Crops Analysis | October 2, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: December corn rose 12 cents to $4.88 3/4, ending the session above the 10, 20- and 40-day moving averages amid the largest daily gain since July 24.

Fundamental analysis: Corn futures notched spillover strength from corrective buying efforts in SRW wheat following a reach to a three-year low on Friday. However, a daily sale of 210,000 MT for delivery to Mexico during 2023-24, combined with a down-to-the-wire move to skirt a government shutdown through Nov. 17 improved market sentiment across commodities. Though a surging U.S. dollar and lingering weakness in crude oil likely limited the upward move. Meanwhile, USDA reported weekly export inspection data for week ended Sept. 28, which showed 625,870 MT (24.6 million bu.) inspected for export, which were down 84,735 MT from the previous week but within the pre-report range of 500,000 to 850,000 MT. Corn inspections continue to outpace year-ago by nearly 11%.

Rain will continue prove hit-or-miss across the Midwest, allowing harvest efforts to progress efficiently across the Midwest. World Weather Inc. notes dry weather and favorable conditions for crop maturation and harvesting will continue through much of the next two weeks outside of one round of organized rain occurring Tuesday into Thursday. The forecaster reports many west-central and northwestern areas will see their first frost of the season this weekend with a few areas seeing light freezes Saturday morning.

USDA will update weekly condition ratings and harvest progress estimate following the close. A Reuters poll indicates traders expect the crop’s “good” to “excellent” rating to remain unchanged at 53% and harvest to have progressed 10 percentage points from a week ago to 25% complete.

Technical analysis: December corn futures were able to notch a close above the 10-, 20- and 40-day moving averages of $4.80 3/4, $4.81 1/4 and $4.84 1/2. Initial resistance will now serve at $4.95 1/4, then $5.00 1/2 and the 100-day moving average of $5.12 1/4. Conversely, initial support will now lie at today’s failed resistance levels, then at $4.71 1/2 and the Sept. 19 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.

 

 

Soybeans

Price action: November soybeans rose 2 cents to $12.77 after marking the lowest intraday level since June 29. December meal fell $6.90 to $374.30, the lowest close since June 12, while December soyoil rallied 160 points to 57.43 cents, ending the session above the 200-day moving average.

Fundamental analysis: Soybeans struggled to garner much bullish momentum from the surging corn and wheat markets as the crush market continues to slide. CBOT crush traded at the lowest level since June today ahead of the USDA crush report, due out this afternoon. New crop CBOT crush, calculated using various amounts of soybean, soybean meal and soybean oil futures, is down nearly 50 cents (21.4%) in the past month and a half. Crush demand has been a large part of the rallies seen in the soy complex over the past year. Continued weakness, especially as outside markets have turned around, is concerning for soy bulls.

Summer-like temperatures returned to the Midwest over the weekend and are expected to remain into the first half of the week. Some precip is also expected to roll into the Corn Belt mid-week, which will slow fieldwork, though dry weather is expected to return after that, World Weather Inc says. Argentina was dry over the weekend and rain over the coming weeks is expected to continue to be lighter than usual. Much more rain will be needed to break the ongoing drought, the forecaster says.

The USDA releases the weekly Crop Progress report this afternoon. Analysts expect soybean conditions to remain steady at 50% “good” to “excellent,” according to a Bloomberg poll. Large deviations in crop ratings are unlikely this late in the season. Harvested progress is expected to rise to 24%, two percentage points above last year and in line with the ten-year average.

USDA releases the monthly Oilseed Crushings report this afternoon, which is expected to show August crush at 171.6 million bushels, an 11-month low. The survey conducted by Reuters also showed expected soyoil stocks of 1.840 billion lbs., the tightest since October 2019.

This morning, the USDA reported daily sales of 132,000 MT of soybeans for delivery to China during the 2023-24 marketing year.

Technical analysis: November soybeans appear to be forming a similar pattern as that has persisted over the past month- a large daily drop met with corrective buying and consolidation. Price stabilized from Friday’s selloff but buying interest remained limited. Bears remain in full control of the technical advantage, targeting $12.60 support, which is backed by $12.55. The $12.55 level has acted as an important pivot since March, failure below which is likely to visit $12.00. Bulls are targeting initial resistance at $13.00, backed by $13.17 then $13.33 3/4.

