Crops Analysis | November 17, 2023
Price action: March corn futures fell 8 cents to $4.85 1/4 and near the session low at Friday’s close. For the week, March corn rose 6 1/4 cents.
5-day outlook: Today’s technically bearish weekly low close in March corn futures sets up some follow-through chart-based selling pressure early next week, including a challenge of the recent contract low of $4.76 1/2 or below. Corn traders will be influenced by daily price movements in soybean futures next week. Soybean bulls faded badly late this week after nearby futures hit a nine-week high Wednesday. Corn traders will also keep an eye on the U.S. dollar index and crude oil prices in the near term. The USDX this week hit a 2.5-month low and crude oil prices posted a four-month bottom. Both markets are now trending lower on their daily bar charts.
30-day outlook: On the positive side for corn, the U.S. corn harvest is winding down rapidly, which means farmer selling at the local elevators and commercial hedge pressure will subside. Seasonals for the corn market also turn friendlier into the end of the year.
90-day outlook: Weather in South American corn-growing regions the next few months will move closer to the front burner of the corn market, especially since the weather in that area has not been great recently. World Weather Inc. today said relief from hot, dry weather in Brazil is coming later this weekend into early next week, although there will be the need for much more rain in the coming weeks. The forecast calls for periodic rainfall thereafter and it’s not likely to be nearly as hot and dry as it has been. Southern Brazil will experience less frequent heavy rain, but precipitation will continue to fall more often than desired. Argentina is expected to see a good mix of rain and sunshine during the next ten days, supporting summer crop planting and early development.
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 fell 20 cents to $13.40 1/4 and gave up 7 1/2 cents on the week. December meal dropped $13.50 to $453.30 but gained $3.90 week-over-week. December soyoil rose 38 cents to 52.01 cents and gained 81 cents on the week.
5-day outlook: Soybeans ended the week under extended pressure amid profit-taking in meal futures and an improving Brazilian weather forecast. World Weather Inc. reports regular rain and cooler temps will occur in central and northern Brazil Saturday through next Friday, inducing significant relief from dryness and improvements in conditions for crops with follow-up rain critical for maintaining any improvements that take place. The forecaster notes Rain is expected in nearly all crop areas by the end of the 10-day period beginning Sunday, outside a few areas in northeast Brazil, but indicates that does not mean the moisture profile will be restored to normal, which will be highly unlikely. Meanwhile, southern Brazil’s succession of excessive rain events is winding down for now, though frequent rainfall is still expected and saturated soil conditions will remain for an extended period.
30-day outlook: As South America’s growing season progresses traders will keep a close eye on production estimates following a shaky start. While hot, dry conditions have affected areas of center west Brazil, torrential rains have affected southern Brazil and southern Paraguay, while recent rains in Argentina have slowed corn planting efforts, which in turn could mean more soybean production. On Thursday, the Buenos Aires Grains Exchange increased its estimate for soybean planted area in Argentina, while South American crop consultant Dr. Michael Cordonnier notes a neutral to higher bias for Argentine soybean production. Cordonnier reported this week that soybean planting efforts in the country are getting off to a slow start, but noted it’s too early to say if it could have a negative impact on yield potential. If weather cooperates for the remainder of the growing season, Soybean yields in Argentina could be normal. However, Cordonnier lowered his Brazilian soybean production estimate this week by 2.0 MMT to 158.0 MMT and noted a lower bias going forward. He notes hot, dry weather has been detrimental to the early soybean crop and has slowed the planting pace and raised the need for replanting. “Nationwide, 5% or more of the soybeans will need to be replanted with as much as 10% or more in localized areas.”
90-day outlook: This week USDA reported weekly export sales of 3.92 MMT for week ended Nov. 9, which was the largest-ever weekly sale by volume for a single marketing year, blowing by the previous high of 3.19 MMT set in September 2020. Traders speculated the purchases were “goodwill” purchases from China ahead of President Xi Jinping’s visit to San Francisco this week. Of the weekly total, China accounted for 2.61 MMT, while 721,300 MT were reported for unknown destinations. Nonetheless, U.S. soybean purchases will continue to be of importance as the calendar year winds down and the marketing-year progresses.
