Crops Analysis | September 27, 2023
Price action: December corn rose 3 1/2 cents to $4.83 1/4, the highest close since Sept. 11.
Fundamental analysis: Corn futures edged higher for the fourth straight session, with notable strength in crude oil futures lending solid price support. However, a wavering wheat complex and fading soybean futures amid profit-taking in meal ultimately limited upside momentum. Traders are also closely monitoring Washington’s efforts to avert a potential government shutdown, which is only four days away.
Harvest continues to progress throughout the Midwest, though World Weather Inc. reports eastern and southern Illinois to Kentucky and the western half of Ohio will see rain and interruptions to fieldwork today, while most other areas are dry and should see improving to favorable conditions for harvesting. The forecaster notes rain will become infrequent and often light Thursday Oct. 11 and crop maturation and harvesting should occur favorably around one round of rain advertised for Oc.t 4-6.
Ethanol production in the week ended Sept. 22 averaged 1.099 million barrels per day (bpd), which rose 29,000 bpd and was 18.0% above the same week last year. Ethanol stocks increased 367,000 barrels to 22.048 million barrels.
USDA will release its weekly export sales data prior to Thursday’s open, with traders expecting net sales for week ended Sept. 21 between 475,000 MT and 1.2 MMT. Sales totaled 566,857 MT during the previous week.
Technical analysis: December corn edged above the 40-day moving average midmorning, in a breach of the technical indicator for the first time since July 28. Though the area held into the close and will continue to serve as solid overhead resistance. However, extended buying efforts above the 40-day will then face resistance at $4.90 1/4, then at the 100- and 200-day moving averages of $5.13 1/4 and $5.45 1/4. Meanwhile, the 20- and 10-day moving averages of $4.80 1/2 and $4.78 1/2 are providing support, along with $4.76 1/4, $4.72 3/4 and $4.69 1/4.
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 1/2 cent to $13.03 1/4 and nearer the session low. December soybean meal fell $3.60 to $389.10 and nearer the session low. December bean oil closed up 53 points at 58.24 cents and nearer the session high.
Fundamental analysis: The narrowly mixed closes in the soybean complex futures today reflected tepid-at-best buying interest from the bulls amid keener risk-off attitudes in the general marketplace, as it appears likely the U.S. government will shut down, at least temporarily, this weekend. Big gains in the crude oil market that saw futures prices hit a 13-mont high today were a bullish outside market force for the soybean complex. However, the rally in the U.S. dollar index to a 10-month high today mostly offset the big gains in crude oil.
World Weather Inc. today said U.S. soybean harvest weather is expected to be mostly good the next several days, but there will be some delays periodically. Meantime, some concern remains for summer crops in Mato Grosso where erratic and lighter than usual rain may occur for a little while longer this spring. Greater rain next week in center south crop areas will prove to be helpful for spring planting.
Thursday morning’s weekly USDA export sales report is expected to show U.S. soybean sales of 500,000 MT to 1.2 million MT in the 2023-24 marketing year.
Friday morning’s quarterly USDA grain stocks report is coming into focus. A Bloomberg survey shows an average trade estimate of 244 million bushels of soybeans stocks as of September 1.
Technical analysis: The soybean futures bears have the slight overall near-term technical advantage. Prices are in a four-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 $13.50. 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 today’s high of $13.17 and then at $13.25. First support is seen at $12.82 1/4 and then at $12.70.
The meal bears have the overall near-term technical advantage. Prices are in a four-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 today’s high of $396.60 and then at $400.00. First support is seen at this week’s low of $384.60 and then at $379.00.
Soybean oil futures bulls have the slight overall near-term technical advantage but have faded. Prices are in a five-week-old downtrend on the daily bar chart. The next upside price objective for the bean oil bulls is closing September prices above solid technical resistance at 62.50 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at 52.50 cents. First resistance is seen at today’s high of 59.03 cents and then at 60.00 cents. First support is seen at this week’s low of 56.62 cents and then at 56.00 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 fell 9 1/2 cents before closing at $5.79 1/2, on session lows. December HRW futures made a two-year low, falling 16 cents to $6.94 1/2. December spring wheat futures fell 15 3/4 cents to $7.50 3/4.
Fundamental analysis: Wheat futures struggled to hold onto overnight gains as the U.S. dollar index continues to surge higher and technical selling overpowers dip buyers. Outside markets have been no help to floundering wheat futures, as the U.S. dollar index surged to the highest level since November. The higher dollar makes U.S. commodities relatively more expensive, hindering importers from purchasing U.S. grain. Paired with the logistical disadvantage the U.S. sees compared to other major exporters, the export situation is likely to see little reprieve over the coming months. Price action is likely to remain relatively quiet until Friday’s Small Grains Annual Summary, which will give a look into final production numbers for the crop year, and the Quarterly Stocks report.
The Plains have been mostly dry and are expected to remain dry into the end of the week. Rains are expected to pick up next week with frequent showers from Oct. 4-11, providing much needed precip for planting, germination and emergence, World Weather Inc says.
USDA is set to release its weekly export sales report Thursday morning, with analysts expecting net sales between 250,000 and 500,000 MT. Net sales last week came in at 307,704 MT and were the lowest since July.
Technical analysis: December SRW futures struggled against 20-day moving average resistance at $5.96 and ultimately closed below the 10-day moving average at $5.87. A series of lower highs and lower lows remains on the daily bar chart as the bears have full control of the technical advantage. Bears are seeking to break support at $5.75 before tackling the contract low at $5.70.
December HRW futures led the wheat complex lower Wednesday and traded a two-year low. Prices remain in a full-fledged downtrend on the daily bar chart. Bears are seeking to take out minor support at $6.92 before tackling $6.80 support. Bulls are targeting initial resistance of $7.00, backed by $7.17 1/4 then $7.28 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.
Price action: December cotton rose 12 points to 88.30 cents, ending nearer the session low. Prices hit a three-week high early on.
Fundamental analysis: The cotton futures market saw mild support today from surging crude oil futures prices that hit a 13-month high today. However, a stronger U.S. dollar index that scored a 10-month high today mostly offset the cotton-friendly big gains in crude oil. Gains in cotton were also limited by the risk-off trader and investor mentality in the general marketplace, as the U.S. stock indexes fell to four-month lows today.
World Weather Inc. today reported U.S. cotton harvest weather is expected to be favorable. Some showers will develop in West Texas next week, although they should not be threatening to fiber quality. The U.S. Delta and southeastern states will experience restricted precipitation and warm weather supporting excellent maturation conditions. Meantime, “cotton weather in India has been good this year and the same is true in China, despite some reduction in area planted. Australia’s cotton planting will be down in unirrigated fields, but that has already been digested in the marketplace. Brazil planting should begin in center south soon if it has not already begun and may start in northern Argentina when significant rain falls,” said the forecaster.
Cotton traders will closely examine Thursday morning’s weekly USDA export sales report, especially any business from major cotton consumer China.
Technical analysis: The cotton futures bulls have the firm overall near-term technical advantage. A 2.5-month-old uptrend is alive 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 today’s high of 89.45 cents and then at 90.00 cents. First support is seen at Tuesday’s low of 87.20 cents and then at 86.00 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.
