Crops Analysis | November 14, 2023
Price action: March corn futures rose 1 1/2 cents to $4.94 1/4 and nearer the session high.
Fundamental analysis: Corn futures saw slight gains today as speculative grain market bulls were encouraged by a tamer U.S. consumer price index report that dropped the U.S. dollar index sharply and to a nine-week low and pushed U.S. Treasury yields lower. The CPI data fell squarely into the camp of U.S. monetary policy doves, who want the Federal Reserve to stop its interest-rate-tightening cycle.
Firmer soybean and meal futures prices today provided mild support to corn, but weaker wheat futures prices mostly offset the higher beans/meal.
USDA this morning reported a daily U.S. corn sale of 101,745 MT for delivery to Mexico during the 2023-24 marketing year.
World Weather Inc. today said several more days of hot and dry weather is expected in Brazil, but showers and thunderstorms increasing late this weekend and next week will ease crop stress. Pockets of crop damage and losses are expected because of poor soil moisture already. More flooding is expected in southern Brazil this week. Argentina weather is expected to be mixed over the next ten days but favoring summer crop planting and early development.
USDA Monday afternoon reported that as of last Sunday, U.S. corn harvest was 88% complete, two points ahead of the five-year average.
Technical analysis: March corn prices hit a contract low Monday and then rallied strongly to post a bullish “key reversal” up on the daily bar chart, which is one technical clue that a market bottom is in place. The bears still have the firm overall near-term technical advantage. The next upside price objective for the bulls is to close March prices above solid chart resistance at the October high of $5.21 1/2. The next downside target for the bears is closing prices below chart support at $4.70. First resistance is seen at $5.00 and then at $5.10. First support is at today’s low of $4.88 1/4 and then at $4.80.
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 rose 7 1/4 cents to $13.89 3/4, the highest close since Aug. 30. December meal rose $4.50 to $473.60, a new high-close. December soyoil rose 121 points to 52.75 cents, marking a mid-range close.
Fundamental analysis: Soybean futures were able to recover from overnight and early session weakness, in step with meal futures, as a plummeting U.S. dollar eased pressure across commodities. The dollar sank immediately following the Bureau of Labor Statistics’ release of the October Consumer Price Index (CPI), which showed U.S. consumer prices were moderating, increasing the odds that the Federal Reserve is done hiking interest rates. Meanwhile, planting in Brazil continues to trail year-ago, with 57.6% of the crop planted in the week ended Nov. 11, compared to 66% at the same time last year, according to Conab. World Weather Inc. notes Brazil’s heatwave and dryness, which have slowed planting progress, will continue into the weekend with rain expected late Sunday through Wednesday of next week in many center-west, center-south and interior northeastern crop areas offering a little relief. The forecaster reports southern Brazil and southern Paraguay are still expecting waves of heavy rain through the next five days that will interfere with farming activity and induce new flooding.
South American crop consultant Dr. Michael Cordonnier lowered his Brazilian soybean crop estimate 2 MMT to 158 MMT due to recent hot, dry weather which has slowed planting and development and increased the need to replant. Cordonnier reported the forecast is calling for more erratic weather going forward and if that turns out to be the case, Brazilian production could move lower. He left his production estimate for Argentina unchanged at 50 MMT and indicated a neutral to higher bias going forward, amid recent weather improvements.
The National Oilseed Processors Association (NOPA) will release October soybean crush figures Wednesday following the close. A Reuters poll indicates analysts expect soybean crush last month to have reached an all-time high of 187.237 million bushels. If realized, October crush would be up 13.2% from September’s rush of 165.456 million bushels and up 1.5% from the October 2022 crush of 184.464 million bushels. It would also be the largest crush on record for any month, surpassing the prior record of 186.438 million bushels set in December 2021.
Technical analysis: January soybeans shook off early pressure to notch the highest intraday level since Sept. 6, with bulls able to end the session near the session high. An extension higher, however, will face initial resistance at $13.95 1/2, then at $14.08 1/2, $14.20 and $14.31 1/4. Conversely, initial support will continue to serve at $13.59 3/4, then at the 10-, 100-, 20-, 200- and 40-day moving averages of $13.55 1/4, $13.44 1/2, $13.34 3/4, $13.23 1/4 and $13.19 1/4.
