Crops Analysis | November 1, 2023
Price action: December corn fell 3 3/4 cents to $4.75, the lowest close since Sept. 18.
Fundamental analysis: December corn struggled throughout today’s session, with morning trade encompassing a run toward the Sept. 19 low. The move came despite returned strength in crude oil futures, which eventually faded lower toward the session low as the morning progressed. Though the month of November tends to lean bearish seasonally, traders are likely taking a cautious stance to begin the month as the Federal Reserve this afternoon released its latest statement regarding interest rates the economy.
Early morning headlines indicating major U.S. airlines and aviation companies sent a joint letter with the ethanol industry to the Biden administration, backing a regulator change that would make it easier for sustainable aviation fuel (SAF) made from corn-based ethanol to qualify for federal subsidies, did little to excite the corn market. As did ethanol production data for week ended Oct. 27, which showed ethanol production averaged 1.052 million barrels per day (bpd), which rose 12,000 bpd from the previous week and 1.2% above the same week last year. Yet, ethanol stocks declined 386,000 barrels during the week to 20.012 million barrels, the lowest level since week ended Dec. 24, 2021.
Improving Argentine weather is likely a key factor keeping a lid on corn prices. World Weather Inc. reports much of the country will see a good mix of rain and sunshine during the next two weeks that will allow for crops to develop in a mostly favorable environment while fieldwork should advance between rounds of rain. The forecaster indicates this is a trend that will continue for a while.
Technical analysis: December corn extended to the lowest level since Sept. 19, with a close held below support support at $4.76 1/2, giving bears an increased technical advantage. A move lower will find additional support at $4.74 1/2, $4.71 then the Sept. 19 low of $4.67 3/4, then $4.55 3/4, $4.25 and $4.00. However, near-term oversold conditions could ignite corrective buying efforts, which would face resistance at today’s failed support level, then at $4.82 and again at the 40- and 10-day moving averages which have converged around $4.84 1/2 and at the 20-day of 4.87 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: January soybeans rose 4 1/2 cents to $13.15 and near mid-range. December soybean meal fell 60 cents to $430.40 and nearer the session high. December bean oil lost 152 points at 49.90 cents, near the session low and hit a five-month low.
Fundamental analysis: Soybean futures today saw modest buying support as the soybean meal futures market remains strong and is trending up. Soybean traders will continue to look to the meal futures market for daily price direction. A feature in the soy complex futures recently has been spreaders buying soybean meal and selling soybean oil.
World Weather Inc. today said improving rainfall in center-west and northeastern Brazil in the coming days will provide better summer-crop planting conditions. Argentina planting weather has been improving with recent rains and this trend will continue for a while.
Traders expected USDA to report the soybean crush totaled 173.2 million bu. in September, according to a Bloomberg survey. That would be up 2.5% from August and 3.4% above last year. NOPA data implied soybean crush would be 175 million bushels.
Thursday morning’s weekly USDA export sales report is expected to show U.S. soybean sales of 900,000 to 1.5 million MT in the 2023-24 and 2024-25 marketing years combined. Last week’s export sales totaled 1.4 million MT.
Technical analysis: The soybean futures bulls and bears are on a level overall near-term technical playing field. The next near-term upside technical objective for the soybean bulls is closing January prices above solid resistance at $13.50. The next downside price objective for the bears is closing prices below solid technical support at the October low of $12.70 1/4. First resistance is seen at the October high of $13.33 3/4 and then at $13.40. First support is seen at last week’s low of $12.97 1/2 and then at $12.80.
The soybean meal bulls have the solid overall near-term technical advantage. Prices are in an uptrend the daily bar chart. The next upside price objective for the meal bulls is to produce a close in December futures above solid technical resistance at the contract high of $448.40. The next downside price objective for the bears is closing prices below solid technical support at $400.00. First resistance comes in at Tuesday’s high of $435.30 and then at $440.00. First support is seen at this week’s low of $423.00 and then at $420.00.
