Crops Analysis | December 20, 2023
Price action: March corn futures fell 3 cents before settling at $4.69 3/4.
Fundamental analysis: Corn futures fell for the third straight session to a fresh contract low as technical selling overcame the market. Outside markets were quieter today as risk assets consolidated recent gains. Sinking wheat and soybean markets did little to spur buying interest in the futures market. The weakness seen in the past two weeks is likely to spur value buys, as March futures are trading near contract lows and nearing the psychological $4.50 mark which has acted as an important level in the past several years.
Rainfall is increasing throughout much of Brazil after a period of unusually dry weather, World Weather Inc. says. The wetter bias maintains through Saturday before northern production areas trend drier once again. Meanwhile, Argentina has become excessively wet, necessitating a more limited rainfall pattern for better fieldwork advancement and to limit crop quality declines, the forecaster says. The pattern in the next seven days should be a favorable mix of rain and sunshine.
USDA is set to release their weekly export sales report in the morning, with trade expecting net sales between 800,000 MT and 1.5 MMT in the 2023-24 marketing year for the week ended Dec. 14. Last week, net sales totaled 1.419 MMT.
Technical analysis: March corn futures fell for the third consecutive session, making a fresh contract low. The near-term technical advantage continues to be held by the bears. Today’s push lower touched downtrend support stemming from the May lows, which could limit seller interest on Thursday. Initial support stands at $4.68 1/4, with backing from $4.62 1/2, as bears ultimately target the $4.50 level. Resistance stands at $4.73 1/2, $4.75 1/2, then $4.78 1/2, the 10-day moving average.
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
Fundamental analysis: The soybean complex fell victim today to a bearish near-term weather outlook for South American soybean-growing regions. World Weather Inc. today said “returning rainfall to Brazil this week and timely rain for that country and Argentina as well as Paraguay and Uruguay over the next two weeks should translate into a favorable environment for summer crop development.”
A sell-off in corn and wheat futures, including corn notching a new contract low, also helped to pressure the soy markets today. The outside markets saw a neutral lean for soybeans today as the U.S. dollar index was a bit firmer but crude oil prices were a bit weaker. Still, the bean bulls have been disappointed the keener “risk-on” atmosphere in the general market place the past week has not translated into sustained buying interest in the soy markets.
Thursday morning’s weekly USDA export sales report is expected to show U.S. soybean sales of 1.3 million to 2.5 MMT for the 2023-24 marketing year in the week ended Dec. 14, according to a Reuters survey. That compares to sales of just over 1 MMT in the week ended Dec. 7.
Technical analysis: The soybean bears have the overall near-term technical advantage. A four-week-old downtrend is in place on the daily bar chart. The next near-term upside technical objective for the soybean bulls is closing March prices above solid resistance at $13.60. 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 $13.28 1/4 and then at this week’s high of $13.40 3/4. First support is seen at today’s low of $13.11 1/4 and then at $13.00.
The soybean meal bears have the firm overall near-term technical advantage. A five-week-old downtrend is in place on the daily bar chart. The next upside price objective for the meal bulls is to produce a close in March futures above solid technical resistance at $410.00. The next downside price objective for the bears is closing prices below solid technical support at the October low of $365.30. First resistance comes in at today’s high of $393.90 and then at $398.00. First support is seen at today’s low of $386.10 and then at $380.00.
Soybean oil futures bears have the solid overall near-term technical advantage. The next upside price objective for the bean oil bulls is closing March prices above solid technical resistance at the November high of 53.32 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 today’s high of 51.69 cents and then at 52.50 cents. First support is seen at this week’s low of 49.90 cents and then at 49.00 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.
Fundamental analysis: Wheat futures continue to see choppy price action, with days often alternating between heavy losses and staunch gains, with the market favoring the downside today. Front-month crude oil, which reversed from early gains to fall for the first time in six sessions, weighed heavily on the wheat market today, especially as the U.S. dollar index showed strength from recent lows. SovEcon raised its Russian 2024 wheat production forecast by 1.5 MMT to 91.3 MMT as recent rains and snow have provided improved moisture conditions for the winter wheat crop. That would still be 400,000 MT smaller than SovEcon’s estimate of Russia’s wheat crop this year.
Moisture in HRW wheat acres is likely in the first week of the outlook, with welcome rain occurring in the eastern and northern production areas, World Weather Inc. says. Temperatures are expected to trend lower, leaving the crop in dormancy. The northern plains are expected to receive rain and snow late Saturday into Monday and possibly Tuesday, the forecaster says. Temperatures are likely to rise in the second week of the outlook, though not warm enough to have a meaningful impact on the crop.
USDA is set to release their weekly export sales report in the morning. Analysts expect USDA to report sales between 200,000 and 600,000 MT of wheat sales for the week ended Dec. 14 for the 2023-24 marketing year, sharply down from last week’s marketing-year high of 1.490 MMT.
Technical analysis: The winter wheat futures markets continue to face volatility on a day-to-day basis. While prices are sharply higher from a month ago, bulls and bears are caught in a battle for the near-term direction. March SRW futures continue to consolidate in a bull flag on the daily bar chart. Resistance stands at $6.16 3/4 with further backing from $6.26, the upper end of the recent range. Support stands at $6.08 1/2, $6.05 1/4, then the psychological $6.00 mark.
March HRW futures continue to face relative weakness compared to SRW futures. Bulls are looking to hold support at $6.21 1/2, which is backed by $6.16 1/2, then the psychological $6.00 mark. Resistance stands at $6.38, which caped most gains today, then the 40-day moving average at $6.41. Large daily swings are likely to continue until prices close above $6.60 resistance or below $6.20 support.
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 fell 25 points to 79.21 cents and nearer the session low.
Fundamental analysis: Cotton futures today saw modest selling pressure from technical traders as the overall near-term chart posture for the market remains bearish. Worries about slowing economic growth in China further crimping demand for U.S. cotton remain an underlying bearish element for the natural fiber. Cotton bulls have been disappointed the recent risk-on trading attitudes in the general marketplace, in which the U.S. stock indexes today hit new highs for the year, have not benefitted the cotton market bulls.
World Weather Inc. today said West Texas still needs more moisture to improve the prospects for 2024 planting and some of that needed rain will evolve in the next couple of weeks. Recent excessive rain in the southeastern U.S. may have flooded a few areas, but drier weather through Saturday will help to get the surplus moisture out of the region. More rain is expected in the southeastern states late this weekend into next week. California and Arizona rainfall coming up should also prove to be beneficial in time.
Cotton traders will closely scrutinize Thursday morning’s weekly USDA export sales report, especially to see China’s appetite for U.S. cotton.
Technical analysis: The cotton futures bears have the overall near-term technical advantage. The next upside price objective for the cotton bulls is to produce a close in March futures above technical resistance at the December high of 83.13 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 80.59 cents and then at 81.00 cents. First support is seen at this week’s low of 78.86 cents and then at the December low of 78.59 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.
