Crops Analysis | December 5, 2023
Price action: March corn futures closed up 5 cents at $4.90 1/2 and near the session high.
Fundamental analysis: The corn futures market saw more short covering and perceived bargain buying today. Traders seemingly ignored negative outside market forces that included a higher U.S. dollar index and lower crude oil prices. A rally in the wheat futures markets this week, in which SRW and HRW hit multi-week highs, has spilled over into buying interest in corn.
Support for corn today also came from South American crop consultant Michael Cordonnier lowering his Brazil corn production estimate by 3 MMT, to 118 MMT and saying smaller safrinha corn acreage is likely this year. Cordonnier left his forecast for Argentina corn production unchanged at 52 MMT. Brazil’s CONAB agency comes out with its latest Brazilian crop and planting projections Thursday.
In South American corn-growing regions, World Weather Inc. today said Brazil rainfall may not be normal in center-west or northern parts of center-south, “but there will be enough timeliness in the rain that does fall to support crops. Soil moisture should improve as time moves along, though it will be a slow process.” Northeastern Brazil will remain too dry, while southern Brazil continues wetter than desired in some areas. Argentina will continue to experience a good mix of weather, though the next ten days may be a little drier, said the forecaster.
Technical analysis: The corn futures bears still have the firm 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 $4.50. First resistance is seen at today’s high of $4.90 3/4 and then at $4.95. First support is at this week’s low of $4.81 1/4 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 fell 3/4 cent to $13.05 1/2 after trading at the lowest intraday level since Oct. 13, while January meal rose $9.50 to $417.80, marking the first positive close in six sessions. January soyoil fell 98 points to 50.26 cents and traded at the lowest intraday level since Nov. 13 early on.
Fundamental analysis: Extended selling from technical pressure continued to hover over soybean futures for the fourth straight session despite lower Brazilian production pegs and corrective gains in meal futures.
South American crop consultant Dr. Michael Cordonnier lowered his Brazilian production estimate by 1 MMT to 157 MMT and noted a neutral to lower bias going forward. Cordonnier maintains while recent weather has improved, the rain is arriving too late for a full recovery of the earliest planted soybeans in central Brazil, while very hot and dry conditions during the first half of October took a toll on September planted soybeans. His Argentine estimate was left unchanged at 50 MMT and reported a neutral to higher bias going forward. Soybean acres could rise following the inauguration of Argentina’s new president, Sunday December 10th, if he follows through on his promise to scrap currency controls and to eliminate export taxes, notes Cordonnier, who estimates that those two measures combined could result in a doubling of the price farmers receive for their soybeans.
Casting a shadow over the market, however, was news that Brazil’s soybean exports reached a record in November at 5.196 MMT, just topping the previous record for the month. For the first 11 months of 2023, Brazil exported nearly 98 MMT of soybeans, up nearly 18% from two years ago.
Technical analysis: January soybeans ended the session nearly unchanged after turning from intraday lows which breached $13.00 for the first time since Oct. 13. The 200-day moving average of $13.20 3/4 will serve as solid resistance for bulls, though sub $13.00 is seemingly a buy, with support at $12.96 3/4 backing the psychological level. A turn above the 200-day will face additional headwinds at the 40-, 10-, 100- and 20-day moving averages of $13.32 3/4, $13.37, $13.45 1/2 and $13.50 1/2. Meanwhile, additional support lies at $12.87 1/4, $12.71 and the Oct. 11 low of $12.70 1/4.
January meal futures faced corrective gains after experiencing a notable selloff since mid-November. The 40-day moving average of $421.90 will serve as initial resistance should bulls continue today’s efforts, with additional resistance serving at the 10- and 20-day moving averages of $427.10 and $435.50 as well as the Nov. 15 high of $460.60. Conversely, initial support lies at the 100- and 200-day moving averages of $404.40 and $401.30, again at $399.20, $392.20 and the Oct. 5 low of $366.20.
