Crops Analysis | September 20, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: December corn rose 6 cents to $4.82 1/4, marking a close above the 10-day moving average and the largest daily price gain since Aug. 23.

Fundamental analysis: Corn futures were able to post a second straight day of gains amid short-covering and spillover strength from the SRW wheat. U.S. dollar weakness bolstered support for commodities. Furthermore, as the session progressed, increasing gains in soybean futures, led by meal strength, lifted corn to test the 10-day moving average, which has consistently served as overhead resistance since the end of August.

Harvest has begun in earnest throughout the Corn Belt, with infrequent and mostly light rain persisting during the next two weeks, with a notable exception Friday through next Wednesday when daily showers and thunderstorms bring rain to the entire region at one time or another. The western Corn Belt will be the wettest. Rains will interrupt fieldwork, though the soil is dry enough that delays should be temporary.

Ethanol production during the week ended Sept. 15 was down 59,000 barrels per day (bpd), but up 8.8% from the same week last year. Ethanol stocks rose 510,000 barrels to 21.681 million barrels, rebounding from the lowest level since the week ended Dec. 24, 2021, last week.

Early tomorrow morning, USDA will release its Weekly Export Sales Report, which is expected to show net sales between 550,000 MT and 1.1 MMT during week ended Sept. 14. Last week, USDA reported net sales of 753,298 MT.

Technical analysis: While December corn futures remain in a near-term downtrend, bulls were able to capture a close above the 10-day moving average of $4.80 1/4 for the first time since Sept. 11, though their upside momentum was limited by the 20-day moving average of $4.83 1/4, which will now serve as initial resistance. A move above the area will then face resistance at $4.88 3/4, then at the 40-day moving average of $4.91 1/4 and is then layered from the psychological $5.00 area to the 100- and 200-day moving averages of $5.15 3/4 and $5.48 1/4. Conversely, initial support will now serve at the 10-day moving average, then at $4.70 1/4, $4.67 3/4, $4.64 1/4 and $4.61.

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 closed up 4 1/2 cents at $13.20 and near the session high. December soybean meal rose $5.90 at $395.10 and near the session high. December bean oil fell 100 points at 59.29 cents, nearer the session low and closed at a two-month-low close.

Fundamental analysis: Soybean and meal futures saw short covering today after hitting four-week lows on Tuesday. Bean oil continued to slide on profit taking and weak long liquidation.

The soybean and meal bulls got some traction today as USDA reported a daily U.S. soybean sale of 120,000 MT to unknown destinations for 2023-24. Limiting gains was news China’s soybean imports from Brazil rose 45% in August from a year earlier, according to the General Administration of Customs. Brazilian beans accounted for nearly all of the 9.36 MMT of soybeans China imported in August.

Seasonal farmer selling as harvest ramps up and the related commercial hedge pressure are likely to keep a lid on soybean and meal advances for the next few weeks.

Traders are awaiting Thursday morning’s weekly USDA export sales report, which is expected to show U.S. soybean export sales of 550,000 to 1.2 million MT in the 2023-24 marketing year.

Technical analysis: The soybean bulls and bears are on a level overall near-term technical playing field. However, prices are in a three-week-old downtrend on the daily bar chart. The next near-term upside technical objective for the soybean bulls is closing November prices above solid resistance at $13.80. The next downside price objective for the bears is closing prices below solid technical support at the August low of $12.82 1/4. First resistance is seen at $13.30 and then at this week’s high of $13.44 1/2. First support is seen at this week’s low of $13.08 and then at $13.00.

The meal bears have the slight overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. The next upside price objective for the meal bulls is to produce a close in December futures above solid technical resistance at $410.00. The next downside price objective for the bears is closing prices below solid technical support at the August low of $379.00. First resistance comes in at $400.00 and then at $402.50. First support is seen at $390.00 and then at this week’s low of $385.80.

Soybean oil bulls still have the overall near-term technical advantage but have faded recently. A 2.5-month-old uptrend on the daily bar chart has been negated. Prices are trending down on the daily bar chart. Also, a bearish double-top reversal pattern has formed on the daily chart. The next upside price objective for the bean oil bulls is closing September prices above solid technical resistance at 64.00 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 today’s high of 60.57 cents and then at Tuesday’s high of 61.40 cents. First support is seen at the September low of 59.06 cents and then at 57.86 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.

 

 

Wheat

Price action: December SRW futures rose 4 3/4 cents before settling at $5.88 3/4 after trading on both sides of unchanged throughout the session. December HRW futures fell 2 cents before closing at $7.29. December spring wheat rose 3 3/4 cents to $7.83 1/2.

Fundamental analysis: Wheat futures saw trading on both sides of unchanged Wednesday, though bullish influences from the corn and soybean markets ultimately helped SRW futures close higher on the day. Continued attacks on Ukrainian export infrastructure have helped support wheat prices, as a Togo-flagged cargo ship hit a mine near the Romanian coast, leading to an evacuation of the ship. Prices ultimately need a meaningful catalyst to break out of the recent downtrend, which will likely have to come from renewed export demand. A Reuters survey shows estimates of 250,000 to 600,000 MT in net sales for tomorrow’s USDA export sales report. Last week showed net sales of 437,850 MT.

The wheat balance sheet remains tight coming off the tightest ending stocks since 2007-08, so an increase in use categories could have a substantial impact on the balance sheet, such as feed, which has been well off historical norms the past few years. The Sep. 29 Quarterly Grain Stocks report will give an inside look into the use categories that don’t get as much attention.

Technical analysis: December SRW futures remain in a downtrend on the daily bar chart, though buyers have stepped up at $5.85, which will remain significant support. A break below there has bears targeting the contract low at $5.70. Bulls are targeting initial resistance of $5.94, which is backed by last week’s high of $6.04 1/4.

December HRW futures have traded largely sideways for the better part of a month, though a series of lower highs continue on the daily bar chart. Bears are targeting initial support at $7.22, backed by last week’s move low at $7.09 then the psychological $7.00 level. Bulls are targeting initial resistance of $7.41 3/4, a level that thwarted buying efforts today. Additional resistance comes in at $7.46 1/2, then $7.54 1/4.

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 closed down 66 points at 86.86 cents today and near the session low.

Fundamental analysis: The cotton futures market saw some routine profit-taking pressure today. The cotton bulls were also a bit disappointed China’s central bank Wednesday decided to leave its key interest rates unchanged, despite its listing economy. China has recently implemented monetary policy stimulus measures to prop up the world’s second-largest economy.

The key outside markets were mixed for cotton futures today. Lower crude oil prices were a bit bearish, but a slightly weaker U.S. dollar index was slightly bullish. Today’s FOMC meeting statement was deemed mildly more hawkish than expected, which may somewhat limit buying interest on Thursday. The more hawkish Fed implies further interest rate increases that could dampen consumer demand for apparel in the coming months.

World Weather Inc. today reported that outside of rain in the Blacklands and the Coastal Bend Sunday into Tuesday, little rain of significance is expected in U.S. cotton country through the next two weeks and “cotton maturation and harvesting should occur in a mostly favorable environment.”

Traders are awaiting Thursday morning’s weekly USDA export sales report, with a keener eye on what kind of business comes from China.

Technical analysis: The cotton futures bulls have the solid overall near-term technical advantage. A 2.5-month-old uptrend is in place on the daily bar chart. A bullish symmetrical triangle pattern has formed on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in December futures above technical resistance at the September high of 90.00 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 last week’s high of 88.61 cents and then at 89.00 cents. First support is seen at this week’s low of 86.46 cents and then at the September low of 85.16 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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