Crops Analysis | September 11, 2023
Price action: December corn rose 2 cents to $4.85 3/4, ending near the session high.
Fundamental analysis: Corn futures spent the session trying to battle weakness spurred by struggling SRW wheat futures ahead of Tuesday’s supply and demand data. A notable retreat in the U.S. dollar and notable weekly export inspection data helped limit losses across grains, though trade will remain mostly subdued ahead USDA’s World Agricultural Supply and Demand Estimates, set for release tomorrow at 12 pm ET. Pre-report estimates suggest USDA will peg the national corn yield at 173.5 bu. per acre, down from 175.1 bu. in August, with average production estimated at 15.008 billion bu., and if realized would be over a 9% year-over-year increase. Meanwhile, 2022-23 ending stocks are forecasted at 1.460 billion bu., while new crop ending stocks are expected at 2.140 billion bu.
Earlier today, USDA reported weekly export inspections of 623,862 MT (24.6 million bu.) for week ended Sept. 7, which were up 141,043 MT from the previous week and 4.3% ahead of the same time a year ago. Traders were expecting inspections to range from 375,000 to 750,000 MT.
USDA will update its weekly crop condition ratings this afternoon, with a Reuters poll indicating analysts anticipate a one percentage point decline to 52% “good” to “excellent.” Analysts also expect to see harvest progress to have advanced 5% as of Sunday in the government’s first harvest progress data for 2023.
Technical analysis: December corn futures were able to end the session on a mild positive note but was unable to make a notable move in either direction. Bull’s need a close above initial resistance at $4.87 1/2, $4.91 1/2 and $4.94 1/4 in order to gain upside momentum towards the 40-, 100- and 200-day moving averages of $5.02 3/4, $5.20 1/2 and $5.52 1/2, respectively. Conversely, bears will need a close below $4.80 3/4, $4.78 and $4.74 1/4 in order to press towards $4.50.
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 started the week off strong, rallying 6 cents to $13.69. December soybean meal closed $3.50 higher at $404.90. December soyoil ended the day unchanged at 60.50 cents.
Fundamental analysis: Soybean futures held onto overnight corrective gains, though today’s trade can be chalked up to positioning ahead of Tuesday’s Crop Production and Supply and Demand reports, which will give the first objective look into soybean yields. Traders anticipate old-crop ending stocks of 256.2 million bu., nearly four million bu. below the August report at 260 million bu. New crop harvested acres are seen as rising to 82.8 million acres, 100,000 acres above the June acreage report at 82.7 million acres. Yield is expected to fall to 50.1 bu. per acre, down .8 bushels per acre from the August Crop Production report at 50.9 bu. per acre. This points to expected production of 4,150 million bushels and ending stocks of 209 million bushels, down from 4,205 million bushels and 245 million bushels in the August Crop Production report.
Soybean demand continues to pace poorly, despite the recent uptick in daily sales announcements. This morning, USDA announced a daily export sale of 185,000 MT of soybean cake and meal to the Philippines for the 2023-24 marketing year. Outstanding sales for meal are at the highest level since 2015 for the 2023-24 marketing year, which begins October 1. This is despite the comparatively poor outstanding sales in soybeans. Mid-morning, USDA reported inspections of 310,073 MT (11.4 million bu.), which were down 96,861 MT from the previous week and near the low-end of the of the pre-report range of 300,000 to 725,000 MT.
The USDA releases the weekly crop progress report this afternoon. Traders see soybean conditions as falling two points to 51% “good” to “excellent,” according to a Reuters poll. A Bloomberg survey sees soybeans as 2% harvested, which would be the quickest start since 2012.
Technical analysis: November soybeans showed strength throughout the session though struggled against downtrend line resistance that has capped all gains since the August 28 peak. The resistance currently stands at $13.70 and will remain key going into Tuesday’s session, a daily close above that level would indicate a likely test of the recent high at $14.09 1/2, though resistance stands at $13.85 and the psychological $14.00 level on the day. Bears are looking for a break of $13.52 support, which would negate a potential “bull flag” on the daily bar chart. Support also stands at $13.61, though is weaker.
December meal futures were supported by a daily export sale announcement and continued Friday’s bounce higher. Bears still retain the technical advantage, but the recent $10+ rally has brought prices back near $408.00 resistance, a close above which would point to a potential interim low in place. Additional resistance stands at $411.00, with the key $420.0 level on deck. Support can be expected at the $400.00 level, backed by $396.30.
