Crops Analysis | November 21, 2023
Price action: March corn futures rose 1 1/2 cents to $4.89 and near mid-range.
Fundamental analysis: The corn futures market continues to languish at lower price levels. Firmer soybean and wheat futures prices today did mildly support buying interest in corn. Corn futures traders will likely continue to look to soybeans and wheat for daily price direction.
USDA Monday afternoon reported that as of Sunday 93% of the U.S. corn crop was harvested, two points ahead of the five-year average. The nearly completed corn harvest will in the coming weeks see less farmer selling in the cash market and a reduction in commercial hedge pressure.
Traders are focusing on weather in South American corn-growing regions. World Weather Inc. today said center-west and center-south Brazil weather will improve this week, but rainfall next week may become a little erratic and light once again. “Center-west and center-south crops will not be nearly as stressed as they were in the past ten days again anytime soon, but the need for greater rain will continue,” said the forecaster. Crops in Argentina are expected to be mostly favorable and those in southern Brazil will benefit from little less intensive rain for a while, said World Weather.
Technical analysis: The corn futures bears have the solid overall near-term technical advantage. The next upside price objective for the bulls is to close March prices above solid chart resistance at $5.00. The next downside target for the bears is closing prices below chart support at the contract low of $4.76 1/2. First resistance is seen at today’s high of $4.93 1/4 and then at last week’s high of $4.96 1/2. First support is at this week’s low of $4.82 1/2 and then at $4.76 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 rallied a dime to $13.77 1/4, a mid-range close after trading as high as $13.89 1/4. December meal fell $1.00 to $459.20. December soyoil rose 108 points to 54.19 cents and closed above the 40-day moving average for the first time since Sept. 15.
Fundamental analysis: Persisting weather concerns in Brazil led soybeans to the highest level in nearly a week, though easing meal futures curbed momentum. World Weather Inc. confirmed earlier that Brazil’s bottom line remains one of concern for crops in the northeast where dryness is expected to prevail deeply into the summer. Meanwhile, crops in the interior south and neighboring areas of Paraguay will be fighting too much moisture for an extended period, though the forecaster indicated there will be some breaks. Center-west crops are not expected to see their moisture profiles return to normal, but production will largely be determined by the timeliness of rain, which is expected to be mostly good, although greater volumes of rain will be desired.
Despite lingering problems in Brazil, South American crop consultant Dr. Michael Cordonnier left his Brazilian soybean production estimate unchanged at 158 MMT but indicated a neutral to lower bias going forward. Cordonnier noted in addition to lower yields, Brazil’s 2023-24 crop may end up as much as 500,000 hectares less than originally anticipated as planting progress continues to lag and poorer fields get planted to other crops. Cordonnier left his forecast for Argentine soybean production unchanged at 50 MMT and noted a neutral to higher bias as recent rainfall has improved conditions across northern and eastern regions of the country, enticing farmers to switch some their early planted corn to soybeans.
Technical analysis: January soybeans spent most of the session above the 10-day moving average of $13.65 3/4 after reaching to the highest level in nearly a week overnight, in a breach of initial resistance of $13.81 1/4. An extension of this week’s gains will continue to face resistance here, then at $13.95, the Nov. 15 high of $13.98 1/2 and then $14.22 1/4, while a move below the 10-day moving average will face additional support at $13.54, then at the 100- and 20-day moving averages of $13.47 1/2 and $13.46 1/4. From there support serves at $13.40 1/4 and again at the 40- and 200-day moving averages of $13.25 and $13.23 1/4.
December meal futures were limited by resistance at $467.70 today and ultimately closed just below the 10-day moving average of $460.10, which will now serve as initial resistance. A push lower will face additional support at $454.20, then at the 20-day moving average of $447.10, again at $433.33 and the 40-day moving average of $419.70.
December soyoil futures rose for the third straight session, with bulls garnering momentum with a close held above the 40-day moving average of 53.15 cents and resistance. Initial resistance will now serve at 54.22 cents, then 55.30 cents and the 200- and 100-day moving averages of 55.77 and 58.04 cents. Conversely, initial support will serve at today’s failed resistance levels, then at 52.59 cents, 52.04 cents and the 10- and 20-day moving averages of 51.99 and 51.51 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: December wheat futures surged 11 1/2 cents, settling at $5.55. December HRW futures rallied 5 1/4 cents to $6.15 3/4, while December spring wheat futures rose 10 1/4 cents to $7.17 1/2.
Fundamental analysis: Wheat futures saw corrective buying, maintaining gains despite corn and soybeans both pulling back from intraday highs. Wheat prices were boosted by reports of Russian missiles striking the Odesa port in Ukraine. A WSJ report that Iran is weighing sending short-range missiles to Russia also boosted prices.
As of Sunday, USDA estimated 95% of the winter wheat crop was planted, slightly ahead of the five-year average of 96%, while 87% had emerged (85%). The portion of the crop rated “good” to “excellent” rose one point from a week ago to 48%. 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 rose 2.0 points to 320.9, while the SRW crop declined 1.6 points to 374.2. Both crops continue to be rated well above year-ago levels.
World Weather Inc. notes eastern portions of the U.S. HRW region will receive some welcome rains earlier in the week though the west will be drier based. Snow and a little rain will develop in Nebraska, Kansas and Colorado Friday and into the weekend, though moisture totals will be low. The cooling coming with the cold front will push winter crops more into dormancy.
Technical analysis: December SRW futures surged on the session, but remained below significant resistance. Bears retain full control of the technical advantage, aiming to break prices below initial support at $5.47 1/4, then converged support at $5.40-$5.41 at the contract low. Bulls are aiming to break prices above 10-day moving average resistance at $5.60 1/2 with backing from $5.64.
December HRW futures remain in a firm downtrend on the daily bar chart. Prices made a fresh contract low on Monday, which will remain as support at $6.07. Bears are targeting the $6.00 mark below that. Bulls are targeting resistance at $6.28 1/2 before tackling firmer resistance at $6.39.
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 56 points to 80.69 cents, a near mid-range close.
Fundamental analysis: Cotton futures continued to edge sideways in narrow trade as the U.S. dollar gained increasing strength following a touch to an 11-week low overnight. Meanwhile, crude oil moved modestly lower as traders turned cautious ahead of the Thanksgiving holiday and the meeting of OPEC+, in which the group may deepen supply cuts.
Favorable U.S. weather has allowed cotton harvest to progress swiftly to an estimated 77% complete as of Sunday, according to USDA. Cooperative weather increases odds for larger production prospects, with many market participants anticipating an increase in production in USDA’s December production updates. World Weather Inc. reports U.S. crop areas will continue to experience a mostly good harvest environment. Meanwhile, global production could expand as the forecaster notes Brazil cotton acres could be on the rise as producers opt to plant full season cotton instead of attempting soybeans in the wake of hot, dry weather. Argentina cotton planting is also expected to advance better after recent rainfall.
Technical analysis: March cotton continues to consolidate mostly between the 20- and 10-day moving averages of 81.69 and 80.14 cents. A turn below the 10-day will find additional support at 78.82 cents, then 77.93 cents and the Nov. 8 low of 77.66 cents. A move above the 20-day will face further resistance at 82.13 cents, then 83.02 and 84.23 cents, with notable resistance serving at the 40- and 100-day moving averages of 84.42 and 84.96 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.
