Crops Analysis | October 17, 2023
Price action: December corn futures fell 1 cent to $4.89 and nearer the session low.
Fundamental analysis: The corn market is seeing quieter, consolidative trading action so far this week. Harvest is in full swing and commercial hedge pressure continues to limit the upside in futures. Also, the grain market speculative bulls continue very timid as risk appetite in the general marketplace remains less than robust amid the still-unfolding Middle East crisis. Steadily rising U.S. Treasury yields are also casting a pall over much of the raw commodity sector, suggesting the Federal Reserve will continue to raise interest rates to crimp demand and reduce inflation.
USDA on Monday afternoon reported the U.S. corn harvest at 45% complete as of Sunday, ahead of the five-year average of 43%. The crop’s “good” to “excellent” rating remained unchanged at 53%.
Weather forecasts call for a generally good U.S. corn harvest window for the next two weeks. Meantime, World Weather Inc. reported Argentina rain potential looks better for Saturday through Monday and again Oct. 25-26, with sufficient rain expected to improve topsoil moisture.
Technical analysis: The corn futures bears have the overall near-term technical advantage. However, prices are still in a fledgling uptrend on the daily bar chart. The next upside price objective for the bulls is to close December prices above solid chart resistance at $5.20. The next downside target for the bears is closing prices below chart support at the September low of $4.67 3/4. First resistance is seen at this week’s high of $4.96 3/4 and then at $5.00. First support is at $4.85 and then at last week’s low of $4.82 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 10 1/2 cents to $12.96 3/4, a high-range close after trading the highest intraday level since Sept. 29. December meal rallied $9.60 to $399.80 and closed above the 100- and 40-day moving averages, while soyoil fell 55 points to 55.35 cents.
Fundamental analysis: Soybean futures extended Monday’s gains amid spillover strength which stemmed from strong gains in meal futures. The move came after the National Oilseed Processers Association reported record September crush and proof export demand is gaining steam, evidenced by USDA’s weekly export sales and inspections data reported in the past week. Meanwhile, as harvest efforts progress rather quickly in the U.S., South America’s planting pace has been curbed by extreme weather patterns. Southern Brazil continues to be overwhelmed with torrential rain, with more in the forecast this week, while northern Brazil is experiencing an extended period of record heat and drought. However, dry weather in east-central and northeastern Brazil is the biggest concern, with producers waiting for improved soil moisture before planting soybeans, according to crop consultant Dr. Michael Cordonnier. Meanwhile, in Argentina, farmers have not planted any soybeans yet, though Cordonnier expects some will begin this week. However, he notes if there is not enough soil moisture to ensure germination, farmers may wait for additional moisture as the planting window is just starting to open.
As of Sunday, USDA reported soybean harvest was 62% complete, well ahead of the five-year average of 52%. The crop’s “good” to “excellent” rating rose one point from a week ago to 52%. World Weather Inc. notes harvest in the Midwest should advance well during the next two weeks as only two rounds of well-organized rain are expected with the poorest conditions extending from portions of Wisconsin to Michigan and Ohio where daily showers will occur midweek into Saturday.
Dr. Michael Cordonnier now forecasts U.S. soybean production of 4.08 billion bu. after increasing his yield estimate 0.3 bu. to 49.3 bu. per acre. However, Cordonnier’s estimate is still below USDA’s October forecast of 4.10 billion bu. and yield of 49.6 bu. per acre.
Technical analysis: November soybeans were able to breach psychological resistance at $13.00 for the first time since Sept. 29 and ended the session above resistance at $12.90 1/4 and $12.94 1/4. Initial resistance will now serve at $12.99 3/4 and again at the 100-, 200- and 40-day moving averages of $13.14 1/2, $13.19 1/4 and $13.24 3/4. Conversely, initial support will now serve at today’s failed resistance levels, then at the 20-day moving average of $12.85 1/4, then at $12.80 3/4 and again at the 20-day moving average of $12.75 1/4 and Oct. 12 low of $12.50 1/2.