January soyoil bears advanced their technical posture, with a close held below support at 50.84 and 50.45 cents. Initial support will now serve at 49.83 cents, then at the Nov. 8 low of 48.53 cents. Meanwhile, resistance will stand at today’s failed support levels, then at the 20-, 40- and 10-day moving averages of 51.33 cents, 51.62 cents and 51.83 cents and again at 52.47 cents and 52.86 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 wheat rose 10 3/4 cents at $6.31 1/4 and nearer the session high. Prices hit a three-month high today. March HRW wheat gained 5 cents to $6.62 3/4, near mid-range and hit a four-week high. Spring wheat futures rose 2 3/4 cents before settling at $7.39.
Fundamental analysis: Short covering and follow-through technical buying was featured in the wheat futures markets today. Wheat traders ignored a stronger U.S. dollar index today. Decent gains in the corn futures market today also worked in favor of the wheat market bulls. Six straight days of price gains in winter wheat futures begin to suggest those markets have put in near-term price bottoms.
The wheat markets were also lifted after USDA this morning reported another daily U.S. wheat sale of 198,000 MT of SRW to China during 2023-24, bringing total sales this week to 638,000 MT.
World Weather Inc. today reported not much change has occurred in wheat-growing areas around the world recently and little change is forthcoming. Precipitation will be limited in the west-central and southwestern U.S. hard red winter wheat areas during the coming ten days. Some light rain and snow will fall briefly Friday into Saturday. U.S. Midwest soil moisture remains favorable while the Pacific Northwest is still recovering from dryness. Snow cover is widespread from Germany through much of western and northern Russia and northern Ukraine which should protect winter crops from winterkill as temperatures get bitterly cold this week. Russia’s southern region and southern Ukraine are snow-free, but the coldest temperatures are unlikely in those areas.
Wheat traders are starting to look ahead to Friday morning’s USDA monthly supply and demand report.
Technical analysis: Winter wheat futures bears still have the overall near-term technical advantage. However, recent price gains suggest near-term market bottoms are in place. SRW bulls' next upside price objective is closing March prices above solid chart resistance at $6.70. The bears' next downside objective is closing prices below solid technical support at $5.85. First resistance is seen at today’s high of $6.36 1/4 and then at $6.50. First support is seen at today’s low of $6.16 1/4 and then at $6.00. The HRW bulls' next upside price objective is closing March prices above solid technical resistance at $7.00. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.95. First resistance is seen at the November high of $6.70 1/2 and then at $6.80. First support is seen at this week’s low of $6.42 and then at $6.29.
What to do: Get current with advised sales.
Hedgers: You should be 60% priced in the cash market for 2023-crop. You should also have 10% of expected 2024-crop production sold for harvest delivery next year.
Cash-only marketers: You should be 60% priced for 2023-crop. You should also have 10% of expected 2024-crop production sold for harvest delivery next year.
Price action: March cotton rose 100 points to 79.68 cents, ending near the session high.
Fundamental analysis: While March cotton futures regained a portion of recent losses, technical headwinds continue to influence sideways consolidation. However, the natural fiber was able to hold onto gains despite fading crude oil strength and a rising U.S. dollar amid signs of rising export demand following a large removal of certified stock from ICE warehouses. Certified cotton stocks, which can be delivered against the contract, fell to 6,325 bales today from their highest level in over two years at 87,770 bales on Dec. 1, according to ICE data.
World Weather Inc. reports late-season harvesting in the U.S. should advance relatively well, although there will be some brief bouts of rain in the southeastern states. Meanwhile Australia’s cotton has benefited greatly from recent rain, while Argentina has also seen welcome rain recently and the odds are good that Brazil will have a larger planted area to cotton this year and a weather pattern that might favor good yields.
Technical analysis: Gains in March cotton continue to be limited by technical resistance at the 10- and 20-day moving averages of 79.89 and 80.00 cents. However, a push above the area will then face resistance at 80.77 cents, 81.33 cents and at the 40-day moving average of 82.52 cents. Conversely, support will continue to serve at 79.16 cents, then at 78.11 cents and 77.55 and 76.50 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.
