Crops Analysis | November 22, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: December corn futures fell 1 1/4 cents to $4.68 3/4, a low-range close.

5-day outlook: Corn futures struggled garnering much momentum either way despite volatility in the soy and wheat markets. Bulls continue to fail to break out of the recent downward trend on the daily bar chart, a trend that is likely to persist through the end of the month. Based on our research, the most common time for a harvest low is in the last ten days of November, which ought to give bulls confidence that the end of the recent weakness is near, though the technical posture points to continued weakness, though the decline has proceeded at a very slow pace, showing strength under the market.

30-day outlook: The demand outlook over the coming month will tell an important story in corn. Recent export inspections have been lackluster, though that is historically the norm as exporters focus on exporting soybeans. That outlook shifts over the coming month, with corn getting more attention from importers. The export situation could be one that reverses the recent downward trend. USDA is expected to release its weekly export report on Friday at 7:30 a.m. CT, delayed a day because of the holiday. Traders expect net sales between 700,000 MT and 1.6 MMT for the 2023/24 marketing year. Just this morning, USDA reported daily sales of 128,000 MT of corn to unknown destinations. If the export situation improves, prices will likely be able to climb through the month of December, which tracks well with seasonals and our analog study comparing price action to 2013 at this time.

90-day outlook: South American weather has dictated price action in the soy complex for the better part of a month. As time progresses, that will shift to corn as there is more clarity on how the delayed soybean planting affects the Brazilian second crop corn. Dr. Michael Cordonnier pointed out that some producers are looking to cut their corn acres by 25% to 50% as cheap prices and poor conditions discourage them from planting. Expect traders to be keyed into South American weather over the next quarter.

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.

 

 

Soybeans

Price action: January soybean futures fell 20 3/4 cents to $13.56 1/2. March soybean meal futures lost $5.70 at $424.10. March soybean oil futures closed down 68 points at 52.41 cents after hitting a four-week high early on. All three markets closed nearer their daily lows.

5-day outlook: Price action in soybean and meal futures has turned sideways and choppy as their price uptrends on the daily charts have stalled out. The slight weakening of the technical postures for both markets suggests the speculators won’t be aggressive buyers in the near term. The down-trending crude oil market will also limit buying interest in the soybean complex, especially bean oil. Still, better risk appetite in the general marketplace, evidenced by the rallying U.S. stock market, should keep a floor under present soybean complex futures prices in the near term. Friday’s weekly USDA export sales report is expected to show U.S. soybean sales of 800,000 MT to 1.8 MMT in the 2023-24 marketing year and sales of zero to 20,000 MT in the 2024-25 marketing year.

30-day outlook: Weather in South American soybean-growing regions will remain close to the front burner of the complex in the coming weeks. World Weather Inc. today said center-west and center-south Brazil weather will improve over the next week to ten days. “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.” Crops in Argentina are expected to be mostly favorable and those in southern Brazil will see frequent rainfall that will maintain concern over development and production potential. Parts of Paraguay and neighboring areas in southern Mato Grosso do Sul, Parana and Santa Catarina may get excessive amounts of moisture. In contrast, far northeastern Brazil may be dry or mostly dry during the next ten days resulting in more crop stress and concern over planting conditions, said the forecaster.

90-day outlook: Last week USDA reported weekly U.S. soybean export sales of 3.92 MMT for week ended Nov. 9 that were the largest weekly sales by volume for a single marketing year. China was the main buyer. The recent meeting between President Biden and Chinese leader Xi Jinping hints at a thawing in heretofore chilly relations between the world’s two largest economies. That could mean better Chinese demand for U.S. ag products in the coming months. The recent depreciation of the U.S. dollar on the foreign exchange markets is also a bullish element for U.S. soybeans, making them more price-competitive on the world trade markets.

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.

 

 

Wheat

Price action: December SRW wheat rose 3/4 cents to $5.55 3/4, closing near the session low, while December HRW fell 1 1/4 to $6.14 1/2. December spring wheat fell 6 3/4 cents to $7.10 3/4.

5-day outlook: While SRW wheat futures turned down from overnight strength, curbed by technical resistance and low trade volume ahead of the Thanksgiving holiday, slight gains were achieved despite a rally in the U.S. dollar from Tuesday’s 11-week low. USDA’s daily export sale of 110,000 MT of SRW wheat for delivery to China served up a little demand optimism for U.S. wheat as global demand concerns continue to loom amid an enduring conflict between Russia and Ukraine. A Russian attack on Ukraine’s southern port of Odesa ignited corrective buying on Tuesday, pulling SRW wheat futures from technically oversold territory following a five-day sell off, though strong technical resistance curbed traders’ appetites. Volume will likely remain low into the weekend, though market participants will continue to monitor any additional attacks, which could further jeopardize grain exports from the region.

30-day outlook: The. U.S. winter wheat crop is off to a favorable start, comparatively, with USDA increasing the “good” to “excellent” rating one point from the previous week to 48% versus the crop’s rating of 32% for the same period a year-ago. However, with 95% of the crop planted, the growing season lies ahead, which could serve up variability in the coming months. World Weather Inc. reports 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. The forecaster notes these areas need greater moisture to induce better winter crop establishment, with some areas trending a little too cool for new crop development. Midwest wheat likely benefitted from rain earlier this week, but cooling this weekend will diminish new crop development for a while. 

90-day outlook: USDA will postpone its Weekly Export Sales Report until Friday, with traders expecting net sales to have totaled between 125,000 and 450,000 MT during the week ended Nov. 16. In the week prior, wheat sales fell short of traders’ pre-report expectations and were down 17% from the previous week. The marketplace will continue to closely monitor U.S. export sales as the marketing-year progresses and global supply disruptions loom.

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.

 

 

Cotton 

Price action: March cotton rose 21 points to 80.90 cents, a high-range close.

5-day outlook: Cotton futures spent the session in narrow trade as sideways consolidation continued ahead of the Thanksgiving holiday. The natural fiber has hovered mostly between the 10- and 20-day moving averages over the past six sessions amid subdued volatility as the outside markets provided limited directional vigor. However, as next week approaches, increased volume will return, notably as traders turn their attention to the delayed OPEC+ as producers struggle to agree on production levels and potential reductions. The meeting was originally set for Nov. 26, but has been delayed to Nov. 30 amid differing views among the group’s participants.   

30-day outlook: U.S. cotton producers have plugged away 77% of the country’s cotton crop as of Nov. 19, according to USDA’s weekly Crop Progress Report. While harvest weather has proven mostly favorable throughout harvest, traders are anticipating a production increase in the government’s December crop data, due out Dec. 10. Meanwhile, World Weather Inc. indicates weather will continue to be mostly good as producers work to reap the remaining 20% of the crop to be harvested.

90-day outlook: U.S. cotton exports will continue to prove of particular importance as the marketing-year progresses. While USDA’s weekly export sales have recently proven steady, traders have been increasingly concerned top importer, China will look to Brazil to fulfill their import needs. Those worries could become exacerbated as Brazilian producers have recently grappled with hot, dry conditions, which have driven sentiments to plant full-season cotton as opposed to soybeans. Though the production remains to be seen, traders will closely eye planting efforts in the coming days, along with weather and demand.

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.

 

 

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