Crops Analysis | August 14, 2023
Price action: December corn rose 1/2 cent to $4.87 3/4, ending near the session high after touching a four-week low early on.
Fundamental analysis: December corn faced followthrough weakness as a strengthening U.S. dollar cast a shadow over the grain complex, though as the session progressed, the dollar retreated from earlier highs, easing pressure across commodities. Meanwhile, Brazil is on track to reap a record-large safrinha corn crop despite lagging harvest efforts. As of last Thursday, AgRural reported harvest was 71% complete, compared to 85% on the same date last year.
World Weather Inc. reports corn maturation will be sped up by the coming period of warmer, drier weather, with small reductions in kernel size possible in the drier areas where the crop is least advanced. However, soil moisture is high enough in much of the Midwest to support crop development while the region dries down during the next two weeks. By that time, most crops will be mature enough that a lack of soil moisture won’t have much of an impact. USDA will update crop conditions following the close, with traders expecting a one percentage point increase from last week to 58% “good” to “excellent.” If realized, it would match last year’s rating for the same period.
USDA reported weekly export inspections of 398,269 MT (15.7 million bu.), which were up 10,296 MT from the previous week and within the pre-report range between 275,000 and 500,000 MT.
Technical analysis: December corn was able to notch a positive close after spending most of the session under mild pressure, which led the contract to the four-week low of $4.81. The area will continue to serve as significant support, though a close above the 10-day moving average of $4.95 3/4 and resistance of $5.02 1/4 will be needed to give bulls confidence in a move toward the 20-, 40- and 100-day moving averages of $5.19 3/4, $5.28 1/4 and $5.35 1/4. Conversely, in addition to today’s low, additional support lies at $4.77 1/2, $4.68 and $4.53 1/4.
What to do: Get current with advised sales.
Hedgers: You should be 90% sold in the cash market on 2022-crop. You should be 50% forward priced for harvest delivery on expected 2023-crop.
Cash-only marketers: You should be 90% sold on 2022-crop. You should be 35% forward priced for harvest delivery on expected 2023-crop production.
Price action: November soybeans rose 18 1/2 cents to $13.26, ending near the intraday high. September meal futures rose $5.00 and settled at $415.30, also near the intraday high. September soyoil rose 92 points to 65.05 cents, closing on the day’s highs.
Fundamental analysis: The recent uptick in export demand has supported soybean prices, though futures prices remain stuck in a sideways range dating back to the start of August. Outside markets remain largely unsupportive, with wheat futures volatile and trending lower and corn stuck between soy strength and wheat weakness. Friday’s report failed to ignite a catalyst to break out of the current range and weather proving both bullish and bearish depending on the time frame. Little certainty lies in the soybean market at this point, so sideways trading is likely to remain for the time being.
Nearby forecasts remain favorable with periods of rain and moderate temperatures for most of this week. Rain is expected across portions of the Midwest, with Illinois to southern Ohio and Kentucky receiving .5 to 1.5 inches and Wisconsin to Michigan receiving .5 to 2.5 inches in the next couple of days, according to World Weather Inc. The end of the week is expected to turn hot and dry, caused by a high-pressure ridge over the Midwest, shutting off precipitation and allowing temperatures to turn hotter, the forecaster says. Highs in the middle of next week are expected to be in the 100’s, bringing crop stress concerns back into the picture.
USDA reported corn export inspections of 297,797 MT (10.9 million bu.) in week ended Aug. 10. Inspections rose 13,420 MT week-over-week. Traders anticipated inspections to range from 150,000 to 350,000 MT.
The USDA is set to release their weekly Crop Progress report this afternoon, in which analysts are expecting a two-point rise in conditions to 56% “good” to “excellent” according to a Bloomberg survey. This would mark the second weekly rise in a row.
Tomorrow at 11, NOPA releases their July report on Soybean crush, with analysts expecting crush at 171.337 million bushels according to a Reuters survey. This would be over 6 million bushels over the June number and the second highest July crush on record. Analysts expect soyoil stocks of 1.687 billion pounds. This crush report will give insight into whether crush demand will continue to outpace the USDA forecast or if it will limp into the end of the crop year despite decreased Argentine crush.
Technical analysis: November soybeans showed relative strength but remain in a largely sideways pattern, which started at the calendar rolled to August. Friday’s low at $12.97 1/2 will remain an important low for bulls going forward and will need to be supported, this level coincides well with the $13.00 psychological level. Further selling would target the August low at $12.82 1/4. Bulls are aiming for a close above $13.37 before tackling the August high at $13.54. A close above the latter would signal a low is in place, though unlikely as harvest kicks off and the bearish seasonality weighs on the market.
