Market Briefs | September 27, 2023

PUBLISHED September 27, 2023

The soybean market seems to have found support above the Aug. 23 low of $12.82¼. Resistance is currently at the 100-day moving average, which is at $13.05 ¾. AgRural’s report indicates that Brazilian soybean plantings have reached nearly 2%, a slight increase from the same time last year. Export inspections totaled 18 million bushels, meeting expectations. Year-to-date inspections have reached 47 million bushels, showing a 6.5% increase from last year, contrary to the USDA’s forecast of a 10% decrease. Last week, money managers sold around 28,000 soybean contracts, reducing their long position to 45,832 contracts, the smallest in over three months. Additionally, the USDA lowered soybean condition ratings by 2% for the week, now at 52% in the good to excellent category through Sunday. This was unexpected, as market analysts had anticipated the USDA would keep soybean ratings unchanged.

December corn futures are trying to reach last week’s high of $4.83. The next resistance levels are the current month’s high of $4.90¼ and then the 50-day moving average at $4.98. Recent rains caused delays in harvesting across much of the central Midwest. However, better progress may have been made in the southwestern and eastern corn belts. The USDA announced the sale of 1.661 thousand metric tons (equivalent to 65.5 million bushels) of corn to Mexico. Out of this, 41.5 million bushels are for the current 2023/24 marketing year, and 24 million bushels are for 2024/25. In the latest CFTC report from Friday, money managers sold an additional 10,000 corn contracts, increasing their short position to nearly 145,000 contracts. This is their largest short position since August 2020. As of the week ending Sept. 24, 15% of corn acres have been harvested, marking a 6% increase from the previous week.

The rice harvest is progressing well ahead of schedule. Nationwide, 66% of the crop is harvested compared with a five-year average of 59%. At home in Arkansas, 70% of the crop is in the bins, a full 10% ahead of the five-year average. November futures are holding up pretty well considering the overall bearish fundamental situation in the U.S. In the September reports, USDA raised its crop estimate to 220.9 million cwt, up from 203.6 million in August. Large increases were seen in both acreage, yield, and stocks and resulted in a big increase in all-rice ending stocks. Concerns about global supplies, particularly in Asia, are supporting the market. Export bans from India have driven prices higher, and that makes the U.S. more competitive in the global market. November futures have established support at $15.60, and resistance begins at $16.37. Ultimately, the recent high of $16.87½ could prove tough to challenge, especially as harvest winds down. 

Cotton futures are dealing with a mixed bag of fundamental factors influencing the market. In the negative column, a stronger dollar, which made a new six-month high last week, is impacting cotton’s ability to be competitive and disappointing export demand is the result. Sales last week were only 105,800 bales, which is low but up 67% from the four-week average, really illustrating how slow this market is right now. Traders are worried about the condition and yield potential of the crop in West Texas, where 24% of the crop has been harvested and only 10% of the remaining crop is in good to excellent condition. In Arkansas, 71% of the crop is rated good to excellent. From a technical perspective, December has support near 85¢ and resistance at the recent high of 90¢.

The December 2023 wheat contract prices are holding above support at $5.70. It’s likely that any price increase will be limited to this month’s high of $6.07½ before Friday’s report. Export inspections for wheat were in line with expectations, totaling 16.5 million bushels. Year-to-date inspections stand at 207 million bushels, showing a 28% decrease from last year, contrary to the USDA’s forecast of an 8% decrease. India’s food secretary reassured they have enough wheat supplies to prevent shortages and mentioned the government might sell additional wheat in the open market to control domestic prices. Russian wheat prices remained stable FOB late last week at $235 per metric ton, unchanged from the previous week. 

Live cattle futures have lacked direction over the past few sessions. The failure of October to challenge resistance at $187.30 prompted the market to chart a bearish key reversal. Follow-through selling has been somewhat limited so far. Support will begin at $182.50, with additional support at $177.50. October feeders are looking toppy. The market could move to retest support as $247.50. The September Cattle on Feed report showed placements at 95% of a year ago, within expectations. Total inventories are 98% of the year-ago total. 

October hog futures are under pressure after surging to new four-week highs last week. The market has found support near $81. The Quarterly Hogs and Pigs report is expected to show further herd liquidation as a 9.6% increase in summer slaughter totals has already been reported.