Crops Analysis | October 30, 2023
Price action: December corn fell 2 1/2 cents to $4.78 1/4, closing near the session low.
Fundamental analysis: Corn futures faced spillover weakness from SRW wheat and soybean futures, with heavy selling in crude oil amid easing supply concerns casting a further shadow over prices. Despite an escalation in the Israel-Hamas war, the conflict is contained to the area with seemingly no oil supply disruptions occurring thus far. Market participants are also taking a risk-off position ahead of Wednesday’s Federal Reserve meeting despite broad expectations the Fed will keep interest rates unchanged.
Weather in Argentina has improved recently, with “essential” rains falling over the weekend in the country’s agricultural heartland and more expected in the coming days, according to the Rosario grains exchange in an earlier report. Meanwhile, U.S. producers continue to inch closer to the harvest finish-line, though recent rains have likely slowed progress over the past few days. World Weather Inc. reports today’s forecast is wetter overall during the next two weeks, but much of the precip will not be heavy and harvesting should advance between the bouts of moisture.
Earlier today, USDA released its weekly export inspection data for week ended Oct. 26, which showed inspections of 531,516 MT (20.9 million bu.), up 82,255 MT from the previous week and within the pre-report range of 350,000 to 600,000 MT.
USDA will update harvest progress as of Oct. 29 following today’s close. A Reuters poll indicates traders expect corn harvest to be 69% complete, which would be a ten percentage-point increase from last week.
Technical analysis: December corn futures spent the session near the low-end of the recent consolidation range, mostly between the 40-day moving average of $4.85 and support at $4.78. A push below initial support will face additional support at $4.75 1/4, $4.72 1/4 and the Sept. 19 low of $4.67 3/4. However, near-term oversold conditions could spur corrective buying above the 40-day moving average, though additional resistance stands at $4.86 3/4 and at the 10- and 20-day moving averages of $4.87 1/4 and $4.88 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.
Price action: Unable to hold onto overnight gains, November soybeans fell 14 1/2 cents to $12.82 3/4, closing near the session low. December meal futures led the soybean complex lower, falling $15.9 to $426.50, while December soyoil futures rose 12 points to 53.39 cents.
Fundamental analysis: Soybeans led the ag complex lower today, led by a sinking soybean meal market. Inspections this morning did little to stimulate bulls, as USDA reported soybean export inspections of 1.890 MMT (69.5 million bu.) during week ended Oct. 26, which were down 735,466 MT from the previous week, but within the pre-report range of 1.65 to 2.5 MMT. Inspections continue to pace above the required level to reach the current USDA export forecast. Inspections are likely to trend lower seasonally over the coming months.
Interior southern Brazil and southern Paraguay endured significant flooding rain during the weekend resulting in crop damage, World Weather Inc reports. Southern Brazil will continue to be wet over the coming week, further damaging crops, though flooding should not be as great as that of the weekend, the forecaster says. Precip will trend wetter this weekend and into next week across center west and northeastern Brazil, where rain is needed contrary to the south, improving planting conditions.
USDA is set to release the weekly crop progress report this afternoon. A Bloomberg survey pegs the crop as 85% harvested, up from 76% a week ago but down from 88% last year.
Technical analysis: November soybeans quickly reversed overnight gains and sold most of today’s session, falling back below the $13.00 mark. Bulls are seeking to hold $12.80 support, which capped nearly all last week’s selling pressure. Further weakness would have bears targeting support at $12.71 1/2. Bulls are looking to recapture $13.00 resistance, backed by the 100-day moving average at $13.12 1/2.
December soybean meal futures led the soy complex lower today. Despite today’s rout, a steep uptrend remains on the daily bar chart. That uptrend line is in danger of being negated with another red close, so bulls are seeking to hold support at $426.00 Tuesday, with a close below that mark indicating a technical breakdown. That would have bears targeting $422.50 support, with firmer backing from $411.30 then the psychological $400.00 mark. Bulls are targeting resistance at $439.40, backed by Friday’s high of $448.40.
December soyoil rose slightly today on spreading amidst the selloff in the meal market. Further buying has bulls targeting initial resistance at the 10-day moving average, currently at 52.81 cents. A break above this level would have bulls targeting downtrend resistance at 53.25 cents. While bears maintain the near-term technical advantage, a small uptrend remains on the daily bar chart, which places initial support at 52.05 cents. A break below this level would have bears targeting last week’s low of 50.82 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 closed down 9 cents at $5.66 and near the session low. December HRW wheat closed up 2 cents at $6.45, near mid-range and hit a more-than-two-year low early on. Spring wheat futures slipped 2 cents to $7.17 3/4.
Fundamental analysis: Buying interest in wheat futures today was limited by still-bearish charts along with lower corn and soybean prices. Some mild short covering was seen in December HRW futures. Outside markets were mixed for wheat today, as the U.S. dollar index was solidly lower but so were Nymex crude oil futures prices.
Ukraine’s grain exports fell 49.1% in October from a year-ago to 2.15 MMT, according to the country’s ag ministry. Since July 1, Ukraine has exported 8.9 MMT of grain, down 4 MMT (31.0%) from last year.
USDA this morning reported U.S. wheat export inspections of 189,842 MT, which were up 20,362 MT from the previous week and within market expectations. U.S. wheat inspections so far this marketing year continue to lag, historically.
This afternoon’s weekly USDA crop progress reports are expected to show U.S. winter wheat planted at 85% versus 77% last week and 87% at this time last year. USDA is also set to release the first winter crop rating of the year, with Reuters and Bloomberg surveys both pegging the crop as rated 47% “good” to “excellent.”
Technical analysis: Winter wheat futures bears have the firm overall near-term technical advantage. SRW bulls' next upside price objective is closing December prices above solid chart resistance at the October high of $6.04 1/2. 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 today’s high of $5.77 and then at $5.86 1/4. First support is seen at last week’s low of $5.63 1/4 and then at $5.50. In December HRW futures, a 2.5-month-old downtrend on the daily bar chart has been restarted. 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 $6.67 3/4 and then at this week’s high of $6.80 1/4. First support is seen at today’s low of $6.32 1/4 and then at $6.25.
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 dove 147 points to 82.91 cents and closed below the 100-day moving average.
Fundamental analysis: December cotton futures slid today amid profit-taking spurred by heavy selling in crude oil futures, while a weaker U.S. dollar limited selling efforts. Crude oil succumbed to selling as the Israel-Hamas war has so far been limited to the region, leaving oil supply seemingly unaffected. Risk-off sentiments are also heightened ahead of Wednesday’s Federal Reserve meeting, though interest rates are widely expected to remain unchanged.
World Weather Inc. reports Texas harvest weather will improve this week and the expected freezes will help top defoliate the crop faster for field progress in future weeks, while drought in the southeastern U.S. should be helping to preserve and protect fiber quality. The forecaster notes weekend rains in the northern Delta likely slowed harvest progress, but it will resume this week. Good harvest weather will continue in the southwestern U.S.
USDA will update harvest progress as of Sunday following the close. Last week, harvest progress was estimated at 41% complete, two percentage points ahead of the five-year average.
Technical analysis: Bears were able to secure the near-term technical advantage in December cotton futures, with a close held below the 100- and 10-day moving averages of 84.41 and 83.69 cents. Initial support will now serve at 82.94 cents, and again at 82.05 cents and the Oct. 20 low of 81.51 cents. Conversely, initial resistance will now stand at the 10- and 100-day moving averages, then at the 20-day of 84.93 cents, 85.27 cents and the 40-day moving average of 86.12 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.
