Crops Analysis | November 20, 2023
Price action: December corn rose 2 1/2 cents to $4.69 1/2, nearer the session high, while March corn rose 2 1/4 to $4.87 1/2.
Fundamental analysis: Corn futures spent the overnight and morning under mild pressure amid weakness in SRW wheat futures despite supportive outside markets and a daily sale of 104,000 MT to Mexico during 2023-24. However, corrective buying in soybean and meal futures ultimately pulled corn higher into the noon hour along with news that weekend rains in much of Brazil proved erratic. World Weather Inc. reports Isolated showers and thunderstorms will pop across the key summer grain and oilseed production areas through Nov. 30, though greater rain totals will be in less than 20% of the production region each day through the coming week and numerous areas may have a tough time getting enough rain to counter evaporation. Meanwhile, temps will remain above normal in most of center west, center south and the interior northeastern crop areas while the far south is a bit cooler biased. Anticipation that the Fed is done raising interest rates also weighed on the U.S. dollar, propping up commodities as they become more competitive in the global marketplace.
USDA reported weekly export inspections data midmorning totaling 553,899 MT (21.8 million bu.) during week ended Nov. 16. Inspections were down 153,475 MT from the previous week, but within the pre-report range of 450,000 to 800,000 MT.
USDA will update harvest progress estimates following the close. A Reuters poll indicates analysts expect corn harvest to be 94% complete as of Sunday, which would reflect six-percentage point jump from week ago.
Technical analysis: December corn spent the session within Friday’s lower range but made a solid recovery to close near the session high. Dampening momentum, however, was resistance at the 10-day moving average of $4.71 1/4. A push above the area will face additional resistance at the 20-day moving average of $4.74 3/4, then $4.77 3/4 and the 40-day moving average of $4.82 1/4. Conversely, initial support at $4.64 1/4 continues to serve up solid support, with a push below the area likely igniting heavier selling efforts toward $4.61 1/4 and $4.55 3/4.
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 jumped 27 cents to $13.67 1/4, leading the soy complex higher. December soymeal rallied $6.90 and ended the day at $460.20. December soyoil closed 110 points higher at 53.11 cents.
Fundamental analysis: Soybean futures continue to show strength despite relative weakness in the corn and wheat markets. Supportive outside markets helped soybean futures rebound from weakness late last week as well, as front-month crude oil futures continued Friday’s rebound from a four-month low and the U.S. dollar trades on 11-week lows.
AgRural estimates 68% of Brazil’s expected area had been planted as of last Thursday, which was a seven-point gain from the previous week. However, sowing continues to trail last year’s pace of 80% during the same period. The current pace is the slowest since the 2019-20 season. Weather should improve this week in center west and center south Brazil, though rainfall this weekend and into next week may become a little more erratic and lighter once again, World Weather Inc says. The forecaster says the worst is likely behind Brazil and conditions are unlikely to be as hot and as dry as they were the past couple of weeks.
USDA reported export inspections of 1,609,413 MT (59.1 million bu.), which were down 330,666 MT from the previous week but were within the pre-report range of 1.1 to 2.0 MMT. Export inspections continue to outpace the seasonal pace needed to hit the USDA export estimate.
Technical analysis: January soybean futures rebounded sharply and maintained a six-week uptrend on the daily bar chart. Prices broke below $13.37 support in early overnight trading before buyers underpinned the market, taking prices back above $13.56 3/4 resistance turned support. Bulls will look to defend these levels as support on another bout of selling pressure, while targeting resistance at $13.66 with backing from $13.84 1/2.
December soybean meal futures traded to the upside as well, though struggled against resistance at $460.00 This resistance marks the support that capped losses from the start of the recent rally in early October until it’s break on Friday. Bulls are seeking to close prices back above this level in order to post a false breakdown on the daily bar chart. If prices continue lower once again, bears are targeting support at $445.30, then $425.00. Bulls are targeting resistance at $464.20, then $469.10.
