Crops Analysis | August 17, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: December corn futures rallied 4 1/4 cents, settling at $4.85 3/4, nearer the session high.

Fundamental analysis: Corn prices continued yesterday’s corrective bounce, fueled by the forecast of upcoming hot and dry weather. Wheat continued lower for the fifth straight session which has pared gains in both the corn and soy markets. Corn has yet to take out meaningful resistance, so the near-term selling pressure is still likely to dictate movement in the coming days. Markets are still under pressure overall as bonds continue to sell, bringing the ten-year treasury yield to a new high at 4.325%, the highest level since 2008. This continues to pressure risk assets and concern remains over the Chinese economy, which their central bank is expected to provide stimulus to avoid yuan depreciation.

Traders’ focus has seemed to shift to the drier, hotter forecast over the next week. World Weather Inc reports rising temperatures into this weekend that will last through the next two weeks, covering nearly all of the Midwest and reducing soil moisture across the region. Existing soil moisture is expected to carry crop development through the period, though kernel size loss is at risk in less developed crops. Precip is expected to be largely dry over the next ten days, though light showers are expected before more rain comes in the forecast in the last few days of August.

USDA reported net old-crop corn sales of 233,500 MT in week ended Aug. 10, which were up 55% from the previous week and 16% from the four-week average. Net sales of 704,700 MT were reported for 2023-24. Traders expected sales to range from 0 to 250,000 MT for 2022-23 and 500,000 MT to 1.0 MMT for 2023-24.

Technical analysis: While December corn futures rose on the session, gains can be chalked up to corrective buying following selling efforts nearly 20 cents from the 10-day moving average and near oversold territory. Since then, buying efforts have led to a bounce by dime from Wednesday’s lows, though bears are still in full control of the technical advantage. First support will come in at $4.81, quickly backed by $4.80. Bears are targeting Wednesday’s low of $4.73 1/2, the recent move-low. Failure below which has bears targeting $4.50. Bulls are aiming to take out initial resistance at $4.91, backed by last week’s support zone at $4.94. A crack above $5.00 would garner momentum for bulls, but daily closes above that key level will be key in establishing an interim low.

What to do: Get current with advised sales.

Hedgers: You should be 100% 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 100% sold on 2022-crop. You should be 35% forward priced for harvest delivery on expected 2023-crop production.

 

 

Soybeans

Price action: November soybeans rose 6 1/2 cents to $13.30, a near mid-range close after marking the highest intraday price since Aug. 4. Meanwhile, September soymeal fell $4.90 to $399.60, the lowest close since July y, while September soyoil rose 109 points to 65.50 cents, a high-range close.

Fundamental analysis: Soybean futures edged higher for the second straight session as forecasts of hot, dry weather through the end of August is ramping up production concerns, while new-crop export sales data helped the November contract extend above technical resistance at the 200-day moving average.

Earlier today, USDA reported weekly export sales data for week ended August 10, which showed 2022-23 soybean sales of 93,600 MT, which were down 77% from the previous week and 42% from the prior four-week average. Meanwhile, net sales of 2023-24 totaled 1.407 MMT during the week, which topped the pre-report range of 500,000 MT to 1.3 MMT by over 100,000 MT. Traders expected 2022-23 sales to range from 0 to 400,000 MT.

World Weather Inc. reports some soybeans in wetter areas will benefit from the coming warmer temps, but the dry weather expected should last long enough to stress the crops in drier areas and minor declines in yield should result if today’s forecast verifies. The forecaster indicates there is some potential for greater rain Aug. 25-26 as some computer models are advertising a tropical disturbance that moves from the Gulf of Mexico through the southern and central Plains and across the Midwest. However, confidence is low the disturbance will take the path advertised by these models and will remain organized to bring significant rain to a large part of the region, though its forecast will be closely monitored.

