Market Breifs | January 22, 2025

Rice
Arkansas rice farmers set a new record yield in 2024, according to the USDA Annual Production Report. The average all-rice yield was 7,640 lbs. per acre, or 170 bushels per acre. Long grain yields were even higher, at 7,670 lbs. per acre. March futures ended 2024 by plunging lower, below the FSA reference price of $14. The market has now rebounded a bit, and prices are challenging resistance at $14.90. Overall, the fundamental picture suggests that prices will remain under pressure. The relative value of the dollar and ample supplies from Asia (especially India, now that the export ban has been lifted) are making it tough to compete on the global market. Ending stocks are now projected to be up 9% for the 2024/25 marketing year. The American Relief Act, passed late last year, is projected to provide payments near $69/acre for rice. The program will be based on planted acreage, with prevented planted acres receiving a 50% payment. More information should be available soon as USDA publishes the rules and enacts the program. Payment limits will apply.

Cotton
Arkansas cotton farmers are projected to have set a new record yield in 2024 of 1313 lbs/acre. Cotton futures are trending solidly lower. The fundamental situation remains quite bearish as soft export demand continues to weigh on the market. In the monthly WASDE, production was raised, and export projections were lowered, resulting in a stocks-to-use ratio of 37.5%, up from 23.2% just one year ago. The downside could be limited, though, as farmers begin to make their planting decisions for 2025. At current price levels, we would expect to see acres shift to other crops, but West Texas has adequate moisture. The first look at the crop will be the National Cotton Council producer survey released on Feb. 16, which will provide some insight into planting intentions. The American Relief Act, passed late last year, is estimated to provide payments near $87/acre for cotton, but that could be adjusted as the rules are written. Payments are expected by mid to late March.

Corn
The nearby March corn contract recently broke through resistance at $4.80, climbing to a fresh eight-month high at $4.90. A move above this level could see the next resistance point at $5.00. The initial surge followed a bullish USDA report, which lowered U.S. corn production to 14.9 billion bushels and cut ending stocks to 1.21 billion bushels. Globally, stocks declined to 293.3 million tons. The continued push higher has been driven by speculative traders increasing their net-long positions to the highest level since mid-2022, when prices began their descent from the 2021/22 highs. Currently, the corn market is extremely overbought technically and a downward correction would not be a surprise.

Soybeans
Soybean futures have rebounded following the latest WASDE report, which lowered U.S. production to 4.4 billion bushels and reduced ending stocks to 380 million bushels. The nearby contract has climbed above $10.70, with technical resistance expected at $10.80-levels not seen since September 2024. The Relative Strength Index (RSI) is nearing overbought territory, suggesting possible price resistance ahead. On the downside, support is currently seen at $10.20. The recent rally has been supported in part by President Trump's decision to delay tariff action following a productive call with President Xi.

Wheat
The latest USDA report provided little direct support for wheat, but a sharp decline in the U.S. dollar has renewed optimism for U.S. export competitiveness. President Trump appears eager to reopen trade negotiations with Canada and Mexico. While finalizing a new deal would be a lengthy process, both countries may be able to avoid new tariffs by agreeing to enter discussions. The Chicago March wheat contract recently approached its 75-day moving average of $5.67. A break above this level could target the 100-day moving average at $5.75. However, global competition remains a headwind for wheat prices. In Russia, melting snow cover has increased concerns about potential winterkill, which could influence global supply expectations.

Livestock and Poultry
In the monthly WASDE, the 2025 beef production forecast was raised on higher placements at the end of 2024 and higher weights. The Cattle Report, released on Jan. 31, will provide additional data on projected cattle placements and heifer retention in 2025. Pork production was also raised on farrowing data from the end of 2024. Broiler and turkey production projections for 2025 were lowered on based on recent hatchery and slaughter data. Cattle price projections were raised as beef demand remains strong. Broiler and hog price projections were also raised based upon demand.