Crops Analysis | November 29, 2023
Price action: March corn rose 2 1/4 cents to $4.75 3/4, closing nearer the session high after marking a fresh contract low early on.
Fundamental analysis: Corn futures were able to rally from a fresh contract low notched shortly after this morning’s open. Follow-through gains in wheat bolstered the grain campaign along with rising crude oil futures. Traders continue to anticipate this week’s OPEC+ meeting after being delayed due to a disagreement between cartel members on whether to cut collective crude oil production. Currently, there is no clear marketplace consensus on what OPEC will announce at the meeting, set to begin Thursday.
Earlier today, ethanol production for week ended Nov. 24 was released and showed an average of 1.011 million barrels per day (bpd) were produced, which was down 12,000 bpd from the previous week and 0.7% below the same week last year. Ethanol stocks fell 273,000 barrels to 21.379 million barrels.
USDA will release its weekly export sales data ahead of the open Thursday morning, with traders expecting net sales to range from 600,000 MT to 1.2 MMT. Last week, net sales of 1.432 MMT were reported for the previous week, which were down 21% from the previous week but up 16% from the four-week average.
Technical analysis: March corn futures tested initial support at $4.70 3/4 but were able to rebound to end the session just below resistance at $4.76 1/2. An extension higher will face additional resistance at $4.79 1/2, then at $4.82 1/4 and the 10- and 20-day moving averages of $4.83 3/4 and $4.86. From there, resistance serves at the 40- and 100-day moving averages of $4.94 1/2 and $5.03 3/4. Conversely, initial support will continue to lie at $4.70 3/4, though a turn below the area will likely induce heavier selling, with only support at $4.68 and $4.65 limiting a downside move.
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 rose 1/2 cent to $13.47 and nearer the session high. March soybean meal fell $2.10 to $416.90 and nearer the session low. March bean oil closed down 15 points at 52.48 cents and near mid-range.
Fundamental analysis: Soybean traders today paused after gains posted Tuesday. The down-trending corn market that hit a new contract low today limited buying interest in the soy complex, but the two-day rally in the wheat markets limited seller interest. The U.S. dollar index hit a 3.5-month low overnight, which also favors the soybean complex bulls. Still, in the near term look for soybeans to take daily price direction from the corn market.
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. 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. These trends in the northeast and south will prevail all next week and into mid-month. Argentina 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, said the forecaster. Soybean planting in Brazil’s state of Paraná was estimated at 96% compete as of Nov. 28.
Thursday morning’s weekly USDA export sales report is expected to show U.S. soybean sales of 850,000 to 1.5 million MT in the 2023-24 marketing year and sales of zero to 50,000 MT in the 2024-25 marketing year.
Technical analysis: The soybean bulls have the slight overall near-term technical advantage. However, a four-week-old uptrend on the daily bar chart has been negated. The next near-term upside technical objective for the soybean bulls is closing January prices above solid resistance at $14.00. The next downside price objective for the bears is closing prices below solid technical support at $13.00. First resistance is seen at today’s high of $13.52 and then at $13.70. First support is seen at today’s low of $13.37 and then at this week’s low of $13.23 1/2.
The soybean meal bulls still have the overall near-term technical advantage but are fading. A six-week-old uptrend on the daily bar chart has been negated. The next upside price objective for the meal bulls is to produce a close in March futures above solid technical resistance at the contract high of $445.10. The next downside price objective for the bears is closing prices below solid technical support at $400.00. First resistance comes in at today’s high of $421.70 and then at this week’s high of $426.70. First support is seen at last week’s low of $414.60 and then at $410.00.
The soybean oil bears have the overall near-term technical advantage. However, a 2.5-month-old downtrend on the daily bar chart has been negated. The next upside price objective for the bean oil bulls is closing March prices above solid technical resistance at 56.00 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at 45.00 cents. First resistance is seen at last week’s high of 53.32 cents and then at 55.00 cents. First support is seen at Tuesday’s low of 50.83 cents and then at this week’s low of 49.89 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: March SRW rose 13 3/4 cents to $5.85 3/4, the highest close since Nov. 15. March HRW rallied 16 1/2 cents to $6.34 1/4, near the session high, while March spring wheat rose 12 cents to $7.25 1/4.
Fundamental analysis: SRW wheat futures were able to notch notable follow-through gains after marking fresh lows to start the week. Headlines of damaging rains in southeastern Australia lent price support, with Reuters reporting production could shrink by more than 100,000 MT, with up to 1 MMT of milling wheat being downgraded into lower-quality feed grain.
World Weather Inc. notes the need for greater moisture will continue in western production areas of HRW wheat country over the next two weeks. The forecaster states any precip in the first week of the outlook will occur mainly in southeastern areas, especially Thursday. New crop development is still expected to be quite limited until spring unless a prolonged period of unusually warm weather evolves. In the northern Plains, snow cover will continue to be lacking through the next seven days, though some increase in snow is possible in the second week of the outlook and greater snow cover will be needed late winter to protect crops when threateningly cold conditions inevitably arrive.
USDA is set to release its weekly export sales report Thursday morning. A Reuters poll of analysts shows expectations of net sales between 200,000 and 500,000 MT. Last week, USDA reported net sales of 171,753 MT.
Technical analysis: March SRW gapped higher to begin the overnight session and was able to secure a close above the 10-day moving average of $5.77 3/4 and resistance at $5.84 1/2. Initial resistance will now serve at the 20-day moving average of $5.89 and again at the 40-day, currently trading at $5.95 1/4. An extension above these levels will then face resistance at the Oct. 20 high of $6.31 and again at the 100-day moving average of $6.35 1/2. Meanwhile, initial support will continue to serve at Tuesday’s close of $5.72, then at $5.67 3/4, $5.61 1/2 and again at Tuesday’s low of $5.56 1/4, then $5.51 and $5.44 3/4.
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 1 point to 79.59 cents and nearer the session low.
Fundamental analysis: The cotton futures market today saw mild chart-based selling pressure. However, losses were limited by a slumping U.S. dollar index that hit a 3.5-month low overnight. A rally in crude oil prices today was a bullish daily outside market for cotton, as was gains in the U.S. stock indexes that saw the Nasdaq and S&P 500 hitting new multi-month highs.
World Weather Inc. today said recent rain in central, southern and eastern Texas, the Delta and U.S. southeastern states has raised topsoil moisture for spring 2024 planting. West Texas needs rain for next year’s crop, but dry conditions have been very good for this year’s harvest. California needs some drier weather to support late season harvesting. Additional rain is forthcoming to the Delta and southeastern states, said the forecaster. Meantime, eastern Australia has received rain recently benefiting dryland cotton planting potential. India’s rain this week in west-central parts of the nation may have included a few unharvested cotton areas, but no serious quality decline was suspected. Southern India cotton is rated favorably. Argentina has received some rain recently and more is needed and will evolve soon. Brazil may experience an increase in cotton acreage this year because of poor soybean performance.
Traders are awaiting Thursday morning’s weekly USDA export sales report. Recent weekly sales tallies have shown better global demand for the U.S. fiber, including from China.
Technical analysis: The cotton futures bears have the firm overall near-term technical advantage. A big and bearish pennant pattern has formed on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in March futures above technical resistance at 84.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at the November low of 77.66 cents. First resistance is seen at today’s high of 80.40 cents and then at this week’s high of 80.99 cents. First support is seen at this week’s low of 78.86 cents and then at 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.
