Crops Analysis | January 8, 2024
Price action: March corn fell 5 3/4 cents to $4.55 and marked a fresh contract low early on.
Fundamental analysis: Corn futures extended recent weakness to a fresh contract low as spillover weakness from SRW wheat and soybean futures in addition to plunging crude oil futures weighed on prices. Buying efforts in corn and soybeans continue to be limited by improvements in South America’s growing conditions, while the big drop in crude oil futures stemmed from short selling by fund managers after top exporter, Saudia Arabia, slashed prices and increased OPEC output, which eased supply concerns heightened by tensions in the Middle East.
World Weather Inc. notes Argentina will continue to see mostly favorable conditions for crop development through the next two weeks as regular rounds of showers and thunderstorms will occur through the next ten days in most areas with southeastern Argentina driest, where greater rain will be needed later this month.
USDA reported weekly export inspection data midmorning, which showed total inspections of 856,597 MT (33.7 million bu.) during the week ended Jan. 4, which were up 286,740 MT from the previous week and near the top-end of the pre-report range of 500,000 to 975,000 MT.
Technical analysis: March corn bears gained technical traction in today’s session, with a close held below initial support of $4.57 3/4. Initial support will now serve at $4.55 and again at $4.50. Meanwhile, initial resistance will serve at today’s failed support level, then at $4.62 3/4, $4.65 1/2 and again at the 10-, 20- and 40-day moving averages of $4.68 1/4, $4.73 1/2 and $4.79 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: March soybeans fell 10 3/4 cents to $12.45 1/2 but closed well off session lows. March soymeal dropped 90 cents to $368.5 after making a three-month low early in the session. March soyoil rallied 18 points to 47.81 cents, despite making a seven-month low earlier in the session.
Fundamental analysis: Soybean futures continue to undergo heavy selling, marking a fresh six and a half month low. Over the course of the 70-plus cent selloff over the past two weeks, open interest has risen, indicating new sellers entering the market. Today marked the most trading volume since Jan. 2, indicating some short covering likely took place, which helped lift prices 9 1/2 cents from the intraday low. Selling was featured across commodities today, led lower by crude oil futures, which negated all last week’s gain.
Beneficial rain in northern Brazil over the weekend limited buying interest in soybean futures today as well. Rainfall was the greatest in the north from Minas Gerais and Bahia to Mato Grosso, World Weather Inc. notes. The forecaster also noted that drying continued in Mato Grosso do Sul, Parana and Sao Paulo after beginning in a drying node last week. Temperatures remain warm, though showers over the weekend and into next week will limit soil moisture loss and maintain good crop development.
USDA reported soybean export inspections of 674,749 MT (24.8 million bu.) during week ended Jan. 4, down 294,705 MT from the previous week and shy of the pre-report range of 700,000 MT to 1.125 MMT.
Technical analysis: March soybeans fell for the third consecutive session, though closed off intraday lows. Bears retain full control of the technical advantage, though some corrective buying this week is possible. Bulls are looking to overcome resistance at $12.50, $12.65 3/4, then the 10-day moving average at $12.80 3/4. Bulls are seeking a daily close above the $13.00 mark to signal an interim low could be in place. Support stands at $12.36, with backing from $12.38, then $12.25.
March soymeal futures remain in a downtrend on the daily bar chart, though bulls closed prices well off intraday lows today. Prices have entered firm support ranging from $365.30 to $370.00. A daily close below $365.0 would indicate likely sustained weakness, targeting $353.50 then the psychological $350.00 mark. Resistance stands at $379.50, quickly backed by the 10-day moving average at $380.40, then $388.20.
March soyoil futures managed to close higher despite making a seven-month low early in the session. Bulls are seeking to hold prices above support at 46.30 cents, which is backed by 45.85 cents, then the psychological 45.00 cent mark. Meanwhile, resistance stands at 48.25 cents, the 10-day moving average at 48.42 cents, then 49.08 cents. Further buying targets resistance at 50.00 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.
Price action: March SRW wheat closed down 19 3/4 cents at $5. 96 1/4 and near the session low. Prices closed at a five-week low close. March HRW wheat closed down 12 3/4 cents at $6.15 1/4, nearer the session low and hit a six-week low. March spring wheat futures fell 9 1/2 cents to $7.02 1/2, marking a six-week low.
Fundamental analysis: Losses in corn and soybean futures today, including a new contract low in March corn, spilled over into selling pressure in the wheat markets today. Sharp losses in crude oil futures also kept the speculative bulls on the sidelines today.
USDA reported better U.S. wheat export inspections of 491,074 MT, up 214,641 MT from the previous week and above pre-report expectations.
Wheat traders are monitoring a major winter storm hitting the central U.S. at present. World Weather Inc. today said blizzard conditions are expected in the western Oklahoma Panhandle and southeastern Colorado through western Kansas and possibly into central Kansas. More snow will occur later this week and the region will likely be protected with enough snow cover from threateningly cold temperatures in the upcoming weekend. Meantime, the northern Plains states’ temperatures will become significantly cold later this week. Snow cover is still needed in the western half of the region to protect crops. Some light snow is expected before the coldest air arrives. “Concern of winterkill is generally low since even a little snow will help with protection. However, a close monitoring of the extent of the snow cover will be warranted,” said the forecaster.
Trades are looking ahead to Friday’s monthly USDA supply and demand report, which will show final production numbers and Dec. 1 stocks. U.S. winter wheat seeded acres will be closely monitored by wheat traders.
Technical analysis: Winter wheat futures bears have the firm overall near-term technical advantage. Prices are starting to trend lower again. 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 today’s high of $6.17 1/4 and then at last week’s high of $6.28 3/4. First support is seen at last week’s low of $5.91 1/4 and then at $5.80. 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 today’s high of $6.29 3/4 and then at last week’s high of $6.42. First support is seen at today’s low of $6.09 1/4 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.
Price action: March cotton rose 23 points to 80.24 cents, a mid-range close.
Fundamental analysis: Cotton futures were able to mark mild gains to start the week despite heavy selling in crude oil futures along with a broad risk-off tone across commodities, while extended U.S. dollar weakness served up support to the natural fiber. Oil prices fell sharply following price cuts by top exporter Saudi Arabia and a rise in OPEC output that offset supply concerns generated by escalating geopolitical tension in the Middle East.
Meanwhile, cotton development in Brazil and Argentina should be advancing favorably with little change likely, while Australia cotton areas are expecting some additional showers over the next couple of weeks that should support favorable cotton development, according to World Weather. In the U.S., rain is still needed in West and South Texas, although the situation is not critical right now. Recent rain in California, the Delta and southeastern states was good for U.S. production potentials in 2024, though there is some growing concern about possible returning La Nina this summer for crop areas in the southern Plains.
Technical analysis: March cotton futures continued to face resistance at the 40- and 20-day moving averages of $80.30 and $80.34 but were able to trade as high as 80.81 cents, also testing resistance at 80.64 cents along the way. A consecutive test of these levels could find a run at additional resistance at 81.10 cents, and 81.62 cents, though trade will likely remain choppy/sideways as traders position for Friday’s barrage of USDA reports. Meanwhile, initial support will continue to serve at 79.66 cents, then 79.14 cents, 78.68 cents and again at the Nov. 8 low of 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.