Soybean oil futures bears have the firm overall near-term technical advantage. A nine-week-old downtrend is in place on the daily bar chart. The next upside price objective for the bean oil bulls is closing December prices above solid technical resistance at 55.00 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at 47.50 cents. First resistance is seen at 51.00 cents and then at today’s high of 51.88 cents. First support is seen at 49.00 cents and then at 48.00 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 futures rose 5 1/2 cents to $5.61 3/4, settling nearer the session high. December HRW futures rallied 10 3/4 cents before closing at $6.40, near session highs. December spring wheat futures fell 1/4 cent $7.09.
Fundamental analysis: Wheat futures showed corrective gains following three straight days of selling, despite sustained selling in corn and a downturn in the crude oil market. Front-month crude oil futures quickly reversed overnight gains today as the market fell over $2.50 from the intraday high. Despite this, wheat futures continued to show relative strength throughout the session. Russian agricultural consultancy SovEcon lowered its forecast for Russia’s 2023-24 wheat exports to 48.8 MMT from 49.2 MMT today.
Cold temperatures have likely halted winter wheat emergence and development in the northern Plains, possibly pushing many crops into a semi-dormant state. Winter crops in the north are not well established and need a period of warmer weather to bring on good stands, World Weather Inc says. Some warming this weekend and into next week are likely to advance fieldwork and help stimulate some new winter crop development, the forecaster says. Precip remains light in HRW acres with some showers occurring early next week.
Technical analysis: December SRW futures saw corrective buying but bears still maintain the near-term technical advantage. If bulls were to keep prices above $5.55 support, or at least the Oct. 12 low of $5.47 1/4, a series of higher lows would continue on the daily bar chart. Below the latter, bears are targeting the contract low of $5.40. Bulls are seeking a daily close above the 10-day moving average, currently at $5.70, which is quickly backed by downtrend line resistance at $5.71 1/2. Bulls are ultimately targeting a daily close above the 40-day moving average, which capped the rally in October, currently at $5.84 1/2.
December HRW futures continued in a steep downtrend today, with the intraday high poking the downtrend line stemming from Oct. 20. This resistance, currently at $6.40 and declining by about 5 cents per day, is likely to be broken sooner than later as prices are nearing oversold. Further resistance stands at $6.50 1/2, then $6.63. Bulls are seeking to hold support at today’s low of $6.26, backed by yesterday’s contract low at $6.25 1/2. Additional selling pressure targets the psychological $6.00 level.
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 178 points to 79.44 cents and near the session low. Prices hit a 3.5-month low.
Fundamental analysis: Technical selling was featured in the cotton futures market today as the near-term chart posture for the natural fiber has significantly deteriorated this week. More weak long liquidation was featured today. Recent strength in the U.S. dollar index and a wobbly U.S. stock market are bearish outside market forces working against the cotton market bulls.
Recent better cotton yield reports coming out of Georgia are also a bearish market fundamental.
World Weather Inc. today said Texas harvest weather will improve this week and the freezes expected will help to defoliate the crop for faster field progress in future weeks. Drought in the southeastern U.S. should be helping to preserve and protect fiber quality. Good harvest weather will continue in the southwestern U.S. Harvest conditions remain very good in China and are mostly good in India. Rain this weekend and next week in southeastern Queensland and northeastern New South Wales in Australia will help improve conditions for dryland cotton planting next week.
Traders will closely examine Thursday morning’s weekly USDA export sales report, especially to gauge China’s interest in purchasing U.S. cotton. U.S. cotton shipments to China have been lackluster in recent weeks.
Technical analysis: The cotton futures bears have the firm overall near-term technical advantage. A four-week-old downtrend on the daily bar chart is in place. The next upside price objective for the cotton bulls is to produce a close in December futures above technical resistance at 83.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at the June low of 76.81 cents. First resistance is seen at 80.00 cents and then at today’s high of 81.28 cents. First support is seen at today’s low of 79.30 cents and then at 78.00 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.
