Crops Analysis | November 27, 2023
Price action: December corn fell 7 3/4 cents to $4.55 1/2 and closed near the session low, while March corn dropped 7 1/4 cents to $4.75 1/4.
Fundamental analysis: Corn futures extended to a fresh-for-the-move low amid spillover SRW wheat weakness and broad technical selling across commodities. USDA’s late-morning release of weekly export inspection data applied additional pressure to the grain complex, as weekly corn inspections totaled 406,680 MT (16.0 million bu.) during the week ended Nov. 23, missing the pre-report range of 450,000 to 750,000 MT. Inspections also declined 194,388 MT from the previous week.
In Brazil, summer crop planting reached 83% of the projected area in the center-west of Brazil as of last Thursday, according to AgRural. Efforts advanced three percentage-points from the previous week and trailed last year’s completion rate of 88% during the same period a year ago. With planting finished in Rio Grande do Sul and Paraná, and nearly finished Santa Catarina, producers in the south will increasingly focus on the implications of excess rain and lack of light on the management and pace of crop development.
USDA will update its weekly harvest progress estimates as of Nov. 26. A Reuters poll indicates analysts expect corn harvest to be 97% complete, which would be a four-percentage point advance from the previous week.
Technical analysis: December corn ended the session below support at $4.60 1/4 and $4.57 1/4, giving bears the near-term technical advantage and increased momentum towards additional support at $4.52 1/4. However, a push into oversold territory today could spur corrective buying efforts, which would face resistance at today’s failed support levels, then at $4.65 1/4, $4.68 1/4, again at the 10- and 20-day moving averages of $4.69 1/2 and $4.71 1/4. From there resistance serves at $4.73 1/4, $4.76 1/4 and the 40- and 100-day moving averages of $4.80 1/4 and $4.90 1/4.
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 soybean futures fell 1 cent to $13.29 3/4. December meal futures rose $1.3 to $458.7, though closed nearer session lows. December bean oil futures rallied 38 points to 51.91 cents.
Fundamental analysis: Soybean futures saw limited losses after falling over 50 cents in the past two sessions as prices were supported by technical buying. Despite corn and wheat futures trading on multi-year lows, soybeans continue to be supported by production concerns in top world exporter Brazil. Meal futures continue to show relative strength as well, further limiting weakness in soybeans.
Brazil’s soybean planting stood at 74% done as of last Thursday, according to AgRural, behind 87% on that date last year and the slowest since 2015-16. Rainfall over the weekend was greatest in Goias and east-central Mato Grosso, with lighter rain in central and western Mato Grosse do Sul. Rainfall this week will be restricted with most areas failing to get enough rain to counter daily evaporation through Saturday, World Weather Inc says.
Technical analysis: January soybean futures traded in a narrow range compared to the last couple of weeks. Prices have been in a steady downtrend for two-weeks, which one could argue is a bull flag on the daily bar chart, though a bearish head and shoulders has formed on the chart as well. Bulls need to keep prices above neckline support at $13.29 1/4, a daily close below which would validate the head and shoulders pattern and lead to extended weakness, targeting support at $13.19 1/2 then the psychological $13.00 mark. Bulls are targeting a daily close above resistance at $13.72, which would validate the bull flag, with additional resistance at $13.35, $13.41 and $13.50 on the way.
December meal futures traded the $460.00 mark for the seventh session in a row as prices consolidate following a two-month uptrend. Bulls are seeking to hold prices above support at $453.30, backed by last week’s low of $440.80. Bears are looking to hold resistance at $460.20, backed by $467.50.
December bean oil futures failed to hold the overnight gap higher though still closed higher on the day. Prices are in a four-week uptrend on the daily bar chart, as bulls are looking to hold support at 51.00 cents. Further support stands at the psychological 50.00 cent mark, then 49.36 cents. Resistance stands at 52.28 cents, then 53.33 cents, the 40-day moving average.
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 16 1/4 cents to $5.61. March HRW wheat closed down 15 cents at $5.96 1/2. Both markets closed near their session lows and hit contract lows. Spring wheat futures dropped 14 3/4 cents to $6.99 3/4.
Fundamental analysis: The wheat futures markets were hit today by the chart-based sellers and by the selloff in corn futures. Slumping crude oil futures prices were also a bearish outside market force working against the wheat bulls today.
Today’s weekly USDA export inspections report showed 276,585 MT of U.S. wheat inspected for export, compared to 366,472 MT reported last week. The latest figures continue to disappoint the bulls.
World Weather Inc. today said precipitation fell in some U.S. hard red winter wheat areas and continued in Europe and the western CIS, while China was drier- biased and India stayed generally dry. Meantime, Australia’s harvest advanced around rain in New South Wales while advancing swiftly in the dry areas of Western Australia. Crop conditions in Argentina were good for wheat maturation and harvest progress. Snow cover is widespread in parts of Europe and the western CIS as well as in a part of the U.S. central Plains and Midwest, protecting winter crops. Warming is likely in many of these areas later this week into next week.
This afternoon’s final weekly USDA crop progress report of the year is expected to show U.S. winter wheat crop in 49% good to excellent condition, compared to 48% last week and 34% at the same time last year.
Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. SRW bulls' next upside price objective is closing March prices above solid chart resistance at $6.00. The bears' next downside objective is closing prices below solid technical support at $5.00. First resistance is seen at $5.70 and then at today’s high of $5.82. First support is seen at today’s contract low of $5.56 1/4 and then at $5.50. The HRW bulls' next upside price objective is closing March prices above solid technical resistance at $6.50. The bears' next downside objective is closing prices below solid technical support at $5.50. First resistance is seen at today’s high of $6.17 1/2 and then at $6.25. First support is seen at today’s contract low of $5.96 3/4 and then at $5.85.
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 plummeted 173 points to 79.26 cents, the lowest close since Nov. 9.
Fundamental analysis: Cotton futures faced notable selling to start the week amid broad technical selling and increasing production prospects in Brazil. Producers are expected to plant 15% more cotton acres versus year-ago, with output expected to jump 16.4% to an all-time high, according to forecasts from Agroconsult.
Meanwhile, traders will closely monitor crude oil futures as OPEC+ is looking at extending and possibly deepening oil production cuts in a meeting set to be held Thursday of this week.
USDA will release its weekly harvest estimate as of Sunday following the close. Last week, cotton harvest was reported at 77% complete, a ten-point gain from the previous week and seven points ahead of the five-year average. World Weather Inc. notes dry weather and good harvest progress will continue through much of the next two weeks in western Texas and southwestern Oklahoma with some showers Wednesday through the weekend. The forecaster reports the Blacklands, Coastal Bend and south Texas will see showers in at least a part of the region most days Wednesday through Saturday.
Technical analysis: March cotton lost technical traction, with bears holding a close below the 10-day moving average of 80.72 cents and support at 80.21 and 79.43 cents. An extension lower will face further support at 78.67 cents and again at the Nov. 8 low of 77.66 cents. Meanwhile, corrective buying efforts will face initial resistance at today’s failed support levels, then at the 20-day moving average of 80.92 cents, again at 81.75, 82.51 and 83.29 cents and the 40- and 100-day moving averages of 83.83 and 84.98 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.