December soyoil futures traded in a balanced session, with the session high at 61.00 cents, session low at 60.00 cents and settlement at 60.50 cents. Price has been basing around the late-July, early August support zone around 60.00 cents, a level that will remain key this week. Prices have turned from bullish to a sideways trend, a break of 60.00 cent support on a closing basis likely leads to a downward trend. Initial resistance stands at 61.15 cents, backed by 61.75 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 wheat fell 11 1/4 cents to $5.84 1/2 and near the session low. Prices hit a contract low. December HRW wheat closed down 8 1/4 cents at $7.23 3/4, near mid-range and hit a two-year low. December spring wheat futures closed 4 cents lower on the session to $7.66 3/4.
Fundamental analysis: Technical selling pressure was featured in the wheat futures markets today, amid bearish charts. Fundamentally, expected bigger Russian wheat supplies are a negative for futures prices.
Weather for wheat leans bearish for prices. World Weather Inc. today said that in the Plains states “significant rainfall in the first week of the outlook will be ideal for bringing soil moisture up to more favorable levels for winter wheat planting and for germination and emergence conditions.” More rain in the second week of the outlook will further benefit early season wheat. In the northern Plains, the forecaster said a pattern of limited shower activity in the first week of the outlook will benefit harvest progress but will leave western areas, such as Montana, with a need for greater rainfall for winter wheat planting.
USDA this morning reported U.S. wheat export inspections of 406,181 MT, which were up 88,105 MT from the previous week and near the upper estimate of the pre-report range of 225,000 to 450,000 MT. Still, recent wheat inspections and export numbers have been disappointing.
This afternoon’s weekly USDA crop progress reports are expected to show U.S. spring wheat harvested at 86% as of Sunday versus 74% last week at the same time. Winter wheat planted is seen at 6% compared to 1% last week at the same time.
Wheat traders are awaiting Tuesday morning’s monthly USDA supply and demand report for September. A Bloomberg survey showed analysts expect 2023-24 U.S. wheat ending stocks at 614 million bushels versus 615 million seen in the August report. Don’t be surprised to see the wheat futures markets take their direction from corn futures following the USDA report Tuesday.
Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. Prices are in steep six-week-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing December prices above solid chart resistance at $6.50. The bears' next downside objective is closing prices below solid technical support at $5.50. First resistance is seen at $6.00 and then at the September high of $6.15 1/2. First support is seen at today’s contract low of $5.80 1/4 and then at $5.75. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at $7.70. The bears' next downside objective is closing prices below solid technical support at $7.00. First resistance is seen at today’s high of $7.32 3/4 and then at $7.40. First support is seen at today’s low of $7.11 1/4 and then at $7.00.
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 rose 187 points to 87.78 cents, ending the session above the 10- and 20-day moving averages.
Fundamental analysis: Cotton futures notched follow through gains, with weakness in the U.S. dollar and lingering supply concerns in key U.S. growing regions underpinning the natural fiber. Traders will be tuned into USDA’s supply and demand updates, due out Tuesday at 12 pm ET. A Bloomberg indicates analysts anticipate U.S. production of 15.78 million bales, down from July’s forecast of 16.50 million. Meanwhile, U.S. ending stocks are expected at 3.4 million bales, down from the previous estimate of 3.8 million bales.
Market participants will continue to monitor weather and crop ratings are harvest progresses in earnest. World Weather Inc. notes Texas rainfall will be welcome in easing long term dryness, but it comes too late for a serious change in production for 2023. U.S. Delta crop conditions remain mostly good as are those in the southeastern and far western states.
USDA will update weekly crop condition ratings, with additional declines likely amid hot, dry conditions throughout Texas last week. Last week, the U.S. cotton crop was rated 31% “good” to “excellent,” while 41% was rated “poor” to “very poor.”
Technical analysis: December cotton bulls regained technical traction, with a close held above the 20-day moving average of 86.25 cents, as well as resistance at 86.63 and the 10-day moving average of 87.43 cents. Initial resistance will now serve at 85.92 cents, then at 89.69 cents and the Sept. 1 high of 90.00 cents. Meanwhile, initial support will serve at today’s failed levels of resistance, then at the 40-day moving average of 85.63 cents, 85.21, 84.50 and 83.79 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.
