Crops Analysis | August 29, 2023
Price action: December corn futures closed down 9 1/2 cents at $4.86 3/4 today and nearer the session low.
Selling pressure in the soybean and wheat futures markets today also helped to pressure the corn market.
World Weather Inc. today said another two weeks of mostly restricted rain along with warm to hot temperatures late this week into early next week in the Corn Belt will cause further declines in soil moisture, which will speed up corn maturation and drying.
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.
Price action: November soybeans fell 13 1/4 cents as late session selling pressure brought prices down to $13.92 1/2. September soymeal fell $6.40 and settled near session lows at $419.3. September soyoil fell 34 points and settled at $66.56 cents.
Fundamental analysis: Soybeans gapped lower overnight on stronger than expected crop conditions, price then rallied through much of the session but faced increased selling pressure into new lows on the close. USDA rated 58% of the soybean crop as “good” to “excellent,” down one point from the previous week. The amount of crop rated “poor” to “very poor” increased one point to 14%. The soybean rating decline was less than anticipated, as analysts’ expecting a three-point cut from the prior week. On our weighted CCI, the soybean crop fell 4.9 points to 344.0, which was 1.8 points (0.5%) below last year at the end of August. Iowa and Nebraska led the CCI declines for soybeans, while crops in Illinois improved.
Forecasts retaining a dry bias over the next week to ten days have helped support prices as well as the crop finishes. Last week’s drastic heat and dryness have caused some early maturation of the soybean crop, leading to aborted pods and smaller/lighter seeds. Temperatures are once again expected to turn higher into the weekend through the beginning of next week, World Weather Inc says.
This morning, USDA reported daily sales of 246,100 MT of soybeans and 105,000 MT of soymeal – both to unknown destinations for 2023-24. Recent export demand has helped support prices on the recent run and it is encouraging for bulls to see continued demand as prices are trading at the highest levels in a month. Despite the recent string of daily sales, outstanding sales for new crop are at the lowest level for the date since the 2019/20 crop year.
Technical analysis: November soybean futures gapped lower overnight but were supported by Sunday nights gap higher. Price struggled to overcome Monday’s settlement of $14.05 3/4 and eventually turned lower. Bulls maintain the technical advantage and today’s session can be chalked up to profit-taking barring any accelerated selling on Wednesday. Initial resistance stands at the psychological $14.00 level and is backed by $14.05 3/4. Bulls want to defend last Friday’s high of $13.90 1/2 on tonight’s open or a potential “Island top” technical reversal could add selling pressure. The next support stands at $13.81.
September soybean meal futures underwent selling pressure as well today though price remains in a steep uptrend on the daily bar chart. Initial support stands at $417 and is backed by $415.5. Monday’s close at $425.7 marks initial resistance with bulls targeting Monday’s high of $428.
September soyoil was not immune to the downturn in the soy complex, though it experienced relative strength. Support can be expected at 66.37 cents and is backed by 65.25 cents. Bulls are targeting today’s high at 67.48 cents before 68.33 cents, which has been a heavily traded spot over the past month and a half and will act as stiff resistance.
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 16 1/2 cents to $6.00 1/2 today and near the session low. Prices hit a contract low. December HRW wheat closed down 20 1/2 cents at $7.29 1/4. Prices closed near the session low and hit a 21-month low. December spring wheat futures fell 5 3/4 cents to $7.85 3/4, despite showing relative strength most of the session.
Also bearish, reports said Ukrainian farmers are not expected to reduce the planted area of winter wheat for the 2024 harvest, despite higher logistics costs due the Russia-Ukraine war and shipping problems.
In the Northern Plains, World Weather Inc. today said very little rain through Sunday with above to well above average temperatures “will be great for summer crop maturation and harvest progress but will be stressful for any remaining late season immature crops.” A weather disturbance Monday could promote some needed rain in the west. Early planting of wheat will begin soon and greater soil moisture is needed to improve the prospects for that crop, said the forecaster.
Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage and gained more power today. Prices are in steep four-week-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing December prices above solid chart resistance at $6.60. The bears' next downside objective is closing prices below solid psychological support at $6.00. First resistance is seen at today’s high of $6.18 1/4 and then at this week’s high of $6.28 1/2. First support is seen at today’s contract low of $5.99 1/2 and then at $5.85. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at $7.80. The bears' next downside objective is closing prices below solid technical support at $7.00. First resistance is seen at today’s high of $7.49 3/4 and then at last week’s high of $7.71 3/4. First support is seen a today’s low of $7.28 and then at $7.15.
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 futures rose 2 points to 86.89 cents.
Fundamental analysis: Cotton futures pivoted around unchanged and remained in yesterday’s trading range as price continues to consolidate following last week’s run higher. Crop conditions came in steady from a week ago at 33% “good” to “excellent” despite top producer Texas seeing conditions improve two-points to 12% “good” to “excellent.” The upcoming Crop Production report will include revised acres reflecting FSA data, leading to a reduction in planted acres. The question lies in how much of the crop USDA sees as “abandoned,” but regardless production is likely to fall significantly. This is met with reduced export demand from top-importer China as poor data continues to roll out of the nation.
Cotton futures were also strengthened by an overall “risk on” day in the market which saw the Dow jump over 200 points and front-month crude oil futures rallying over $1 to the highest level since August 21. The U.S. dollar index also saw losses on the day following job openings coming in lower than anticipated and consumer confidence coming in lower than expected. The weakness in the dollar and strength in risk assets can likely be attributed to the marketplace consensus that the poor data this morning will likely encourage the Fed to be patient on additional rate hikes, as the Fed has eagerly awaited a slowdown in the labor market to ease inflation.
Technical analysis: December cotton futures traded on both sides of unchanged and struggled to garner momentum either way. Price remains largely sideways on the daily bar chart, though another rejection off 88 cents does not bode well for bulls. Initial support stands at 86.31 cents with additional selling targeting 85.94 cents. Bulls are targeting Monday’s high of 87.84 cents and a daily close above 88 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.
