Crops Analysis | November 8, 2023
Price action: December corn rose 7 1/2 cents to $4.76, a mid-range close.
Fundamental analysis: December corn was able to grab back a portion of Tuesday’s losses, with spillover strength stemming from SRW wheat and soybean futures, though extended selling in crude oil futures curbed upside momentum in grains. USDA began the morning by reporting daily U.S. corn sales of 270,000 MT to Mexico during 2023-24, along with the largest single-day soybean sale to China since late July, which rallied soybean bulls. Short covering in wheat was spurred by reports that it will be difficult to revive the Black Sea grain deal, in which Russia exited in July. United Nations Secretary Antonio Guterres noted to Reuters the goal would be to have Russia and Ukraine to agree to allow freedom of navigations for each other, but admitted this was an unlikely solution. Meanwhile, earlier news that recent widespread rains in Argentina came too late to save the country’s already drought-impacted wheat crop helped push SRW wheat to a near three-week high.
Traders will continue to keep an eye on South American planting efforts as soybean planting delays and the need to replant some acres will push back harvest, likely causing some safrinha corn acres to be planted after the ideal window.
With tomorrow comes USDA’s Weekly Export Sales Report, with traders expecting net sales to range from 600,000 MT to 1.2 MMT. Last week, USDA reported sales of 748,070 MT for the previous week, which were down 45% from the previous week and 40% from the from the four-week average.
USDA will also release production, supply and demand data at 11 a.m. CT. A Reuters poll indicates on average, traders expect production to increase slightly from October
Technical analysis: December corn continues to face resistance at the 10-day moving average of $4.76 1/2, though success above the level will face resistance at $4.80 3/4, which has served as solid resistance since late October. Bulls will need to make a move above the area to work towards the 40- and 20-day moving averages of $4.83 1/2 and $4.84, as well as the the 100-day moving average of $5.00 1/2 and the 200-day at $5.28 1/4. Conversely, initial support continues to serve at $4.65 1/4, then at $4.61 3/4 and $4.55 1/2.
What to do: Get current with advised sales.
Hedgers: You should be 50% sold in the cash market on 2023-crop.
Cash-only marketers: You should be 35% sold on 2023-crop production.
Advice: We advise soybean producers to sell another 10% of 2023-crop in the cash market. This pushes hedgers to 55% sold and cash-only marketers to 50% priced. We also advise all soybean producers to sell an initial 10% of expected 2024-crop production for harvest delivery next fall.
Price action: January soybeans rose 3 3/4 cents to $13.65 3/4 and nearer the session low after hitting a seven-week high early on. December soybean meal gained $2.40 to $449.80, near the session low. Prices hit a contract high early on. December bean oil rose 46 points to 49.95 cents and near the session high.
Fundamental analysis: The soybean and meal bulls were out of the gate in strong fashion in early trading on some fresh demand news but faded down the stretch. Technical buying amid better risk appetite in the general marketplace was featured today. However, buying enthusiasm in the complex waned amid slumping crude oil prices that hit a 3.5-month low today.
USDA this morning reported a daily U.S. soybean sale of 909,500 MT for the 2023-24 marketing year. Of the total, 433,000 MT were for China and 476,500 MT for unknown destinations. Those were the largest single-day soybean purchases by China since late July. Cash premiums at Gulf terminals rose as much as a dime a bushel Tuesday as exporters scrambled to source supplies.
World Weather Inc. today said drying in center-west and center-south Brazil over the next ten days will likely lead to declining soil moisture and rising crop moisture stress. Crop conditions will remain favorable for a few days but will deteriorate in time with the drier areas suffering first. Temperatures will be well above average, adding to crop stress. Argentina will see a favorable mix of rain and sunshine to support planting and early-season crop development.
Thursday morning’s weekly USDA export sales report is expected to show U.S. soybean sales of 800,000 to 1.5 million MT in the 2023-24 marketing year and sales of zero to 50,000 MT in the 2024-25 marketing year.
Near midday Thursday comes the latest USDA monthly supply and demand report, with fresh production and stockpile numbers coming from the agency. Analysts look for a very slight decline in U.S. soybean production versus the September USDA report.
Technical analysis: The soybean bulls have the overall near-term technical advantage. Prices are in a four-week-old uptrend on the daily bar chart. The next near-term upside technical objective for the soybean bulls is closing January prices above solid resistance at $14.00. The next downside price objective for the bears is closing prices below solid technical support at $13.00. First resistance is seen at today’s high of $13.84 1/2 and then at $14.00. First support is seen at this week’s low of $12.52 and then at $13.35.
The meal bulls have the solid overall near-term technical advantage. Prices are in a five-week-old 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 $470.00. The next downside price objective for the bears is closing prices below solid technical support at $413.00. First resistance comes in at today’s contract high of $464.20 and then at $470.00. First support is seen at $445.00 and then at this week’s low of $433.00.