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 fell 5 1/4 cents at $5.70 1/2 and nearer the session low. Prices hit a contract low today. March HRW wheat closed down 7 1/4 cents at $6.20 1/4. Prices closed nearer the session low and hit a 27-month low. Spring wheat futures fell 8 1/4 cents before settling at $7.07 1/4.
Fundamental analysis: Technical selling pressure was featured in the winter wheat futures markets today, amid fully bearish near-term charts. Losses in wheat today were somewhat limited by firmer corn and soybean prices and by a lower U.S. dollar index and higher crude oil prices.
USDA this morning reported U.S. wheat export inspections of 358,254 MT, which were up 135,682 MT from the previous week and within the pre-report range of expectations.
World Weather Inc. today said “wheat development around the world is not likely to be faced with many big issues due to weather for a while.” U.S. weather is expected to remain a little less than ideal in the western High Plains region and in dryland production areas of the Pacific Northwest. These areas need greater moisture to induce better winter crop establishment, but some areas are trending a little too cool for new crop development. The Midwest wheat crop is likely to benefit greatly from rain early this week. Meantime, most of Russia’s southern region and Ukraine have received sufficient moisture this autumn to help winter crops establish favorably. Argentina’s weather will improve for crop maturation and harvesting in the south. Central and northern wheat areas may be a little wet and there could be some delay in harvesting and a little crop quality decline. Southern Brazil’s less frequent and less significant moisture should prove somewhat helpful in getting the remaining wheat harvested even if it is of poor quality.
This afternoon’s weekly USDA crop progress report is expected to show U.S. winter wheat planted at 97% as of Sunday, compared to 93% last week. The U.S. winter wheat condition rating is expected to be at 47% good to excellent, steady from last week.
Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage and have momentum. SRW bulls' next upside price objective is closing March prices above solid chart resistance at the November high of $6.22. The bears' next downside objective is closing prices below solid technical support at $5.25. First resistance is seen at today’s high of $5.79 3/4 and then at $5.90. First support is seen at today’s contract low of $5.67 3/4 and then at $5.60.
HRW futures see a four-month-old downtrend is in place on the daily bar chart. The HRW bulls' next upside price objective is closing March prices above solid technical resistance at the November high of $6.70 1/2. The bears' next downside objective is closing prices below solid technical support at $6.00. First resistance is seen at today’s high of $6.30 1/2 and then at $6.40. First support is seen at today’s low of $6.16 1/2 and then at $6.10.
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: March cotton fell 26 points to 81.25 cents but ended nearer the session high after trading as low as 79.70 cents.
Fundamental analysis: Cotton futures edged lower to start the week, though selling was limited by solid technical support and encouragement from outside markets. The U.S. dollar extended Friday’s selling, underpinning commodities, as traders widely expect the Fed has completed its recent campaign to raise interest rates. Meanwhile, crude oil futures rallied, taking back all of Friday’s losses as news that OPEC+ is planning to announce further supply cuts in production at a meeting set for early next week.
World cotton supply could increase in the coming months as Brazilian farmers look to cotton as recent hot dry weather has hemmed soybean planting progress throughout the country to the slowest pace since 2019-20. Moreover, cotton planting in Argentina is expected to advance better after recent rainfall, while World Weather Inc. reports U.S. crops will continue to experience a mostly good harvest environment. USDA will update its weekly harvest progress estimates following the close. Last week, the government reported 67% of the U.S. cotton crop was harvested, which was ahead of the five-year average by four percentage points.
Technical analysis: March cotton spent much of the session trading within the 20- and 10-day moving averages of 81.95 and 80.11 cents as the natural fiber continues its recent trend of sideways consolidation. Should a break to the upside occur, the next area of resistance will serve at 82.71 and 83.55 cents, then at the 40- and 100-day moving averages of 84.65 and 84.97 cents. A move below the 10-day will face additional support at 79.23 cents and at the Nov. 8 low of 77.66 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.
