Market Briefs | January 10, 2025

Corn
Corn prices have rallied in recent weeks but remain mixed on a day-to-day basis, offering little clarity on market direction. Export demand appears to be losing momentum, and expectations for substantial South American crops are weighing on the market. Sideways trading may persist as traders await Friday's USDA report. Early weakness in prices can be attributed to profit-taking ahead of the report and some hedge selling as March futures approach resistance at $4.60. Caution may be warranted due to the significant growth in speculative long positions, which have shifted sharply from the heavily short positions held earlier this summer. Ahead of the WASDE report, analysts anticipate a 0.5 bushel per acre reduction in yield estimates, translating to a 51-million-bushel drop in production. This report will also provide the USDA's final estimates for 2024 U.S. corn and soybean crops.

Soybeans
Soybean prices have experienced volatility, with futures recently recovering from double-digit losses. Early price weakness was linked to the upcoming central Brazilian harvest and concerns about large global ending stocks, as reflected in the forthcoming WASDE report. However, weather forecasts indicating warmer and drier conditions in southern Brazil and much of Argentina are providing price support. Analysts expect the USDA to slightly lower its 2024 soybean production estimate by approximately 8 million bushels, bringing the total to 4.453 billion bushels. Despite this adjustment, production would still be 7% higher than the 2023 crop, making it the second-largest U.S. harvest on record.

Wheat
Wheat futures have faced downward pressure in recent weeks due to a stronger dollar and declining export activity. However, concerns about reduced supply from Russia, the world's top wheat exporter, are offering some support. In the U.S., the condition of the Plains winter wheat crop has been downgraded, which also lends some price support. Arkansas reports 52% of its wheat crop is in good to excellent condition, with only 4% rated as poor. Top wheat-producing states, including Kansas and Oklahoma, have seen crop conditions decline to 47% and 45% good to excellent, respectively.

Rice
Rice futures plummeted in late December, moving to new contract lows and a new three-year low on a front-month basis. The nearby January contract is now attempting to stabilize but has so far been unable to move above resistance at the key $14 level. Export sales have been disappointing as world supplies remain ample. We are still seeing the impact of India's months-long export ban and now the lifting of that ban as their supplies hit the market and depress prices. Brazil has increased rice acreage and produced a big crop, creating further competition on the world market. USDA will release its final 2024 production estimates, grain stocks, and updated Supply and Demand balance sheets on Jan. 10. It will be another 45 days until the first 2025 production estimates are released. If prices don't recover, we could see reduced acreage.

Cotton
Cotton futures continue to trend lower and test the contract lows. The March contract is building support at 67.5 cents, while new crop December has support at 68.81 cents. Disappointing export sales are the biggest factor currently, as sales lag behind the pace necessary to meet current USDA projections. The dollar remains strong, which doesn't help our exports, and China is not currently an active buyer as they have ample domestic supplies. As with rice, we could see significant cuts in acreage at these price levels.

Cattle
Cattle futures remain in an uptrend, with prices surging higher during the holidays. February live cattle set a new all-time high of $196 last week. Strong wholesale beef prices are supportive, but the biggest factor is the relatively tight supply of U.S. cattle. Imports from Mexico are still suspended, further limiting the supply of market ready cattle. As winter weather storms move through the country, cash prices are expected to remain strong.

Hogs
Hog futures have been under pressure in recent weeks as demand has weakened due to seasonal factors. Pork cutout values have fallen, and the quarterly Hogs and Pigs report confirmed that farmers are no longer liquidating sows, suggesting a more robust supply of hogs will follow.