Crops Analysis | October 24, 2023
Price action: December corn futures closed down 6 1/4 cents at $4.84 and nearer the session low.
Fundamental analysis: The corn futures market today was pressured by bearish outside market elements that included sharp gains in the U.S. dollar index and losses in the crude oil market. Weaker wheat futures markets today also limited buying interest in corn. Good U.S. harvest progress and related commercial hedge pressure were also bearish factors for corn today.
The corn market bulls got no traction today after USDA reported a daily U.S. corn sale of 117,200 MT for delivery to Mexico during 2023-24.
USDA estimated that as of Sunday the corn harvest was 59% complete, up 14 percentage points from the previous week and five points ahead of the five-year average.
World Weather Inc. reported today that Argentina’s recent rain and slowly improving rainfall potential in center west Brazil may provide some bearish bias on corn market mentality. “However, recent hot temperatures and a general lack of rain that will continue for a few more days may result in permanent crop damage. Replanting may be necessary,” said the forecaster. What had been good U.S. harvest weather will deteriorate over the coming week in the western Corn Belt, said World Weather.
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 8 1/2 cents to $12.95 1/4, marking a high-range close above the 10-day moving average. December meal rose $13.70 to $434.20, the highest close since March 10. December soyoil fell 62 points to 51.32 cents, after trading at the lowest intraday level since June 9 earlier in the session.
Fundamental analysis: Soybean futures fended off overnight weakness, in step with meal futures despite a strong U.S. dollar rally. The government’s harvest progress estimate of 76% as of Oct. 22 seemingly weighed on futures amid a 14% week-over-week jump, which is nine points ahead of the five-year average.
Weather in South America continues to drive the complex as producers in Brazil continue to plant. World Weather Inc. reports Center-west Brazil will see some showers in the coming week, but much of the resulting rain will not counter evaporation, leaving a need for additional rains. Meanwhile, interior and southern Brazil and Paraguay will receive too much rain this weekend, resulting in a new round of flooding and more delays to summer crop planting.
Crop consultant Dr. Michael Cordonnier left his Brazilian soybean crop estimate unchanged at 162 MMT, but now indicates a neutral to lower bias going forward. Irregular rainfall across Brazil caused Cordonnier to be more cautious with his bias towards soybeans.
Technical analysis: November soybeans rallied from the overnight low, which tested support at $12.80 1/2, and extended back above the 20- and 10-day moving averages of $12.85 and $12.91 3/4. Initial resistance will now stand at $12.98 1/2, then $13.10 1/4, with solid resistance at the 40-, 200-, and 100-day moving averages of $13.14 3/4, $13.16 3/4 and $13.21 1/4. Conversely, initial support will now serve at the 10- and 20-day moving averages, then $12.80 1/2, $12.74 1/4 and the Oct. 12 low of $12.50 1/2.
December meal made a strong move higher as the noon hour approached, with bulls ultimately taking out the June high of $432.60. Initial resistance now stands at $434.20 and $439.30, while support lies at $422.20, $415.30, $410.20.
December soyoil edged lower for the second straight session, though support was able to hold at 51.15 cents into the close. The area will continue to serve as initial support, then at 50.35 and 48.93 cents. Meanwhile, resistance will continue to serve first at 52.57 cents, then the 10-day moving average 53.63 cents, the 20-day at 54.78 cents, 55.90 cents. From there the 200-day moving average will serve as strong overhead resistance at 56.61 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 $5.80 1/2 and near mid-range. December HRW wheat lost 7 3/4 cents at $6.63 and near mid-range. December spring wheat fell 9 1/2 cents to $7.28 1/4.
Fundamental analysis: “Rain in the Plains makes grain,” was the theme in the wheat futures markets today. World Weather Inc. today reported rain and snow coming to the U.S. Plains, rain in Europe, rain in southern and western parts of Russia, good soil moisture in India and recent rain in Argentina “all have a bearish bias to wheat market mentality.”
Sharp gains in U.S. dollar index and solid losses in crude oil futures were also bearish outside market forces working against the wheat market bulls today.
USDA Monday afternoon reported 77% of the U.S. winter wheat crop was sowed as of Sunday, one point behind average and two points less than traders expected. U.S. winter wheat emergence was estimated at 53%, equal to the five-year average for the third week of October.
Meantime, Russia’s grain harvest in 2023 is forecast at 140 MMT, down from last year’s record high, but still the second-largest ever. Exports are estimated at 60 MMT, according to the TASS news agency.
Technical analysis: December SRW futures have seen a 2.5-month-old downtrend on the daily bar chart negated and prices are starting to trend higher, However, the bulls need to show fresh power soon to keep the fledgling price uptrend alive. Bears still have the overall near-term technical advantage. 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 the contract low of $5.40 1/2. First resistance is seen at this week’s high of $5.95 1/4 and then at $6.00. First support is seen at today’s low of $5.72 3/4 and then at $5.60.
HRW futures bears have the solid overall near-term technical advantage. However, a 2.5-month-old downtrend on the daily bar chart has stalled out. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at $7.00. The bears' next downside objective is closing prices below solid technical support at $6.25. First resistance is seen at $6.75 and then at the October high of $6.90 1/4. 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 80 points to 82.93 cents, a near mid-range close.
Fundamental analysis: Cotton futures spent the day mostly lower as overhead resistance combined with a U.S. dollar rally limited upward momentum. However, strength in crude oil and equities limited downside in the natural fiber. USDA reported cotton harvest was 41% complete as of Sunday, which rose eight points from the previous week and was ahead of the five-year average of 39%. Meanwhile, the crop’s “good” to “excellent” rating fell one point to 29%, while the portion rated “poor” to “very poor” was unchanged.
World Weather Inc. reports rain coming to Texas over the next week will slow or stall harvesting and raise a little concern over fiber quality. Harvest weather in the U.S. Delta and southeastern states will be mostly good over the next ten days, although some rain is expected in the Delta during the weekend into early next week.
Technical analysis: December cotton faced stiff overhead resistance at the 10- and 100-day moving averages of 84.20 and 84.31 cents, though a move above the area will encounter additional resistance at 85.19 cents, then at the 20-day moving average of 85.72, then the 40-day at 86.53 cents. Meanwhile, initial support will continue to serve at 81.97 cents, then last week’s low of 81.51 cents, then 80.22 and 78.75 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.
