Crops Analysis | August 30, 2023
Price action: December corn futures fell 6 cents before settling at $4.80 3/4, near the session low.
Hurricane Idalia is expected to move up the eastern coast from Florida to Georgia and South Carolina. Wind speeds have been reported up to 100 miles per hour, though the storm has weakened to a Category 1 since land fall. The storm is expected to move into the Atlantic and no meaningful impacts on crops are expected. Temperatures across the Midwest are expected to warm Friday and into the weekend. Rain chances are unlikely as well, apart from some expected showers next Tuesday and into Wednesday. Precip next week is not likely to have much benefit on driest parts of the crop which have seen early maturation.
Ethanol production averaged 1.007 million barrels per day (bpd) during the week ended Aug 25, down 41,000 bpd from the previous week but 37,000 bpd (3.8%) above the same week last year. Ethanol stocks fell 1.18 million barrels to 21.61 million barrels. Ethanol data points to a miss of the current USDA estimate, which will partly be offset by exports likely coming in higher than the current USDA estimate.
USDA releases export sales tomorrow morning, analysts expect net sales between 475,000 MT and 1.1 MMT for the week ended Aug 24, according to a Dow Jones survey. Last week came in at 650,800 MT.
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 5 3/4 cents to $13.86 3/4 and nearer the session low. December soybean meal dipped $1.70 to $410.20 and near mid-range. December bean oil lost 70 points to 62.63 cents and near the session low.
Fundamental analysis: The soybean and soybean meal futures markets today saw routine corrective and profit-taking price pullbacks from recent gains but the bulls remain confident, overall.
Weather still leans bullish for soybean prices. World Weather Inc. today said that in the U.S. Midwest another two weeks of mostly restricted rain along with warm to hot temperatures late this week into the middle of next week “will cause further declines in soil moisture and additional reductions in soybean yields in the drier areas.” Warming will occur Friday and temperatures will be much warmer than normal this weekend into the middle of next week when highs in the middle 80s to the middle 90s are common with some upper 90s and a few lower 100s from eastern South Dakota through eastern Kansas into central Wisconsin. Rain will increase next Tuesday into Wednesday when roughly half of Corn Belt receives rain, with northwestern and southeastern areas driest and a few immature beans “should benefit from the moisture while the rain will come too late for much of the crop,” said the forecaster.
USDA today reported a daily U.S. soybean sale of 266,000 MT to unknown destinations for 2023-24. Thursday morning’s USDA weekly export sales report is expected to show total U.S. soybean sales of 800,000 to 1.6 million MT, according to a Dow Jones Newswires survey. Last week’s total sales were just over 1.5 MMT.
Technical analysis: The soybean bulls still have the solid overall near-term technical advantage as prices are in an uptrend on the daily bar chart. The next near-term upside technical objective for the soybean bulls is closing November prices above solid resistance at the July high of $14.35. The next downside price objective for the bears is closing prices below solid technical support at $13.00. First resistance is seen at $14.00 and then at this week’s high of $14.09 1/2. First support is seen at $13.68 and then at $13.50.
The soybean meal bulls have the overall near-term technical advantage. A price uptrend is still in place on the daily bar chart. The next upside price objective for the meal bulls is to produce a close in September futures above solid technical resistance at the June high of $432.60. The next downside price objective for the bears is closing prices below solid technical support at $400.00. First resistance comes in at today’s high of $414.90 and then at this week’s high of $421.00. First support is seen at today’s low of $405.50 and then at $400.00.
Soybean oil futures bulls have the solid overall near-term technical advantage. However, 2.5-month-old uptrend on the daily bar chart has stalled out. Also, a bearish double-top reversal pattern appears to be forming on the daily chart. The next upside price objective for the bean oil bulls is closing September prices above solid technical resistance at 68.00 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at the August low of 57.86 cents. First resistance is seen at this week’s high of 64.27 cents and then at the July high of 65.58 cents. First support is seen at 61.93 cents and then at last week’s low of 60.70 cents.
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 futures rallied 6 1/2 cents before settling at $6.07 and nearer the session high. December HRS futures closed 2 1/2 cents higher at $7.31 3/4. December spring wheat futures saw relative weakness and closed 6 1/4 cents lower at $7.79 1/2.
A falling U.S. dollar index also supported prices as the dollar retraced the latter half of August gains in the last two sessions. The move comes on the heels of poorer than expected data regarding the U.S. economy, which the market seems to believe will ease the Fed into putting off additional rate hikes, which were referenced in the symposium last week in Jackson Hole.
Technical analysis: December SRW futures saw overnight gains, a midsession selloff to Tuesday’s contract low, then traded new session highs midday. Volume today was lower than yesterday, but the second highest in the last two weeks. This indicates that dip buyers are entering the market, but meaningful resistance needs to be taken out before determining if an interim low may be in place. The 10-day moving average, currently at $6.22 1/2, has capped the last three rally attempts. Consecutive daily closes above this level would establish an interim low and target resistance at $6.41. The “sell the rally” mindset is likely to sustain until that point, targeting Tuesday’s contract low of $5.99 1/2.
December HRW futures traded a 22-month low this morning before rallying through the balance of today’s session. Support remains at Wednesday’s low of $7.21 1/4 and is backed by the psychological $7.00 level. Bulls are targeting resistance at $7.40 1/2, then $7.50. Bears retain the technical advantage and the “sell the rally” mindset is likely in HRW futures as well.
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 closed up 99 points at 87.88 cents today and nearer the session high.
Fundamental analysis: Hurricane Idalia is presently thrashing the southeastern U.S., especially Florida. World Weather Inc. today said some damage to southeastern U.S. cotton production areas in Georgia is expected, “but the bulk of cotton should be spared.” In Texas, the forecaster said “dryland crops will remain seriously stressed and destined to yield poorly.”
Also supportive for the cotton futures market today is this week’s rally in the U.S. stock indexes and the U.S. dollar index under solid selling pressure so far this week. This week’s batch of weaker-than-expected U.S. economic data also favors the cotton market bulls, as the data falls into the camp of the monetary policy doves, who believe the Federal Reserve has raised U.S. interest rates far enough.
Cotton traders on Thursday will closely examine the weekly USDA export sales report.
Technical analysis: Cotton futures bulls have the solid overall near-term technical advantage. A two-month-old uptrend is in place on the daily bar chart. However, there is strong overhead resistance just above the market. A head-and-shoulders top reversal pattern may be forming. The next upside price objective for the cotton bulls is to produce a close in December futures above technical resistance at the August high of 88.83 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at the August low of 83.25 cents. First resistance is seen at 88.83 cents and then at 90.00 cents. First support is seen at today’s low of 86.86 cents and then at this week’s low of 86.11 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.
