Crops Analysis | September 28, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: December corn rallied 5 1/4 cents to $4.88 1/2, ending near the session high and notching the highest close since Aug. 28.

Fundamental analysis: Corn futures showed relative strength, which was especially impressive amid the weakness seen in the soy complex. A turn in the U.S. dollar index, which fell over 400 points on the session, aided bulls. Export sales this morning came in line with the four-week average, with net sales of 841,800 MT (33.1 mil bu.), which were within the pre-report range of 475,000 MT to 1.2 MMT. China is said to have made large purchases of Ukrainian corn in the past two weeks, with the sale amounting to several hundred thousand metric tons. This comes as U.S. outstanding sales to China are less than 10% of what they were last year at this time as the nation seeks alternatives to U.S. grain. Export sales continue to pace below the five-year average and hopes of 2 billion bu. of corn exports are diminishing.

The USDA releases their Quarterly Stocks report tomorrow, which will give ending stocks for the 2022-23 marketing year. A Bloomberg survey of analysts shows expected ending stocks at 1,439 million bu., which would be below the most recent USDA forecast of 1,452 million bu. Three out of the last four years have seen ending stocks below the average trade estimate, the largest deviation exceeding 300 million bu. in Sept. 2019. The average deviation from the analyst average is about 100-million bu. A Reuter’s poll shows an expected reduction in 2022-23 production as well to 13.719 billion bu., down from 13.73 billion bu.

Technical analysis: December corn futures showed relative strength compared to the rest of the ag complex and posted a bullish high range close ahead of Friday’s Grain Stocks report. Bulls held initial support at the 20-day moving average, currently at $4.82 1/2, in early selling efforts. This will remain support into Friday and is backed by $4.80, then $4.75. The 40-day moving average, currently at $4.89 1/4, capped gains in the latter half of the session and will remain initial resistance. December futures have not traded above the 40-day moving average since its failure on July 28. Additional resistance comes in at $4.94 1/2, then the psychological $5.00 mark.

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 fell 2 3/4 cents to $13.00 1/2 but ended nearer the session high. December meal rose $2.40 to $391.50, above the 10-day moving average. December soyoil fell 133 points to 56.91 cents, the lowest close since June 29.

Fundamental analysis: Soybean futures were able to rise from overnight lows amid bolstering gains in meal, though profit taking in soyoil futures and overhead resistance proved limiting factors. Meanwhile, USDA’s weekly export sales data released prior to the open showed net sales 672,200 MT in the week ended Sept. 21, which rose notably from the previous week but commitments continue to lag behind year-ago by 34%. Traders remain focused on efforts to avert a government shutdown before the week is over, though odds are increasing due to significant differences between the House and Senate on how to address the issue.

With Friday comes USDA’s Quarterly Stocks report, which will provide the final look at the 2022 crop. On average, traders are expecting soybean production to total 4.269 billion bu. according to a Reuters poll. If realized, it would reflect a slight decline from USDA’s June figure of 4.276 billion bu. Traders also expect Sept. 1 soybean stocks to total 242 million bu.; a seven year-low if realized, and down from June’s figure of 796 million bu. and 274 million bu. a year ago.

World Weather Inc. maintains concerns continue to linger for Brazilian summer crops, most notably Mato Grosso, where erratic and lighter-than-usual rain may occur for a bit longer this spring, however the region will receive greater rain next week and on into the second week of October. Center south Brazil is also expecting greater rainfall next week and into the following week to increase soil moisture and improve early season crop planting conditions.

Technical analysis: While November soybeans rose from overnight lows, solid overhead resistance at the 10- and 100-day moving averages of $13.06 1/2 and $13.08 1/2 hemmed momentum. However, a push above the area will find additional resistance layered at the 200-, 20- and 40-day moving averages of $13.26 3/4, $13.35 1/4 and $13.39 1/4, respectively. Conversely, initial support continues to serve at $12.94 3/4, then at $12.86 1/4 and $12.75 1/4.

December meal secured a close above the 10-day moving average of $390.10. The 100-day moving average of $392.90 will now serve as initial resistance, with additional resistance layered at the 20-, 40- and 200-day moving averages of $394.80, $395.90 and $402.40. Meanwhile, initial support lies at $386.10, then at $383.00 and $377.80.

December soyoil lost technical traction, with bears capturing a close below the 100- and 200-day moving averages of 57.31 and 57.18 cents. Initial support will now serve at 56.43 cents, with additional support at 55.59 cents. Initial resistance will now serve at the 200- and 100-day moving averages, then at the 10-, 20- and 40-day moving averages of 59.10, 60.36 and 61.17 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 wheat fell 3/4 cent to $5.78 3/4, a mid-range close. December HRW wheat lost 9 1/2 cents to $6.85. Prices closed nearer the session low and hit a two-year low. December spring wheat fell 3 3/4 cents to $7.47.

Fundamental analysis: Risk appetite in the general marketplace late this week remains tepid at best, which continues to limit buyer interest in the wheat futures markets. The surging U.S. dollar index is also a negative element for wheat, as the USDX on Wednesday hit a 10-month high. Somewhat friendly for the wheat markets is the rally in the crude oil futures market that saw prices overnight hit a 13-month high above $95 a barrel.

USDA this morning reported U.S. wheat export sales of 544,500 MT during week ended Sept. 21, which rose 77% from the previous week and 51% from the four-week average. Sales were above market expectations.

Traders are looking ahead to Friday’s quarterly grain stocks report from USDA. A Bloomberg survey shows traders expect little change in U.S. all wheat production or grain stocks from the August report numbers. It’s more likely that wheat futures markets will react in tandem to the corn futures market response to Friday’s USDA data.

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 this week’s high of $5.96 3/4 and then at $6.07 1/2. First support is seen at the contract low of $5.70 and then at $5.60.  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 $6.50. First resistance is seen at $7.00 and then at this week’s high of $7.21 3/4. First support is seen at today’s low of $6.81 and then at $6.70.

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 rose 41 points to 88.71 cents, marking a low-range close after marking the highest intraday level since Sept. 1.

Fundamental analysis: December cotton futures notched a fourth straight day of gains to a one-month high amid U.S. dollar weakness, though pressure in crude oil ultimately limited upside efforts. USDA’s weekly export sales data also proved lackluster, with net sales totaling 55,300 RB during the week ended Sept. 21, which were down 48% from the previous week and 31% from the four-week average. Top purchasers for the week were Vietnam, China and Indonesia. Meanwhile, shipments totaled 159,400 RB which rose 6% from the previous week and down 3% from the four-week average.

World Weather Inc. reports planting efforts in Brazil should begin in the center south soon, if it has not already begun and may start in northern Argentina when significant rain falls, though the forecaster notes dry weather will occur through much of the next two weeks. In the meantime, U.S. harvest weather is expected to be favorable, though some showers will develop in West Texas in the coming week, although they should not be threatening to fiber quality. The U.S. Delta and southeastern states will experience restricted precip and warm weather supporting excellent maturation conditions.

Technical analysis: After gapping higher overnight, December cotton bulls failed to secure a close above resistance at 89.25 cents, despite an extended run of the area. Initial resistance will continue to serve at the level, then at the Sept. 1 high of 90.00 cents, again at 90.19 and 90.94 cents. Conversely, solid support lies at the 20- and 10-day moving averages of 87.46 and 87.36 cents, again at the 40-day moving average of 86.51 cents and the 100-day moving average of 83.61 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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