Crops Analysis | December 26, 2023
Price action: March corn rose 7 1/4 cents to $4.80 1/4 and closed above the 10- and 20-day moving averages for the first time since Dec. 12.
Fundamental analysis: Corn edged higher for the third straight session amid spillover strength from SRW wheat and a rally in crude oil futures which stemmed from rising tensions in the Middle East. Furthermore, crude oil and the U.S. dollar reacted from broad expectations the Fed will cut interest rates next year. USDA’s weekly export inspection data for week ended Dec. 21 lent an additional boost, with inspections totaling 1.082 MMT, which were up 121,925 MT and above the expected pre-report range of 450,000 and 925,000 MT.
South American crop consultant Dr. Michael Cordonnier left his Brazilian corn estimate unchanged at 117 MMT but noted a lower bias going forward. Cordonnier noted the country’s 2023-24 corn production will depend on the safrinha corn acreage and yield. Safrinha corn acreage in Brazil’s top producing state of Mato Grosso could be down 25%, according to a survey conducted by Aprosoja/MT. Meanwhile, Dr. Cordonnier left his Argentine corn estimate unchanged at 53 MMT and noted a neutral bias going forward. He did report, however, if weather continues to cooperate, the estimate could move higher in the weeks ahead.
Technical analysis: March corn futures were able to notch the largest daily gain in nearly a month, with a close secured above resistance at $4.74 1/4, $4.75 1/4 and $4.76 1/2, as well as the 10- and 20- day moving averages of $4.77 1/4 and $4.80 1/4. Initial resistance will now stand at the 20-day moving average of $4.80 1/4 and then at the 40-, 100- and 200-day moving averages of $4.84, $4.93 3/4 and $5.21 3/4. Conversely, support will serve at today’s failed resistance levels, then at $4.71 1/2, $4.70 1/4 and $4.69 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 futures rose 13 1/2 cents to $13.13 1/4, while March soybean futures rallied 12 3/4 cents to $13.19. March soymeal futures rose $4.80 to $395.90, settling on session highs. March soyoil dropped 51 points to 48.51 cents, though settled off session lows.
Fundamental analysis: Soybean futures saw selling pressure to start the week, but buyers stepped in as the session progressed. Outside markets were supportive as front-month crude oil futures hit a fresh high for the month. Wheat futures surged as well today, which helped to lift both the soy and corn markets.
Crop consultant Dr. Michael Cordonnier lowered his Brazilian soybean estimate by 2.0 MT to 153 MMT and noted a neutral/lower bias going forward. Cordonnier reported rainfall increased last week in central and northeastern Brazil but amounts and coverage were variable and generally less than what was needed for the drought plagued areas. He left his Argentine estimate unchanged at 50 MMT, with a neutral/higher bias going forward.
USDA reported weekly export inspections of 1.07 MMT (39.3 million bu.), down 354,601 MT from the previous week but within the pre-report range of 800,000 MT and 1.585 MMT.
Technical analysis: March soybean futures’ surge did little to affect the recent bearish trend and initial resistance at $13.21 1/4 is still intact. Above that mark, bulls are targeting the 20-day moving average at $13.30 1/2, which coincides with the downtrend line stemming from the November high. Support stands at $13.01 3/4, $12.98 1/4, then $12.85.
March soybean meal futures surged on the session, overcoming 10-day moving average resistance at $394.7. Further resistance stands at $399.8, quickly backed by the psychological $400.0 mark, then $403.2. Support stands at $393.6, $390.0, with firmer backing at last week’s low of $384.7.
March soyoil futures faced heavy selling for the third straight session despite gains in beans and meal. Prices made a six-month low though bounced into the close. Support stands at the psychological 48.00 cent mark with backing from 47.80 cents. Bulls are seeking to overcome resistance at 49.74 cents, backed by the psychological 50.00 cent mark, then 50.26 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 20 cents at $6.36 1/4. March HRW wheat closed up 19 3/4 cents at $6.42 3/4. Both markets closed nearer their daily highs. Spring wheat futures rallied 15 cents to $7.29 1/4.
Fundamental analysis: Wheat futures were supported in part today by rising Ukraine/Russia tensions following reports Ukraine’s military shot down a couple of Russian jets and hit a Russian warship with missiles. The key outside markets were also bullish for wheat futures today as the U.S. dollar index was weaker and crude oil prices are sharply higher. Solid gains in corn futures today were also supportive to wheat markets.
Also positive for U.S. wheat prices today were reports Russia’s grain harvest in 2023 will total 142.6 MMT, down 9.5% from last year’s record. Russian wheat production totaled 92.77 MMT, down from 104.23 MMT in 2022.
World Weather Inc. today said weekend precipitation “was welcome in hard red winter wheat production areas, and that which lingers into Wednesday will also be welcome.” Most of the U.S. Midwest moisture situation “is very good for wheat and enough improvement has occurred in the Pacific Northwest for some benefit to wheat and barley in the spring.” There is still need for greater moisture in Canada’s Prairies, the northwestern U.S. Plains and in the Pacific Northwest,” said the forecaster.
USDA this morning reported weekly U.S. wheat export inspections of 428,663 MT, up 143,871 MT from the previous reporting week and above pre-report expectations.
Technical analysis: Winter wheat futures bears 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 $5.80. First resistance is seen at the December high of $6.49 1/2 and then at $6.60. First support is seen at $6.25 and then at $6.15.
March HRW futures today scored a bullish “outside day” up. Bears still have the firm overall near-term technical advantage. However, recent price gains begin to suggest a market bottom is in place. The HRW bulls' next upside price objective is closing March prices above solid technical resistance at the December high of $6.77 1/2. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.95. First resistance is seen at $6.50 and then at $6.60. First support is seen at $6.30 and then at last week’s low of $6.19 1/4.
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 29 points to 80.05 cents and closed above the 10-day moving average for the first time since Dec. 14.
Fundamental analysis: Cotton futures rose modestly despite strong gains in crude oil as technical headwinds continue to dampen buying interest. U.S. dollar weakness also propped up the natural fiber as the marketplace continues to anticipate interest rate cuts in the coming year and shake off sentiments of a possible recession.
World Weather Inc. indicates returning rain to some of Brazil’s crop areas this weekend and next week will be supportive of planting, germination and emergence in Bahia and in center west areas. Bahia’s rain may be delayed until next week and most of Brazil’s cotton areas should not see much precip of significance through Friday of this week. The forecaster reports Argentina cotton will get periods of rain during the next couple of weeks supporting crops favorable, while South Africa is also expecting timely rain for its cotton. India’s cotton is being harvested favorably with late season crops in the south still filling bolls favorably. Meanwhile, West and South Texas still need more moisture to improve prospects for 2024 planting, and while some of the needed rain will eventually evolve, it’s expected to be limited for the next ten days.
Technical analysis: March cotton spent the session narrowly trading within Friday’s range as the 10-, 20- and 40-day moving averages of 79.97, 80.12 and 80.52 cents curbed a move higher. However, ultimately a close was captured above the 10-day, now making the 20- and 40-day moving averages initial resistance. From there, resistance stands at 81.61 cents, 82.17 cents and the 100-day moving average of 84.27 cents. Meanwhile, initial support will now serve at the 10-day moving average and again at 79.04 cents, 78.33 cents and 77.40 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.
