Crops Analysis | November 28, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: March corn futures fell 1 3/4 cents to $4.73 1/2 and near mid-range. Prices hit another contract low.

Fundamental analysis: Corn futures bulls were especially disappointed today given the solid rallies in soybeans and wheat. There were also bullish outside markets for the grains on this day that included a weaker U.S. dollar index that hit a 3.5-month low and higher crude oil prices. However, seasonals are starting to turn friendlier for the corn market and it’s our bias that the downside in corn futures is limited at present price levels.

USDA Monday afternoon reported U.S. corn harvest was 96% complete as of last Sunday, one percentage point ahead of the five-year average.

World Weather Inc. today said drying is expected in center-west Brazil through Saturday and then rain is expected periodically through much of next week.  “This will result in rising crop stress over the next several days and then some relief. Rain in other parts of Brazil’s summer crop region recently offered a little relief, although the northeast is still too dry and portions of the south are still a little too wet,” said the forecaster. “Argentina corn region weather is likely to be favorably mixed and rain in southern Brazil will continue frequently but with lighter amounts giving the region a chance to see some short-term drying and fieldwork.”

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 $4.90. The next downside target for the bears is closing prices below chart support at $4.50. First resistance is seen at $4.80 and then at this week’s high of $4.85. First support is at today’s contract low of $4.71 and then at $4.65.

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 soybeans rose 16 3/4 cents to $13.46 1/2, near the session high, while January meal fell $6.10 to $430.50 and January soyoil surged 188 points to 52.94 cents.

Fundamental analysis: Soybeans rebounded on corrective buying following a near 50-cent drop over the previous three sessions. A daily export sale of 123,300 MT to unknown destinations during 2023-24 and persisting weather concerns in Brazil lent additional support to the complex. World Weather Inc. reports crop stress will increase in center-west Brazil over the next several days, with periodic rains occurring through much of next week. Rain in other parts of Brazil’s summer crop region recently offered a little relief, although the northeast is still too dry and portions of the south are still a little too wet. The forecaster states these trends in the northeast and south will prevail through all of next week and into mid-month.

South American crop consultant, Dr. Michael Cordonnier left his Brazilian soybean production estimate unchanged at 158 MMT and noted a neutral to lower bias going forward. Cordonnier reported limited improvement in the rainfall in central Brazil, though more rain is expected over the next 6-to-10-day period. In the southernmost state of Rio Grande do Sul, wet weather continues to delay planting progress. Cordonnier left his Argentine production estimate unchanged at 50 MMT and indicated a neutral to higher bias with producers expected to switch some of their intended early planted corn to soybeans instead.

Technical analysis: Soybean bulls made their presence known in today’s session, with a close held above resistance at $13.38 and $13.46 1/4, just short of the 100-day moving average of $13.47 1/4, which will now serve as initial resistance. An extension above the area will face additional resistance at the 20- and 10-day moving averages of $13.52 1/2 and $13.58 1/4, then at the Nov. 15 high of $13.98 1/2. Meanwhile, initial resistance will now serve at today’s failed resistance levels, then at the 40- and 200-day moving averages of $13.28 1/4 and $13.22 1/2. A push below these levels would likely induce selling towards the Oct. 11 low of $12.70 1/4.

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: March SRW wheat rose 11 cents at $5.72 and near the session high. March HRW wheat closed up 21 1/4 cents at $6.17 3/4. Prices closed near the session high and hit a contract low early on. March spring wheat futures rose 13 1/2 cents to $7.13 1/4.

Fundamental analysis: Short covering was seen in the wheat futures markets today after SRW hit a contract low on Monday and HRW scored a contract low this morning. A drop in the U.S. dollar index to a 3.5-month low today and a rally in the crude oil market were also bullish outside-market elements for the grains today.

Also supportive for wheat today was news Russia may implement a ban on grain exports if its stocks fall to 10 million MT, Izvestia Daily reported. The government working group on non-tariff measures in foreign trade recommended the ag ministry monitor grain stocks monthly, Izvestia said.

World Weather Inc. today said that in U.S. HRW country, western production areas continue to need greater precipitation. Any precipitation in the first week of the outlook will occur mainly in the east, with the greatest occurring in central Oklahoma Thursday. Winter crops in the northern half of the region are dormant or semi-dormant across much of the region and new crop development “will be quite limited until spring unless a prolonged period of warmer-than- usual weather evolves,” said the forecaster. Meantime, in the northern Plains, a general lack of snow cover “has wheat exposed to any extreme weather that comes along and some of the crops were not well established prior to dormancy – especially not in Montana. Snow cover will be needed to protect crops later this winter and to provide some moisture when it melts,” said World Weather. Not much precipitation is expected, however, and a return to warmer than usual weather is forthcoming.

Technical analysis: Winter wheat futures bears still 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 this week’s high of $5.82 and then at last week’s high of $5.91 1/2. First support is seen at the 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 last week’s high of $6.33 1/4 and then at $6.50. First support is seen at today’s contract low of $5.95 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.

 

 

Cotton 

Price action: March cotton rose 34 points to 79.60 cents, a mid-range close.

Fundamental analysis: Cotton futures spent the session mostly subdued despite a slumping U.S. dollar to a three-and-a-half-month low and a rally in crude oil futures. Market participants are seemingly expecting an extension of OPEC+ current production cuts from Thursday’s meeting aimed at securing 2024 oil production targets. The meeting was delayed due to disagreements from African producers following discussions of larger production cuts. Traders largely expect OPEC will announce another cut in its overall production.

USDA reported 83% of the U.S. cotton crop was harvested as of Sunday, a six-point advance on the week and four points ahead of the five-year average. World Weather Inc. reports recent rain in central, southern and eastern Texas, the Delta and southeastern states has raised topsoil moisture for spring 2024 planting but has delayed late-season activity in southeastern areas. The forecaster states West Texas needs rain for next year’s crop, but dry conditions have been very good for this year’s harvest. 

Technical analysis: Cotton futures continue to be hindered by technical pressure at the 20- and 10-day moving averages of 80.64 and 80.72 cents, while initial support at 78.52 continues to curb selling. However, a break above the 10- and 20-day will face additional resistance at 81.73 cents, then 82.48 cents and the 40- and 100-day moving averages of 83.60 and 84.96 cents. Conversely, a push below initial support will find further support at 77.77 cents and 76.54 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.

 

 

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