Crops Analysis | October 9, 2023
Price action: December corn fell 3 3/4 cents to $4.88 1/4, near the session low.
Fundamental analysis: Following a bout of mild overnight strength, December corn futures reversed to the session low, despite persisting gains in SRW wheat and a strong rally in crude oil futures. Overnight gains stemmed from heightened geopolitical in the Middle East after Hamas forces made a surprise weekend attack on Israel, with fears that a wider conflict could affect oil supply from the region.
U.S. harvest weather is expected to be mostly good, although a mid- to late-week storm will delay harvest progress briefly. Meanwhile, planting efforts in Brazil are progressing in earnest, with corn plantings in center-south estimated to be 37% complete as of last Thursday, just behind last year’s pace of 39% for the same period, according to AgRural. World Weather Inc. indicates Argentina still needs significant rainfall to support early corn planting and reports it may be ten days before beneficial moisture falls.
Recent sideways consolidation will likely persist as traders anticipate USDA’s October Crop data, due out Thursday. A Reuters poll shows Analysts expect 2023-24 corn production at 15.121 billion bu., down slightly from September, while ending stocks are expected at 2.138 billion bu., down from 2.221 billion bu. in September.
USDA will release its weekly condition ratings, harvest progress and export inspection data on Tuesday, due to the observance of today’s government holiday.
Technical analysis: While December corn futures are in a fledgling uptrend, the contract ended near the intraday low, below initial support at $4.89 1/4. However, solid support at the 10-, 40- and 20-day moving averages of $4.86 3/4, $4.83 3/4 and $4.82 1/4. Conversely, resistance around $4.96 3/4 continues to dampen upside efforts, though a close below the area will likely see expanded momentum towards $5.01 1/2, $5.04 1/4, then the 100-day moving average of $5.11.
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 soybean futures fell 1 3/4 cents to $12.64 1/4 after trading in a volatile session. December soybean meal futures rose $2.50 before settling at $374.60. December soybean oil fell 142 points to 53.93 cents.
Fundamental analysis: Soybean futures were unable to hold onto overnight gains from ongoing geopolitical tensions and turned lower at this morning’s open, but eventually closed off intrasession lows. While soybeans turned from earlier gains, outside markets continue to show some risk aversion, as precious metals stayed on session highs and treasury bond futures rallied throughout Monday’s session. Escalation of the conflict in Israel will continue to impact markets as volatility across asset classes is increased, combined with positioning ahead of Thursday’s WASDE and Crop Production reports.
Planting in Brazil continues at a rapid pace, as AgRural estimates the crop having reached 10.1% panted as of last Thursday, compared to 9.6% during the same time last year. Much of Brazil is expected to see a healthy mix of rain and sunshine over the next couple of weeks, World Weather Inc says. That will allow fieldwork to advance at a good pace between bouts of rain, much of which will be beneficial for summer crops with exceptions to parts of southern Brazil that are likely to see some flooding. Northern Brazil will still need additional rain to restore soil moisture as the region has been fairly dry, the forecaster says.
Technical analysis: November soybean futures remain in a downtrend on the daily bar chart as prices were unable to take out initial resistance at $12.81 in geopolitically driven overnight trading. Bulls are seeking a daily close above $12.86 1/2 to indicate a potential low is in, further resistance lies at $12.98 3/4. Bears are seeking to take out initial support at $12.58 1/4, backed by the recent low of $12.56 3/4 then the psychological $12.50 level.
December meal futures showed relative strength today, but bears continue to hold the technical advantage. Recent buying efforts can be chalked up to profit-taking, as initial resistance of $376.00 capped most gains today. Additional resistance lies at $378.50 then $386.40. Bulls are seeking to hold initial support at $371.00, which is backed by last week’s low of $366.50.
December soybean oil continues lower in a steep downtrend on the daily bar chart. Resistance of 56.30 cents held overnight with very little buying above that area. Friday’s low of 55.01 cents is likely to act as resistance on a retest of the level as well. Bulls are seeking to hold initial resistance of 53.76 cents, which is backed by 53.35 cents, then 51.36 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 wheat rose 4 1/2 cents to $5.72 3/4 and nearer the session low. December HRW wheat closed up 12 1/4 cents at $6.86 and nearer the session high. December spring wheat futures rose 10 1/2 cents to $7.31 and nearer the session high.
Fundamental analysis: The wheat futures markets today saw short covering from recent selling pressure. Sharply higher crude oil prices today were a bullish element for the wheat markets, but the stronger U.S. dollar index today limited the bullish impact of higher oil. General risk version in the marketplace today due to the weekend violence in the Middle East somewhat squelched the wheat market bulls and may continue to do so in the near term.
Weather in global wheat regions leans bullish at present. World Weather Inc. today reported dryness in Western Australia is still a big concern. Brazil wheat is still facing a grain quality decline because of too much moisture. Argentina is still dealing with drought, although recent showers and those coming will offer some temporary relief. U.S. hard red winter wheat and wheat in the Pacific Northwest will need greater rain for improved crop establishment, said the forecaster.
There were no weekly USDA grain reports issued today as the agency was closed due to a federal holiday. Weekly export inspections data will be out Tuesday morning. The USDA monthly supply and demand report is due out Thursday.
Technical analysis: Winter wheat futures prices are still in 2.5-month-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing December prices above solid chart resistance at $6.10. The bears' next downside objective is closing prices below solid technical support at $5.25. First resistance is seen at today’s high of $5.81 1/2 and then at $5.90. First support is seen at today’s low of $5.59 and then at $5.50. 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 $7.00 and then at $7.10. First support is seen at $6.75 and then at the September low of $6.62.
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 fell 18 points to 86.96 cents, near the session low after trading the highest level since Sept. 29.
Fundamental analysis: December cotton futures began the overnight session with strong gains amid a surge in crude oil futures following intensified geopolitical tensions in the Middle East. However, as the day session progressed, selling from overnight highs intensified as traders began to prepare for USDA’s monthly supply and demand data due out Thursday. Traders are anticipating further cuts to production, with a Bloomberg survey showing analysts expect production to fall to 12.91 million bales, down from September’s forecast of 13.13 million bales. Ending stocks are expected at 2.96 million bales, down from 3.00 million in September.
As harvest progresses throughout the U.S., World Weather Inc. reports limited rain in cotton maturation and harvest areas of Texas and the Delta will be great for protecting fiber quality. However, some rain in the southeastern U.S. will slow harvesting and discolor some of the cotton fiber, but the rain should not last long enough or be heavy enough to cause a serious threat to the crop.
USDA will release weekly condition ratings and harvest progress updates following tomorrow’s session due to the observance of today’s government holiday.
Technical analysis: December cotton futures traded a 198-point range, reaching the highest level since Sept. 29, though selling efforts ultimately led to a close below the 10- and 20-day moving averages of 87.53 and 87.33 cents. Initial support will now serve at the 40-day moving average of 86.79 cents and again at 86.63, 86.11 and 85.68 cents. Additional attempts to run higher will face resistance at the 10- and 20-day moving averages, then at 88.01, 88.53 and 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.
