Crops Analysis | January 4, 2024

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: March corn rose 1 1/4 cents to $4.66 1/2, a mid-range close.

Fundamental analysis: Early session corrective gains waned as the noon hour approached, with weakness across the soy complex weighing on corn prices, though rallying SRW wheat limited losses. Improving weather is boding well for crops across South America and keeping a lid on prices in the near-term, though traders are anticipating upcoming safrinha corn planting, which could be reduced given a later-planted first crop, along with low corn prices and uncertain weather forecasts. However, increased Argentine corn acres could offset some reductions in Brazil.

Earlier today, U.S. ethanol production for the week ended Dec. 29 showed an average 1.049 million barrels per day (bpd) produced during the week, a 58,000-bpd reduction from the previous week, but up 24.3% from the same week last year. Ethanol stocks rose 62,000 bpd to 23.579 million barrels.

Delayed a day due to Monday’s federal holiday, USDA will release weekly export sales data for the week ended Dec. 28 Friday morning. Traders are expecting sales to range between 500,000 MT and 1.2 MMT. Last week, net sales of 1.242 MMT were reported for the previous week, which were up 23% from the previous week, but down 12% from the prior four-week average.

Technical analysis: March corn extended above resistance at $4.66 3/4 and $4.68 1/2, though efforts to close above the areas ultimately proved futile. Follow-through buying will face additional resistance at the 10-day moving average of $4.71 1/4 and again at the 20-, 40- and 100-day moving averages of $4.76 1/4, $4.80 3/4 and $4.91 1/2. Meanwhile, initial support will continue to serve at $4.62 1/2, then at Wednesday’s low of $4.61 3/4 and again at $4.60 and $4.58 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.

 

 

Soybeans

Price action: March soybeans fell 9 1/2 cents to $12.6 1/2, closing nearer session low and made a fresh 6.5-month low. March soymeal dropped $4.20 to $376.20, settling near session low. March soyoil slipped 44 points to 48.16 cents.

Fundamental analysis: Soybeans continue to face persistent selling pressure, breaking prices to the lowest level since late June. News that China is seeking to use “all strengths” to accelerate the advancement and use of agricultural technology seemed to weigh on soybean prices today. China makes up over 60% of the world’s soybean imports, so improved production via the adoption of GMO crops would have a great effect on the world’s soybean market, though any substantial effect would take years.

Sao Paulo, northern Parana and southern Mato Grosso do Sul, Brazil are likely to see lighter than usual rainfall for the next five days, with some areas still drier biased this time next week, increasing the need to timely rain, World Weather Inc says. Meanwhile, far southern regions of Brazil are likely to see a healthy mix of rain and sunshine over the coming weeks, leaving most crops poised for good yields, the forecaster says.

USDA is set to release its delayed weekly export sales tomorrow morning. A Reuters poll shows expectations of sales between 500,000 MT and 1.3 MMT for the week ended Dec. 21. Last week, export sales totaled 1.242 MMT.

Technical analysis: March soybeans continue to fall under selling pressure, giving the bears firm control of the technical advantage. Prices made a fresh for-the-move low today, bears are looking to close prices below initial support at $12.65, which is backed by $12.55, then the psychological $12.50 mark. Meanwhile, resistance stands at $12.77, with backing from $12.90 3/4, then the 10-day moving average at $12.96. The extended weakness below the moving averages could spur some corrective buying in the next couple of days.

March soymeal futures continue to fall in a tight downtrend on the daily bar chart. Bulls are seeking to hold support at $375.3 with further backing from $368.5. Firm support stands around the $365.0 mark. Meanwhile, bulls are looking to overcome resistance at $380.4, with backing from $386.4, then the 10-day moving average at $386.1.

March soyoil futures have traded in a moderate downtrend since November. Bulls failed to overcome initial resistance at 48.76 cents, which is reinforced by 49.38 cents, then the psychological 50.00 cent mark. Support stands at 47.80 cents, with backing from 47.03 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.

 

 

Wheat

Price action: March SRW wheat rose 13 1/4 cents to $6.13 1/2, near the session high and hit a four-week low early on. March HRW wheat gained 4 1/4 cents at $6.25 3/4, near the session high though hit a five-week low early on. March spring wheat futures firmed 2 3/4 cents to $7.11 1/4.

Fundamental analysis: The wheat futures markets today saw some short covering and perceived bargain hunting following early week selling pressure. This week’s rally in the U.S. dollar index also took a pause today, which was encouraging to the wheat market bulls.

World Weather Inc. today said a more active weather pattern begins today as a rain and snow event moves into the region from the southwestern U.S. “This will promote the greatest snow accumulations from areas in and near the Oklahoma Panhandle into south-central Kansas. Some of this snow will then melt before the next, bigger storm system moves into the region and promotes potential blizzard conditions Monday into early Tuesday.” The snow will be important for its moisture content and for protecting the region from significant cold in the second week of the outlook, said the forecaster.

Friday morning’s weekly USDA export sales report (delayed one day due to the new-year holiday Monday) is expected to show U.S. wheat sales of 150,000 to 450,000 MT in the 2023-24 marketing year, and sales of zero to 50,000 MT in the 2024-25 marketing year.

Technical analysis: March SRW wheat prices scored a bullish “outside day” up on the daily bar chart today. Bears do still have the overall near-term technical advantage. SRW bulls' next upside price objective is closing March prices above solid chart resistance at the December high of $6.49 1/2. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.56 1/4. First resistance is seen at $6.20 and then at this week’s high of $6.28 3/4. First support is seen at $6.00 and then at today’s low of $5.91 1/4.

HRW bears also have the solid overall near-term technical advantage. 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 this week’s high of $6.42 and then at $6.50. First support is seen at today’s low of $6.11 1/2 and then at $6.00.

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.

 

 

Cotton 

Price action: March cotton dropped 81 points, settling at 80.12 cents, near session low.

Fundamental analysis: Cotton futures continue to trade violently sideways, lacking direction as outside markets continue to face volatility. Despite posting gains each day last week, March futures have alternated higher and lower each day this week. Bulls failed to follow through on Wednesday’s strength despite a weaker U.S. dollar index, making U.S. exports relatively more competitive in the world market. Crude oil resumed its recent bearish trend after Wednesday’s rally, failing to overcome initial technical resistance and facing fresh selling pressure, lowering the costs for polyester, the natural fibers’ main competitor.

Cotton traders are looking forward to tomorrow’s USDA weekly export sales report, which is delayed a day due to Monday’s holiday. Export sales have been trending higher for two weeks, with sales coming in at 373,900 RB for the week ended Dec. 21, which was the most since early November. Exports have been trending higher as well, with last week’s number marking a marketing year high.

Technical analysis: While March cotton futures closed above the downtrend stemming from the October highs late last week, they have struggled to remain above that mark at 80.20 cents, marking that area as an important pivot. Bulls are seeking to overcome resistance at 81.00 cents, with backing from Tuesday’s high at 81.75 cents. Bears are looking to break initial support at today’s low of 80.08 cents, which is quickly backed by the psychological 80.00 cent mark, then this week’s low at 79.69 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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