Cotton
Harvest pressure and weak demand continue to limit the upside potential of the cotton market. In the October Supply and Demand report, USDA lowered the cotton production estimate to 14.201 million bales and cut the export projection by 300,000 bales. The net result was an increase in projected carryout, which is expected to be 4.1 million bales. Farmers have harvested 34% of the crop across the U.S., while Arkansas farmers have harvested 52% of the crop at home. Georgia saw significant yield and quality losses from Hurricane Helene, but the market hasn’t reacted much as Texas raises most of the cotton in the country. Nearby resistance is at 75 cents for December and 76 cents for March. The USDA projected on-farm price was unchanged from the September report at 66 cents/lb.
Rice
The rice harvest is winding down, with 91% of the U.S. crop and 95% of the Arkansas crop now in the bins. Futures remain in a mostly sideways trading pattern as harvest pressure and weak export demand continue to weigh on the market. November is testing support at $15 and a close below that level would suggest another leg down, with additional support near $14.70 and the July low of $14.43. In the October Supply and Demand report, USDA increased its average yield estimate, resulting in a slight increase in production which is now pegged at 219.8 million cwt. With demand forecasts unchanged, that increase carried through directly to ending stocks, now forecast to be 45.7 million cwt, up 16% from the previous year. The average on-farm price for long grain was unchanged at $14.50/cwt.
Corn
December corn prices have been trending lower over the past few weeks, recently touching fresh lows for the month and falling below key support at the 50-day moving average. The current contract has now retraced 50% of the gains from the rally that began on Aug. 27th and is nearing critical technical support at the $4.00 level. Meanwhile, the harvest is progressing at a rapid pace, causing some farmers to sell their bushels immediately in order to free up bin space. Beyond the usual harvest pressure, both basis levels and spreads suggest that the futures market might be getting ahead of itself.
For example, the December through March corn spread, which was trading at 17½ cents last Friday, tightened to 15½ cents by Wednesday morning. In addition, U.S. average basis levels have firmed slightly over the past week, now sitting at 32 under the December contract. This suggests that, while harvest pressure remains a factor, there may be some signs of stabilization in the market.
Soybean
November soybeans have posted losses in 11 of the past 12 trading sessions, dropping nearly 7% from a two-month intraday high of $10.69 on Sept. 30. The rapid pace of the U.S. harvest, coupled with improved rainfall forecasts for drought-affected areas in Brazil, has been the primary driver of this downward trend. The November contract recently fell below key support at the 50-day moving average and dipped under the $10.00 mark. However, prices saw a slight rebound as the significant drop in futures prices seems to be encouraging demand. Basis levels at both the Gulf and Pacific Northwest surged ahead of this uptick, amid rumors of increased soybean trade with China. This renewed demand may help stabilize prices in the near term, despite the continued pressure from the harvest and favorable weather conditions in South America
Forestry
Compared to the previous quarter, timber markets showed little movement in the third quarter. Pine pulp prices, which had risen significantly from $0.50-$1.00/ton in the first quarter to $2.00/ton in the second quarter, remained steady. Miscellaneous products, which increased from $30-$33/ton to $35/ton last quarter, saw no significant changes. In the southwest, pine logs, which had dropped from $23-$24/ton to $20/ton, remained stable, while pine pulp held steady at $2.00/ton. Oak logs stayed at $68/ton, and hardwood pulp maintained its price at $10/ton. These price movements suggest continued stability in the market, following the increases and demand seen earlier in the year.
Livestock and Poultry
In the October Supply and Demand report, beef production estimates were raised on higher cattle slaughter and heavier dressed weights for the remainder of the year. Pork, broiler and turkey production were all reduced on lower slaughter rates. Beef imports are expected to rise while export forecasts were lowered for the remainder of 2024. Cattle, hog, and broiler price forecasts were raised based upon strong prices in September and strong demand. Cattle futures have seen some weakness this week after moving to new three-month highs on Monday. The December contract has resistance in the $188 area and the market is technically overbought and was due a correction.