of $16.37. 

Both December and March cotton futures continue to trade between support at 85¢ and resistance at 90¢. The bulls are focused on the state of the U.S. crop-particularly in Texas. Nationwide, 25% of the crop has been harvested. In Arkansas and Texas, that total is 32%. The difference comes in the condition of the respective crops. While 65% of the remaining crop in Arkansas is rated good to excellent, in Texas only 15% is in good to excellent condition. Recent losses in crude oil prices are creating competition from cheaper synthetic fabrics. Brazil is now estimating its 2023/24 cotton crop will be 3.002 MMT, down slightly from last year, but will still provide competition in international markets.

November 2023 soybeans prices hit a new four-month low before making a recovery. The next support level to watch for is at $12.45. The progress of the soybean harvest has been impressive, surging from 23% completion last week to 43% by Sunday. This pace surpasses both the 2022 mark of 41% and the five-year average of 37%. However, there was a slight dip in the condition of the soybean crop, with 51% still rated as being in good to excellent condition. Surprisingly, soybean export inspections exceeded expectations, reaching 60.4 million bushels last week, far surpassing the trade estimates that ranged from 18.4 million to 30.3 million bushels. The majority of these exports, amounting to 52.0 million bushels, are destined for China.

Throughout the week, December 2023 corn futures have closely tracked its 50-day moving average at $4.86. The U.S. corn harvest has progressed favorably, with the completion rate moving from 23% last week to 34% by Sunday, aligning with analyst predictions. This season’s progress outpaces both the 2022 figure of 29% and the five-year average of 31%. Corn quality ratings have remained steady with 53% of the crop maintaining a good-to-excellent condition. However, corn export inspections for the week ending Oct. 5 reached only 21.7 million bushels, a moderate decline from the previous week and at the lower end of the trade’s estimated range, which spanned from 21.7 million to 36.4 million bushels.

Despite recent declines in trade, wheat prices are holding steady above recent lows. The presence of rain in Southern Brazil is expected to lead to reduced wheat production and lower grain quality. The planting progress for winter wheat has advanced from 40% a week ago to 57% by Sunday, slightly exceeding the average trade estimate of 56% and in line with the previous five-year average. As of now, 29% of this season’s wheat crop has emerged, up from 15% the previous week but slightly behind the prior five-year average of 30%. Wheat export inspections for the week fell within the range of analyst estimates, reaching 14.5 million bushels.

Live cattle futures continue to be under pressure from fundamental factors like poor packer margins, demand concerns, and weak packer margins. Technically, December futures have broken through the long-term uptrend drawn off the May low. Selling interest has been limited so far, but there appears to be downside risk to support at $182. Feeder futures have clearly put in a top, and November is now testing support near $247.50. The general trend of smaller U.S. cattle supplies could help underpin the market.

The USDA Hogs and Pigs report released at the end of September provided a bearish surprise. The Sept. 1 hog herd and market hog inventory were above a year earlier. Despite the breeding herd coming in at 98.8% of the total last year and the smallest since 2016, the number of pigs per litter set a new record at 11.61, 104.3% of the previous year. However, strong weekly export sales and continued low-market weights gave the market some support. December hogs have support at $68.