December meal futures bulls gained technical traction with a close held above the 100- and 40-day moving averages of $392.00 and $392.80 in addition to resistance at $393.10, $396.00 and $399.10 after breaching the 200-day moving average for the first time since Sept. 12. Initial resistance will now serve at $4.07.90 and $421.00. However, near-term overbought conditions could spur corrective selling, which would find support at today’s failed resistance levels, then at $390.00, $387.10, then the 20- and 10-day moving averages of $384.10 and $382.30.
December soyoil futures continue to face resistance at the 20-day moving average of 56.18 cents, though buying above the area will then face resistance at 56.56 cents, then at the 200-day moving average of 56.80 cents and again at 57.21 and 58.27 cents. Near-term overbought conditions could spur corrective selling, though support lies at 54.85 cents and at the 10-day moving average of 54.55 cents. From there support lies at 53.79 cents, 53.14 cents and last week’s low of 52.08 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 fell 6 3/4 cents to $5.70 1/2. December HRW wheat lost 2 cents at $6.66 3/4. Prices closed nearer their session lows. December spring wheat fell 1 cent to $7.27 3/4.
Fundamental analysis: The winter wheat futures markets continue trapped in a sideways trading range at lower price levels, amid a recent lack of fresh, bullish fundamental news. Risk appetite in the general marketplace is still not keen, which is keeping the speculative wheat market bulls squelched. A still-strong U.S. dollar index is another bearish outside market element for the wheat markets.
USDA on Monday afternoon estimated U.S. winter wheat planting had reached 68% complete as of Sunday, which was in-line with the five-year average, while 39% was estimated to be emerged.
World Weather Inc. today said U.S. hard red winter wheat areas will experience dry weather most of this week and then the region may get some rain next week. More rain is needed in the Pacific Northwest as well as the west-central and southwestern high Plains region. Western Australia dryness will continue a concern for the nation’s wheat production. Argentina wheat also needs rain, with just a little in the near-term forecast. Southern Brazil wheat is suffering from too much rain. Western Australia wheat regions are also too dry, which will reduce output.
Technical analysis: Winter wheat futures have seen 2.5-month-old downtrends on the daily bar charts stall out. Bears still have the firm overall near-term technical advantage in SRW and HRW. The 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 this week’s high of $5.88 1/2 and then at $6.00. First support is seen at $5.60 and then at last week’s low of $5.47 1/4. 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 the October high of $6.90 1/4 and then at $7.00. First support is seen at the October low of $6.55 1/4 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.
Price action: December cotton fell 192 points to 83.23 cents, marking a near three-month low.
Fundamental analysis: Cotton futures encountered follow through selling as traders continue to weigh demand concerns from China. Many fear cotton prices will struggle throughout the marketing year despite curbed U.S. production as trade tensions are leading China to Brazil and Australia to fulfill the country’s import needs. However, weather patterns could eventually affect rival purchases. Australia continues to face dry conditions, with no significant rain events expected any time soon, while Brazil is expected to remain too wet for center-south planting at least for another week, according to World Weather Inc. However, expected rains in Argentina will be helpful for early season planting progress.
As of Sunday, USDA estimated U.S. cotton harvest was 33% complete, one point ahead of the five-year average, while the crop’s “good” to “excellent” rating dropped two percentage points to 30%, while the portion rated “poor” to “very poor” rose two points. Harvest progress should continue to progress at a strong pace, with dry weather and mostly favorable conditions expected for most of the next two weeks, with one round of rain expected Oct 24-26, though confidence for the event is currently low.
Technical analysis: December cotton bears gained a steadier grip, with a close held below support at 84.41 cents, the 100-day moving average of 84.13 cents as well as support at 83.67 cents. Initial support now serves at 82.76 cents, with little support layered in until the June 27 low of 76.81 cents. However, near-term oversold conditions could ignite buying, which would find resistance at today’s failed support levels, then at the 10-day moving average of 85.64 cents, then 86.06 cents and again at the 20- and 40-day moving averages of 86.57 and 86.83 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.