December soybean meal continues to face relative weakness, falling below $375.00 support on today’s close. Bulls are seeking to hold initial resistance at $370.70, which is backed by firmer support at $365.00, then the May low of $361.8. Bears retain the technical advantage and are seeking to hold resistance at $380.00, then $386.00 as bulls are seeking a daily close above $390.00 to indicate an interim low may be in place.

December soyoil futures saw sharp gains on Monday, though still remain in a downtrend on the daily bar chart. Bulls are seeking a daily close above 57.50 cents, which is backed by 58.15 cents. Clearing these resistance levels would negate the steep downtrend that has lasted since Sept. 18, but bulls need a daily close above 60.00 cents to give confidence that an interim low could be in place. Initial support stands at 57.00 cents and is backed by 55.56 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 rose 23 1/4 cents to $5.64 3/4 and near the session high. December HRW wheat gained 13 cents to $6.76 3/4 and nearer the session high. December spring wheat futures rose 9 1/2 cents before settling at $7.18 3/4.

Fundamental analysis: The winter wheat futures markets saw short covering featured today after prices Friday hit contract lows. Solid gains in the corn market today also helped the wheat bulls. The expected U.S. government shutdown this past weekend that was surprisingly averted for at least six weeks did prompt an up-tick in marketplace risk appetite to help the grains a bit, but it is still not keen. The strong U.S. dollar index that today hit another 10-month high, as well as lower crude oil prices to start the trading week, were bearish outside market elements for the grains.

USDA this morning reported weekly U.S. wheat inspections of 397,594 MT for week ended Sept. 28, which were down 88.118 MT from the previous week but were within the pre-report range.  Wheat continues to fall behind the USDA’s forecast export pace.

World Weather Inc. today reported that in HRW country, weekend temperatures “were too warm to conserve soil moisture. Daily highs in the 80s and 90s maintained very low soil moisture and stressed some early emerging wheat.” Rain is expected to scatter across the region this week and portions of the region “should get adequate relief to temporarily improve the moisture profile – mostly in Oklahoma and northern Texas. Dryness will prevail in western Kansas, Colorado and southwestern Nebraska,” said the forecaster.

This afternoon’s weekly USDA crop progress reports are expected to show U.S. winter wheat planted at 40% complete versus 26% last week.

Technical analysis: Winter wheat futures prices are in nine-week-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing December prices above solid chart resistance at $6.00. The bears' next downside objective is closing prices below solid technical support at $5.25. First resistance is seen at $5.80 and then at $5.90. First support is seen at the contract low of $5.40 and then at $5.30. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at $7.25. The bears' next downside objective is closing prices below solid technical support at $6.25. First resistance is seen at today’s high of $6.82 3/4 and then at $7.00. First support is seen at last week’s low of $6.62 and then at $6.50.

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 60 points to 87.75 cents, ending near the session high and above the 20- and 10-day moving averages.

Fundamental analysis: Cotton futures were able to garner strength despite extended weakness in crude oil futures and equities, while the U.S. dollar surged higher amid an averted government shutdown. General sentiment across commodities has turned more positive following last-minute efforts to fund the government through Nov. 17. Traders will now be able to mull over crop reports, which are likely to show a further reduction on U.S. supply amid persisting hot, dry weather in Texas.

World Weather Inc. notes Texas rainfall this week may induce some short-erm discoloring of the cotton fiber, but the discoloration will only last for a short period of time and dry weather will return in time to bleach the cotton fiber white again. The forecaster states temps will cool down briefly this week and then get quite warm again next week.

USDA will update weekly condition ratings and harvest progress following today’s close. Last week, USDA pegged the “good” to “excellent” rating at 30%, which was a one percentage-point increase on the week. Meanwhile, harvest was pegged at 13% complete, which was in line with the five-year average.

Technical analysis: December cotton futures regained technical traction, with a close held above the 20- and 10-day moving averages of 87.31 and 87.50 cents. Initial resistance will now stand at 88.62 cents, then at the Sept. 1 high of 90.00 cents, and again at 90.09 and 90.89 cents. Initial support will now serve at today’s failed resistance levels, then at the 40-day moving average of 86.66 cents, again at 86.35 and 85.55 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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