September meal futures continue to track soybeans tightly as prices remain in a downtrend on the daily bar chart. Bulls are looking to protect Friday’s low of $409.50, which is quickly backed by the 200-day moving average at $409.10. A breakdown below this level would target $400.00, backed by $394.50. Bulls are looking to break the recent steep downtrend with a daily close above $420.00. This would clear converging moving averages and point to a potential low in place. Bulls are targeting the $425.00 supply zone.
September soyoil has traded similarly to it’s whole and meal counterparts, although has shown more strength recently. Recent selling pressure appears to be consolidation with an uptrend resuming in the coming days. Bulls are targeting the July 24 high at 69.12 cents with additional resistance at 66 cents on the way. Bears ultimately want a daily close below the August 8 low at 62.11 cents to negate bullish momentum, with additional support at 63.30 cents on the way.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold in the cash market on 2022-crop. You should be 45% forward sold for harvest delivery on expected 2023-crop production.
Cash-only marketers: You should be 100% sold on 2022-crop. You should be 40% forward sold for harvest delivery on expected 2023-crop production.
Price action: December SRW wheat fell 12 1/4 cents at $6.41 1/2, nearer the session low and hit a 2.5-month low. December HRW wheat closed down 6 3/4 cents at $7.59 1/4, near mid-range and hit a 3.5-month low. Spring wheat futures closed 10 1/4 cents lower at $8.20.
Fundamental analysis: Wheat futures bears were in control today as technical selling was featured amid a higher U.S. dollar index that hit a two-month high today. Wheat bears brushed aside news that a Russian warship fired warning shots and boarded a Palau-flagged cargo vessel headed to the Ukrainian port of Izmail on Sunday. Since July 1, Ukraine has shipped 3.122 MMT of grains, 470,000 MT (17.7%) above the same period a year ago.
USDA this morning reported disappointing U.S. wheat export inspections of 183,289 MT, well below market expectations. Inspections were down 109,675 MT from the previous week’s reading.
This afternoon’s weekly USDA crop progress report is expected to show the U.S. winter wheat crop at 93% harvested, compared to 87% complete last week. Spring wheat crop condition is expected to be 41% good to excellent, which is the same as last week and compares to 64% good to excellent condition last year at the same time.
Technical analysis: Winter wheat futures bears have the firm overall near-term technical advantage. Prices are in steep three-week-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing December prices above solid chart resistance at $7.00. The bears' next downside objective is closing prices below solid technical support at the May low of $6.08 1/4. First resistance is seen at $6.50 and then at today’s high of $6.61 1/2. First support is seen at today’s low of $6.31 3/4 and then at $6.08 1/4. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at $8.00. The bears' next downside objective is closing prices below solid technical support at the May low of $7.36. First resistance is seen at today’s high of $7.71 1/4 and then at $7.85. First support is seen at today’s low of $7.43 1/4 and then at $7.36.
What to do: Get current with advised sales.
Hedgers: You should be 50% sold in the cash market on 2023-crop production.
Cash-only marketers: You should be 50% sold on 2023-crop production.
Price action: December cotton fell 142 points to 86.47 cents, marking a mid-range close.
Fundamental analysis: December cotton futures gave up a portion of Friday’s gains amid lackluster economic news from top importer, China. News of a decline in consumer sentiment and business and consumer borrowing pressured crude oil futures on heightened global demand concerns. Additional economic data will be reported tomorrow, including retail sales, industrial production and property investment, with traders expecting that data to follow suit.
World Weather Inc. reports weekend rains were greater-than-expected in portions of the Panhandles and southwestern Oklahoma, while most key cotton areas in West Texas remained dry while excessive heat occurred in much of the region, stressing crops and causing a further decline in yields. The forecaster notes short soil moisture, hot temps and two more weeks or so of infrequent rain will lead to rising levels of stress and declines in yields in dryland areas, while cotton maturation and early harvesting should occur favorably in south Texas and the Coastal Bend. Persisting weather issues in Texas will likely push condition ratings lower following this afternoon’s close. Last week, the “good” to “excellent” rating remained unchanged from the previous week at 41%, while the “poor” to “very poor” rating rose 4 percentage points to 34%
Technical analysis: December cotton ended mid-range after testing support at the 10- and 20-day moving averages of 85.62 and 85.23 cents earlier in the session. This area will continue to serve as initial support, though a successful breach will find bears working towards 83.41 cents, then the 40-day moving average of 82.68 cents and the 100-day of 81.99 cents. A push higher, however, will face initial resistance at Friday’s high of 88.83 cents, then 89.48 cents and 91.07 and 93.31 cents.
What to do: Get current with advised sales.
Hedgers: You should be 100% priced on 2022-crop in the cash market. You should have 60% of expected 2023-crop production forward sold for harvest delivery.
Cash-only marketers: You should be 100% priced on 2022-crop. You should have 60% of expected 2023-crop production forward sold for harvest delivery.
