Rice futures trade has been choppy over the last few weeks, with very low volume. The March contract has found support at $10.34, for the time being, with additional support at the major low of $10.10 1/2. The market will find resistance at $10.93 and $11.26 1/2. Harvest pressure is keeping Asian prices under pressure currently, which will cause competition in export markets. Export sales and shipments are currently unreported as the government shutdown continues. The latest USDA Supply/Demand report for rice shows total 18/19 US supplies higher when compared to a year earlier, with ending stocks increasing from 29.4 million to 44.2 million cwt. That increase is not favorable for prices and lead to the estimated on farm price of $11.60 to $12.60.
The long-term trend for soybeans remains higher, but price movement has been more erratic on a shorter term basis. The market seems optimistic about the reopening of trade with China. At this point, most of the negative fundamentals have been built in to the market, and there is the potential for some upside movement. March has resistance at the recent high of $9.27 3/4, and a close above that level would signal a retest of resistance at $9.41. Dry weather in Brazil could result in yield reductions there, but the crop was expected to be a record-breaker, so the market reaction will be limited. As we move into spring, traders will be watching closely as acres shift between corn and soybeans.
Corn futures continue to build on long-term support, but are trading in a narrowing channel below resistance. March has been unable to challenge resistance at $3.84, while July needs to close above $4 in order to signal further gains are possible. Carryover weakness from the ethanol market is limiting the upside potential of corn. Low prices have led to thin to negative margins for ethanol producers, and stockpiles are up 2.7 percent from a year earlier. Also, domestic use of DDGs is declining due to price. Prices have gone up as ethanol production has declined, and DDGs are no longer as competitive compared to soybean meal as they once were, thanks to lower soy prices.
The sharp selloff in cotton looks to be over, and the market is building on support at the recent lows. For March, that is at 70.65 cents. For new-crop December, that is 72.24 cents. This market needs to see some real movement in U.S.-Chinese trade talks. Mill buying appears to be supportive. There is currently no export data available as the shutdown continues.
Live cattle futures set a new contract high on January 16, but futures have since gapped lower. The market has been supported by higher cash prices and winter weather that is delaying marketing. However, the market had become overbought and was due a correction. The chart gap between $126.22 1/2 and $126.02 1/2 will be the first level of resistance for February There should be support around $125.
Hog futures have been under pressure from demand concerns. Optimism about trade with China has underpinned the market, though. February is trading just above support near $125.