Crops Analysis | November 13, 2023
Price action: December corn rallied 13 1/4 cents to $4.77 1/4, marking the highest close since Nov. 3.
Fundamental analysis: An overnight reach to a fresh low and strong gains in soybean and soymeal futures ignited corrective buying efforts in corn. Persisting weather issues in Brazil has put the brakes on planting efforts throughout the country, which continues to run at the slowest pace since 2020-21. Late-planted soybeans means a late harvest, increasing trade concerns of a late-planted second safrinha corn crop. Combined with a notable drop in corn prices, the possibility of lower yields has curbed producer enthusiasm around corn plantings, with current estimates suggesting a 4-7% decline in safrinha corn acreage. Meanwhile, weather in Argentina is expected to be well-mixed over the next ten days, favoring summer crop planting and early development, according to World Weather Inc.
Gains in crude oil futures were supportive for commodities as demand concerns eased in the wake of a monthly report from OPEC, which reflected a slight increase in the group’s forecast for 2023 global oil demand and a relatively high projection in 2024.
Early this morning, USDA reported daily sales of 143,637 MT to Mexico during 2023-24. USDA also reported 608,810 MT (24.0 million bu.) of corn were inspected for export during week ended Nov. 9, up 34,252 MT from the previous week and within the pre-report range of 400,000 to 750,000 MT.
USDA will update harvest progress estimates as of Sunday following the close. Traders are expecting harvest to be 90% complete, according to a Reuters poll, which would reflect a nine percentage-point increase from a week ago.
Technical analysis: December corn was able to post a bullish key reversal with a close held above resistance at $4.68, $4.72 1/4, the 10-day moving average of $4.73 1/4 and $4.75 1/4. However, bulls may find additional resistance at the 20- and 40-day moving averages of $4.80 1/4 and $4.82 3/4 to be more of a challenge. A move above that area will then face resistance at the 100-day moving average of $4.96, then at the Oct. 20 high of $5.09 1/2 and at the 200-day moving average of $5.26 1/2. Conversely, initial support will now serve at today’s failed resistance levels, then at $4.64 3/4, $4.60 3/4, $4.57 1/2 and $4.53 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.
Price action: January soybeans soared 35 cents before closing at $13.82 1/2, ending on the session highs. December soybean meal rose $19.70 after trading limit up mid-morning, settling at $469.10. December soyoil rose 34 points to 51.54 cents, closing nearer session highs.
Fundamental analysis: Soybeans struggled to show continued strength overnight following a gap higher, though prices surged throughout today’s session, sending January futures above last week’s pre-report highs. China continues to purchase large quantities of U.S. soybeans, despite being a premium to their Brazilian counterpart. USDA announced daily sales of 204,000 MT for delivery to China during the 2023-24 marketing year, quickly reducing the disparity of sales between this year and last year, as outstanding sales were previously far below last year at this juncture.
Crop stress continues to riddle Brazilian soybeans without much relief in sight. Weather was hot and dry over the weekend and according to World Weather Inc, warm to hot temperatures will continue in much of western, central and northern Brazil through Saturday, adding production concerns. Some showers are expected in the second week of the outlook in central and northern Brazil, along with cooler temperatures, relieving drying, though follow-up rains will be critical for maintaining any improvements, the forecaster says.
This morning, USDA reported soybean export inspections of 1,666,467 (61.2 million bu.), which were down 516,368 MT from the previous week and below the pre-report range of 1.75 MMT to 2.25 MMT.
The weekly Crop Progress report is released this afternoon, with analysts expecting the soybean harvest at 96% completed, according to a Bloomberg survey.
Technical analysis: January soybeans surged on the session, continuing the recent uptrend as bulls maintain the technical advantage. Bulls overcame resistance at last week’s high of $13.84 1/2, closing at the highest level since early September. Last week’s high will act as initial support and is backed by $13.65 3/4, then $13.50. Bulls are targeting downtrend resistance stemming from the July highs at $13.88 1/2, with backing from the psychological $14.00 mark.
December soybean meal futures traded on limit up mid-session before profit taking pared gains. Prices remain in a steep uptrend on the daily bar chart as bulls target resistance at the contract high of $474.40, backed by $480.00. Bears are seeking to break support at $450.00, quickly backed by the 10-day moving average, currently at $446.00. Additional selling targets the $425.00 level.
December soyoil futures rallied following early session weakness, as prices continued to break out from the steep downtrend from Sept. 18 highs. Down trendline support held this morning on a retest, currently at 50.35 cents. This level is backed by 49.37 cents, which has capped nearly all the downside in November thus far. Bulls are targeting resistance at 51.67 cents, backed by 52.60 cents.
What to do: Get current with advised sales.
Hedgers: You should be 55% priced in the cash market on 2023-crop production. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Cash-only marketers: You should be 50% priced on 2023-crop production. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Price action: March SRW wheat rose 3 cents to $6.02 1/4. March HRW wheat gained 1 1/4 cents to $6.52. Prices closed nearer their session highs. December spring wheat fell 1 3/4 cents to $7.28 3/4.
Fundamental analysis: Solid gains in corn and soybeans/meal spilled over into modest buying interest in wheat futures today. Short covering was featured. A weaker U.S. dollar index to start the trading week also benefited the wheat market bulls.
USDA this morning reported U.S. wheat export inspections of 207,205 MT during week ended Nov. 9, which were up 92,887 MT from the previous week and within the pre-report expectations. Wheat remains behind USDA’s pace for its yearly inspections forecast.
World Weather Inc. today said rain is still needed in west-central and southwestern U.S. hard red winter wheat areas, and in the U.S. Pacific Northwest. Recent warming is helping winter crops in Montana to resume emergence and establishment after very cold late October weather, said the forecaster.
This afternoon’s weekly USDA crop progress reports are expected to show the U.S. winter wheat crop in 50% good to excellent condition, which would be steady from last week’s rating.
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 rose 16 points to 77.48 cents, a mid-range close following narrow trade.
Fundamental analysis: December cotton edged higher for the third straight session as supportive outside markets supported the natural fiber to start the week. Crude oil futures were able to rebound following downtrodden economic data from China amid a report from OPEC which pushed back against recent demand concerns with a slight increase to 2023 demand forecasts. Meanwhile, a weaker U.S. dollar made commodities more appealing to overseas buyers.
U.S. harvest continues to advance, with World Weather Inc. noting dry and good harvest progress will continue through much of the next two weeks in western Texas and southwestern Oklahoma around showers in a few southern areas today and scattered showers Saturday into next Monday. The forecaster notes most other areas will also be dry through much of the next two weeks with a few light showers on occasion that should not have much of an impact on soil conditions.
USDA will update harvest progress estimates as of Sunday following the close. Last week, harvest was estimated to be 57% complete.
Technical analysis: Gains in December cotton futures are facing headwinds at the 10-day moving average of 78.08 cents and resistance at 78.20 cents. An extension above the area, however, will face additional resistance at 79.09 cents, 80.42 cents and the 20-day moving average of 80.86 cents. From there, little resistance serves until the 40- and 100-day moving averages of 83.85 and 84.15 cents. Meanwhile, initial support will continue to serve at 76.87 cents, then at 75.98, 74.65 and 73.76 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.