Soybean oil futures bears have the firm overall near-term technical advantage. A 2.5-month-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 45.00 cents. First resistance is seen at this week’s high of 52.03 cents and then at 53.00 cents. First support is seen at last week’s low of 48.79 cents and then at 47.50 cents.
What to do: Get current with advised sales.
Hedgers: NEW ADVICE - Sell another 10% of 2023-crop to get to 55% priced in the cash market. Also sell an initial 10% of expected 2024-crop production for harvest delivery next fall.
Cash-only marketers: NEW ADVICE - Sell another 10% of 2023-crop to get to 50% priced. Also sell an initial 10% of expected 2024-crop production for harvest delivery next fall.
Price action: December SRW futures rallied 22 cents before settling at $5.92 1/4, but closed well off the session high. December HRW futures jumped 22 1/2 cents and closed at $6.55. December spring wheat rose 11 1/4 cents to $7.35 1/2
Fundamental analysis: Wheat futures rebounded sharply following Tuesday’s drop, showing sustained strength in the latter part of the session as sellers entered the grain market. While prices closed well off intraday highs, SRW futures still closed at the highest level in over three weeks. Outside markets were largely negative today, though the U.S. dollar index reversed from early session gains to close in the red this afternoon. USDA reports tomorrow are likely to dictate price action, as traders expect ending stocks unchanged from October at 670 million bu. according to a Bloomberg poll. While the wheat data itself may not drive price action, a big move in soybeans or, more likely, corn will carry over momentum to wheat futures.
Russia’s ag ministry is expected to set the quota for grain exports at 24 MMT From Feb. 15 to June 30, TASS news agency reported. While the specific allocation for wheat was not mentioned, experts suggest this generous quota is likely to restrict exports. The ministry said the country’s 2023-24 total grain exports would reach 65 MMT. That likely helped support markets, as well as slowing shipments out of Ukraine in the Black Sea.
Dry weather over the next ten days will be good for any remaining late season field work, though precipitation continues to be needed for unirrigated fields in HRW wheat acres, says World Weather Inc. Temperatures will warm into next week, which will likely help emergence and establishment. Winter wheat acres in the Pacific Northwest received some recent precipitation, helping the moisture profile, though significantly more precipitation is needed, the forecaster says.
USDA releases its weekly export report tomorrow morning, traders expect net sales between 250,000 and 500,000 MT. Last week, USDA reported sales of 275,556 MT.
Technical analysis: December SRW futures surged into midsession before sellers entered the market, closing prices well off intrasession highs. Bulls did manage to close prices above the 40-day moving average, currently at $5.82 1/4, which capped gains in October. This level will act as important support into tomorrow’s report driven price action. Further support lies at $5.75. Bears are seeking to defend resistance at the October high of $6.04 1/2 with psychological $6.00 resistance on the way. Further resistance lies at the 100-day moving average, currently at $6.17 3/4.
December HRW futures maintain a more bearish chart than its SRW counterpart. Prices traded sharply higher today, though bulls were unable to overcome 20-day moving average at $6.55 1/2, This will stand as bulls initial target, followed by the support zone that captured most of the downside in early to mid-October at $6.65. Bulls are seeking to hold prices above $6.46 1/4 support, which is further backing from $6.30.
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 159 points to 74.89 cents and near the session low. Prices hit an 11-month low.
Fundamental analysis: Technical selling pressure was featured in cotton futures today as the near-term chart posture has turned fully bearish. This week’s downbeat economic data from China and solid losses in crude oil prices that hit a 3.5-month low today also helped to pressure the cotton market.
World Weather Inc. today reported a mostly good harvest environment is expected in West Texas this week and the same is likely in the lower Delta and southeastern states, despite some potential for rain briefly late this week. Good harvest conditions are also expected in the far western states. Moderate to locally heavy rain in Coastal Bend areas of Texas will be good for planting in 2024.
Thursday morning comes the weekly USDA export sales report and then the monthly USDA supply and demand report, including the agency’s latest U.S. cotton-production estimate.
Technical analysis: The cotton futures bears have the solid overall near-term technical advantage. A steep five-week-old downtrend is in place on the daily bar chart. However, the market is now short-term oversold and due for a good corrective bounce very soon. The next upside price objective for the cotton bulls is to produce a close in December futures above technical resistance at 80.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 70.00 cents. First resistance is seen at today’s high of 76.92 cents and then at 78.00 cents. First support is seen at 74.00 cents and then at 73.00 cents.
What to do: Get current with advised sales.
Hedgers: You should have 60% of 2023-crop production forward sold in the cash market.
Cash-only marketers: You should have 60% of 2023-crop production sold.
