Crops Analysis | September 26, 2023
Price action: December corn futures fell 1 1/2 cents at $4.79 3/4 and near mid-range.
Fundamental analysis: “Risk-off” attitudes in the general marketplace today limited buying interest in the grain futures markets. The looming U.S. government shutdown this weekend is the main worry on the front burner. A strong U.S. dollar index that hit a 6.5-month high today was a bearish “outside market” element working against the corn market bulls.
Also negative for the corn market was USDA rating the corn crop 53% “good to “excellent” on Monday afternoon--up two percentage points from a week ago. Harvest progress was pegged at 15%, up six points from last week. On the Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing), the corn crop increased 3.7 points to 336.6, which is now 1.4 points (0.4%) above last year.
World Weather Inc. today said U.S. corn harvest weather is expected to be mostly good the next several days, but there will be some delay periodically. Meantime, some concern remains for summer crops in Mato Grosso where erratic and lighter-than-usual rain may occur for a while longer this spring. Argentina weather will continue “a little tenuous for early planting of corn although there is time for further improvement and some greater rain may evolve later next week.”
Technical analysis: The corn futures bears have the solid overall near-term technical advantage. The next upside price objective for the bulls is to close December prices above solid chart resistance at $5.00. The next downside target for the bears is closing prices below chart support at $4.50. First resistance is seen at today’s high of $4.83 1/2 and then at the September high of $4.90 1/4. First support is at this week’s low of $4.73 3/4 and then at last week’s low of $4.67 3/4.
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 rose 5 cents to $13.02 3/4, a high-range close. December meal rose $2.90 to $392.70, ending the session above the 10-day moving average. December soyoil gained 23 points, closing at 57.71 cents, a high-range close.
Fundamental analysis: Soybean futures spent the session rangebound, following thwarted overnight efforts to test the 100-day moving average, with price action closely tracking meal futures. Overnight trade was lifted by USDA’s reduced soybean condition rating, which fell two percentage points from last week to 50% “good” to “excellent,” while harvest progress was pegged at 12%, up from 5% a week earlier. However, on our CCI, the soybean crop rose 1.4 points to 332.6, which is now 1.4 points (0.4%) above last year. Meanwhile, Crop consultant, Dr. Michael Cordonnier trimmed his national yield estimate by 0.5 bu.to 49.0 bu. per acre, lowering his production estimate to 4.05 billion bu. Cordonnier noted recent rainfall has improved soil moisture across portions of the western Corn Belt, but it is occurring too late to make a significant impact on soybean fields.
Meanwhile, World Weather Inc. reports hot and dry weather will be common in central and northern Brazil today before showers begin to increase Tuesday while most of the region sees cooler temps during the middle to late part of the week with continued heat in the northeast. The forecaster indicates today’s forecast is wetter for Oct. 3-10 than what was advertised Monday and the regular rounds of showers most areas see should induce gradual improvements in conditions for planting of summer crops.
As the week progresses, sideways trade is likely ahead of USDA’s Quarterly Stocks Report, due out Friday. Traders are expecting 2022 soybean production of 4.269 billion bu., according to a Reuters poll. If realized, it would be a slight reduction from June’s estimate.
Technical analysis: November soybean futures were able to pick up steam into the close, in step with meal futures, and ended the session just below the 100-day moving average of $13.06, which will continue to serve as initial resistance. However, a push above the area will find additional resistance at $13.09 1/2, then at 10- and 200-day moving averages of $13.19 1/4 and $13.27 1/2, respectively. From there, resistance serves at the 40- and 20-day moving averages of $13.40 1/2 and $13.44 1/2. Conversely, initial support lies at $12.88 1/4, $12.78 1/2 and $12.72 1/2.
December meal futures gained an improved technical posture, with a close held above the 10-day moving average of $391.50, though solid resistance continues to serve at the 100-day moving average of $393.30, then at the 40- and 20-day moving averages of $396.20 and $396.90, then at $399.20 and the 200-day moving average of $402.80. Meanwhile, support continues to serve at $385.80, $381.90 and $379.10.
December soyoil continues to find support at the near convergence of the 200- and 100-day moving averages of 57.18 and 57.24 cents, respectively. Resistance continues to serve at 59.01 cents, then at the 10-, 20- and 40-day moving averages of 59.92, 60.90 and 61.33 cents, respectively.
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 closed steady at $5.89. December HRW wheat lost 4 cents to $7.10 1/2. Prices closed near mid-ranges. December spring wheat futures fell 2 1/2 cents to $7.66 1/2.
Fundamental analysis: Keener risk aversion in the general marketplace today kept buyers in the wheat markets standing on the sidelines. The U.S. stock indexes sold off and hit 3.5-month lows today as it appears the U.S. government is headed for a shutdown this coming weekend. The U.S. dollar index hitting another 6.5-month high today was another negative for the wheat futures markets.
USDA Monday afternoon reported the U.S. spring wheat harvest was 96% complete as of Sunday, while winter wheat plantings were estimated at 26%--up 11% from the previous week.
World Weather Inc. said that in HRW country mostly dry weather with unusually warm conditions through Friday “will be good for fieldwork advancement.” A more active weather pattern with greater rainfall Saturday through the second week of the outlook will then be beneficial for wheat planting, germination, and emergence. In the northern Plains, another area of low pressure will start to promote more rain in the region beginning Friday. This will likely be the beginning of an active weather pattern that lasts into the second week of the outlook. The rain will be good for wheat planting and establishment conditions but will also cause some harvest delays.
Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. Prices are in two-month-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing December prices above solid chart resistance at $6.20. 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 $6.07 1/2. First support is seen at $5.80 and then at the contract low of $5.70. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at the September high of $7.54 1/4. The bears' next downside objective is closing prices below solid technical support at $7.00. First resistance is seen at $7.25 and then at last week’s high of $7.44 1/2. First support is seen at this week’s low of $7.03 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 1 point to 88.18 cents, still a high-range close.
Fundamental analysis: December cotton futures showed just a bit of follow-through strength. However, overhead resistance combined with U.S. dollar strength and notable weakness in equities limited the upside. Traders continue to weigh U.S. production curbs and weakening demand prospects from top importer, China, as the country has increasingly looked to Brazil to fulfill its import needs. Furthermore, traders continue to take a cautious approach ahead of a possible government shutdown at the end of the month.
USDA reported the cotton crop made a slight late-season improvement, with “good” to “excellent” ratings increasing one percentage point to 30%, while the portion rated “poor” to “very poor” fell one point to 42% as of Sept. 24. Harvest progress was pegged at 13% complete, up four percentage points from last week.
World Weather Inc. reports U.S. harvest weather is expected to be favorable and rain from Tropical Storm Ophelia should not have caused any serious damage to crops in North Carolina and Virginia.
Technical analysis: December cotton continues to be underpinned by the 10- and 20-day moving averages of 87.09 and 87.33 cents. Additional support lies at the 40-day moving average of 86.35 cents, then at the 100-day of 83.48 cents. Meanwhile, resistance stands at 89.07 cents, then 89.96 cents and then the Sept. 1 high of 90.00 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.