December meal futures rallied impressively from earlier lows to mark a fresh contract high, though an extension higher will face resistance at $479.40, then $489.80 and $505.10. Meanwhile, near-term overbought conditions could ignite profit-taking efforts towards initial support at $453.70 but will be limited by the 10- and 20-day moving averages of $447.60 and $437.50. From there, support serves tat $428.00, then at the 40-, 200- and 100-day moving averages of $410.80, $404.00 and $403.40.
December soyoil pushed higher for the fifth straight session after gapping open above the 20-day moving average (51.54 cents) to begin the session, which will serve as solid support. From there, support lies at the 10-day moving average of 50.58 cents, 50.33 cents and 49.12 cents. Extended bull efforts, however, will face initial resistance at 52.96 cents, then at the 40-day moving average of 53.86 cents, again at 54.17 cents and the 200- and 100-day moving averages of 55.94 and 58.23 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 closed down 4 1/2 cents to $5.97 3/4 today. March HRW wheat closed down 2 1/2 cents to $6.49 1/2. Prices closed nearer their daily lows. March spring wheat rose 3 1/4 cents to $7.47 1/4.
Fundamental analysis: Winter wheat futures saw technical selling featured today, amid still-bearish near-term technical postures. However, losses were somewhat limited by bullish outside market forces that included a sharp drop to a nine-week low in the U.S. dollar index. There was also better risk appetite in the marketplace as the stock market rallied strongly following a tamer U.S. consumer price index report.
USDA Monday afternoon rated the U.S. winter wheat crop 47% “good” to “excellent” condition, down three points from the previous week. When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop declined 2.1 points to 318.9, while the SRW crop improved 4.4 points to 375.8. Both crops rated well above year-ago levels.
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, while recent warming is helping winter crops in Montana to resume emergence and establishment after very cold late-October weather. Meantime, Russia, Ukraine, China and India wheat establishment should be advancing normally, said the forecaster. Argentina rain during the weekend and that coming over the next two weeks will favor late-season winter crop development in the south.
Technical analysis: Winter wheat futures bears have the firm overall near-term technical advantage. However, the sideways price grind at lower levels the past five weeks in SRW begins to suggest a market bottom is in place. SRW bulls' next upside price objective is closing March prices above solid chart resistance at the October high of $6.31. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.71 3/4. First resistance is seen at the November high of $6.22 and then at the October high of $6.31. First support is seen at this week’s low of $5.91 3/4 and then at the November low of $5.83 1/4. The HRW bulls' next upside price objective is closing March 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 the November high of $6.70 1/2 and then at $6.85. First support is seen at the October low of $6.38 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 rose 120 points to 78.68 cents, the highest close since Nov. 3.
Fundamental analysis: December cotton futures were able to expand recent gains amid a stumbling U.S. dollar and surging equities in the wake of a lower-than-expected Consumer Price Index reading in October. The reading increases the odds that the Federal Reserve is done raising interest and sent the dollar immediately tumbling, which is on track to mark its largest single-day percentage decline since Nov. 11, 2022. The move lower eased pressure across commodities, making them more competitive on the global market.
Also adding price support to the natural fiber was news China will stop auctioning cotton from state reserves beginning tomorrow, according to an announcement posted by the China Cotton Reserves Management Company. China began selling state-owned reserves in late-July, with strong demand into early fall, though buyer interest has recently faded.
U.S. harvest continues to outpace the five-year average, with USDA estimating harvest at 67% complete as of Nov. 12, compared to the five-year average of 63% for the same period.
Technical analysis: December cotton bulls mustered enough strength to push above the 10-day moving average of 77.82 cents for the first time since Oct. 30 and ended the session above resistance at 78.05 and 78.61 cents. Initial resistance will now serve at 79.23 cents, then at the 20-day moving average of 80.64 cents and again at the 40- and 100-day moving averages of 83.63 and 84.15 cents. Meanwhile, initial support will serve at today’s failed resistance levels, then at 76.87 cents, 76.25 cents, 75.69 cents and last week’s low of 74.77 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.