Technical analysis: Efforts to breach the 200-day moving average of $13.32 1/4 were denied as the session progressed, leaving the level as initial resistance. It’s apparent bulls and bears intend to keep moving sideways in the near-term, between the recent low of $12.82 1/4 and the 40-day moving average, currently trading around $13.44 3/4. However, a close above the 200-day will likely find a quick breach from the recent range, with efforts then proceeding towards the July 24 high of $14.35. Conversely, Initial support lies at the 10-day moving average of $13.15 3/4, with a breach of the area, likely finding increased selling efforts, though additional support lies at $13.07 1/4, again at $12.90 3/4 and $12.78 1/2.

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.

 

 

Wheat

Price action: December SRW wheat fell 7 3/4 cents to $6.15 1/4 and near mid-range. Prices hit another 2.5-month low today. December HRW wheat lost 11 cents at $7.41 1/2 and nearer the session low. December spring wheat fell 2 3/4 cents to $8.03 1/2.

Fundamental analysis: Technical selling was featured in the wheat futures markets today as the daily charts look terrible. Wheat market bulls were especially disappointed their markets sold off today when corn and soybean futures posted modest rallies. Reports this week that the U.S. and other countries are actively working to find alternative shipping routes for Ukrainian grain exports are another a bearish element for wheat futures. Also, Russia is reporting record wheat export shipments.

USDA this morning reported 2023-24 U.S. wheat export sales of 359,500 MT for the week ended Aug. 10, which were down 37% from the previous week but up 3% from the previous four-week average. Sales were in line with market expectations.

World Weather Inc. today said that in the northern Plains, showers and thunderstorm activity in the next seven days will likely be greatest in northwestern production areas, which will be good for central and northern Montana, where soil moisture is lowest. Timely drier weather in southeastern production areas will be good for greater fieldwork advancement. However, this area will eventually need more rain by the second half of next week.

Technical analysis: Winter wheat futures bears have the solid 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 $6.70. 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 Wednesday’s high of $6.33 and then at $6.50. First support is seen at $6.08 1/4 and then at $6.00. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at $7.90. The bears' next downside objective is closing prices below solid technical support at the May low of $7.36. First resistance is seen at Tuesday’s high of $7.63 and then at this week’s high of $7.71 1/4. First support is seen at $7.36 and then at $7.25.

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.

 

 

Cotton 

Price action: December cotton fell 111 points to 83.61 cents, the lowest close since July 18. 

Fundamental analysis: December cotton futures were walloped for the fourth straight session despite mostly supportive outside markets, though weekly export sales data is proving the new marketing-year is off to a rocky start. Concerns over souring demand from China as the largest importer faces economic headwinds have cast a notable shadow over the natural fiber this week, despite looming weather concerns in Texas. Traders are reducing weather premium as production curbs are less important in a scenario of weakened demand.

World Weather Inc. states Texas crops and a few in the lower Delta have been stressed by dry and warm weather this season, pressuring yields and quality lower, especially in unirrigated areas of Texas. However, crops in the northern Delta and southeastern U.S. are suspected of developing well. West Texas will have a short-term break from excessive heat in West Texas today and Tuesday, but the heat will return late this week and into early next week.

USDA reported weekly new-crop export sales of 186,300 RB for the week ended August 10. Top purchasers for the week were China, Turky, and El Salvador. Export commitments are currently running 30.4% behind a year ago, compared to 32.5% behind last week.

Technical analysis: December cotton gave up additional technical traction with bears posting a close below support at 84.25 and 83.79 cents. Initial support will now serve at 83.18 cents, then at the 40-day moving average of 82.98 cents, with notable support serving at the 100-day moving average of 82.15 cents. Though a breach of the level will likely find bears working towards the June 27 low of 76.81 cents. However, near-term oversold conditions could spur corrective buying efforts, though solid resistance will serve at the near confluence of the 20- and 10-day moving averages of 85.38 and 85.41 cents, respectively. A turn above the area, however, will face additional resistance at 85.97 cents, then at 86.43 cents and the August 11 high of 88.83 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.

 

 

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