Market Briefs | October 25, 2023

Cotton futures remain under pressure, with most-active December moving to new three-month lows. The harvest is progressing on target with the 5-year average pace, with 41% of the crop harvested. Arkansas farmers are ahead of schedule, with 44% of the crop out, compared to a 5-year average of 30%. The west Texas harvest has been delayed by rainy weather this week. Those rains are needed in the long-term, but currently are hurting the quality of an already poor crop. Currently, 66% of the cotton there is rated poor to very poor. The size of the crop, however, has been built into prices for the past few months, and the market is more focused on the demand side of the equation. Export sales continue to be disappointing. China has been purchasing from Australia and Brazil as recent strength in the dollar makes U.S. cotton less competitive. December is building support around 82¢ currently, and resistance at the September high of 89.89¢ looks like the top for now.

The rice harvest is virtually complete everywhere but California. Yield reports in Arkansas are impressive but milling yield reports have been disappointing. Trading volume has been elevated as traders roll out of November and into the January contract, which is now the most active contract. November is bumping against resistance at $16.20, while January has resistance at $16.60. Support begins at $15.60 for November and $16 for January. 

In the Crop Progress report released on Monday, soybean harvest rates fell slightly short of market expectations, giving a boost to soybean prices earlier this week. Across the Heartland, widespread rain showers are anticipated until the week’s end, potentially slowing down the harvesting process for the remaining 24% of soybeans in the fields. Favorable rain forecasts in Brazil have kept grain prices in check this week, with Brazilian planting progress in line with the 5-year average, although it lags behind the past two years due to dry conditions in key areas of the country. 

Steady progress in corn harvest initially pushed down corn futures earlier in the week. However, harvest activities in the Midwest decelerated due to rain and the season’s first significant snowfall. Rains expected in Brazil later this week and recent precipitation in Argentina have also had a dampening effect on global corn prices, as the improved growing conditions raise production expectations for both South American nations. The USDA’s Crop Progress report indicated that more than half of the projected U.S. corn acres have already been harvested. 

A stronger U.S. dollar and substantial rainfall in Argentina over the weekend have alleviated concerns about global wheat supplies, resulting in price declines. Ukraine’s humanitarian corridor in the Black Sea region has successfully shipped around 700,000 metric tonnes of grain, equivalent to roughly 22 million bushels of wheat, in the past few months. The news of sustained Ukrainian grain shipments, coupled with robust Russian wheat exports, has further fueled bearish sentiment in the global wheat markets earlier this week. Meanwhile, winter wheat planting continues across the United States, with 77% of the expected 2024 winter wheat crops already in the ground as of the week ending Oct. 22. However, Arkansas is trailing behind, having planted only 37% of its projected crop, which is 5% below its 5-year average. 

Live cattle futures have plummeted lower this week. Friday’s Cattle on Feed report showed 11.6 million head on feed, the second-highest Oct. 1 total since 1996. Placements during September totaled 2.21 million head, up 6% from 2022. December futures gapped lower on Monday and could retest support at $175.85. February is trading at 4-month lows and testing support at $180. Feeder cattle followed lower, with January moving to 4-month lows and testing support at $237.

Live hog futures remain in a sharply down trend. December futures fell through previous support last week and to new 12-month lows. There is little chart support in sight, beyond the lows set last week, which is $65.40 for December. Seasonal increases in supplies are impacting the market, and demand has also been disappointing. This week’s cold storage report, released on Wednesday, will give the market an indication of how pork is moving through marketing channels.