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 futures fell 5 1/4 cents to $5.75 3/4, near the session low and hit a seven-week low. For the week, March SRW lost 23 1/2 cents. March HRW wheat futures dropped 8 1/2 cents to $6.27 1/2 and hit a 27-month low. For the week, March HRW fell 23 1/4 cents. March spring wheat futures ended the week at $7.31 3/4, down 8 3/4 cents on the day and 10 3/4 on the week.
5-day outlook: The technically bearish weekly low closes in winter wheat futures markets today set the stage for follow-through chart-based selling pressure from the speculators early next week. Wheat traders will also look to the corn and soybean futures markets for direction in the near term. Corn and soybeans faded late this week to suggest those markets will see some more downside early next week.
30-day outlook: Wheat market bears are taking note of grain continuing to flow out of the Black Sea region despite the ongoing Russia-Ukraine war. Reports said 151 ships have used Ukraine’s new Black Sea shipping corridor since it was set up in August. A total of 3.2 million MT of grain have been shipped during that timeframe, according to Ukraine officials.
Traders will also continue to closely monitor weather developments in major wheat regions in the coming weeks. 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. Meantime, in southern Russia, Ukraine, China and India wheat establishment is likely advancing normally. Rain would be welcome in India and far southern Ukraine. Recent Argentine rain, as well as that likely coming over the next two weeks, will favor late-season winter crop development in the south. Brazil’s wheat harvest is poor due to too much rain and additional damage is possible, said the forecaster.
90-day outlook: USDA Thursday reported U.S. wheat export sales of 176,300 MT during the week ended Nov. 9, which were down 50% from the previous week and down 57% from the four-week average. USDA anticipates a decline in exports, year-over-year, and sales continue to trend below the historical average, confirming doubts on the export front in the coming months. The recent depreciation of the U.S. dollar on the foreign exchange market will make U.S. wheat a bit more price-competitive on the world trade markets.
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 24 points to 78.92 cents, while March futures rose 63 points to 81.51 cents, marking 160- and 201-point gains on the week, respectively.
5-day outlook: Cotton futures saw only modest buying to end the week despite supportive outside markets as technical headwinds limited momentum. A slow climb from the Nov. 8 low has pushed December cotton futures into near-term overbought territory, likely limiting any extended upward moves that may occur next week. However, solid support around the 10-day moving average could limit heavy selling. Look for cotton to take near-term direction from outside markets, while technicals dictate the velocity of such moves.
30-day outlook: U.S. cotton production will continue to be a focus in USDA’s December production update on December 10. Harvest continues to progress across the U.S., with the government estimating 67% of the nation’s crop was harvested as of Nov. 12. Rumors of higher-than-expected yields in Texas and Georgia could pose a bearish threat to the natural fiber in the coming months, though the odds of higher production getting baked into the market ahead of the December crop reports is certainly a possibility. U.S. harvest should wind down without too many significant weather disruptions, though World Weather Inc. reports rain will impact the Delta and southeastern states during the middle to latter part of next week, which will slow fieldwork again.
90-day outlook: U.S. export sales have been a hot topic as of late and will continue to be as the marketing-year continues into a new calendar year. A weaker-than-expected Consumer Price Index reading this week could lead to extended pressure in the U.S. dollar, enticing foreign buyers to purchase U.S. goods. While recent U.S. cotton export sales have been relatively stable, traders have held looming fears of a lack of demand from China as the country’s economy continues to struggle. During the week ended Nov. 9, weekly cotton sales totaled 328,300 MT, which were down 17% from the previous week but up 18% from the four-week average. China was the leading purchaser for the week at 176,200 RB. Meanwhile, shipments during the week rose 25% from the previous week to 112,900 RB and were up 5% from the four-week average.
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.
