Crops Analysis | January 9, 2024

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: March corn futures rose 4 1/4 cents at $4.59 1/4 and nearer the session high.

Fundamental analysis: Short covering and corrective buying were seen in corn futures today after prices hit another contract low early on. Solid gains in the wheat futures markets also spilled over into some buying interest in corn. It’s also likely the index funds have been establishing some fresh long positions in the grain markets early this year, including corn. Higher crude oil prices were one bullish outside market element for the corn market today.

Traders continue to keep an eye on weather in South American corn-growing regions. World Weather Inc. today said much of Brazil and southern Paraguay will see regular rounds of rain and favorable conditions for crop development during the next two weeks, while rain will fall frequently enough to slow fieldwork at times with periods of drying likely adequate to allow for some fieldwork to advance.  “Much of northern Brazil will see additional increases in soil moisture that will be important for the coming Safrinha corn planting, with exceptions from Bahia into central and northern Gerais and Espirito Santo where rain will be restricted through at least the next ten days,” said the forecaster.

Corn traders are looking ahead to Friday morning’s monthly USDA supply and demand report that includes fresh U.S. production and stocks numbers. USDA will also update its South American crop numbers.

Technical analysis: The corn market bears have the solid overall near-term technical advantage. Prices are in a 2.5-month-old downtrend on the daily bar chart. The next upside price objective for the bulls is to close March prices above solid chart resistance at $4.81. The next downside target for the bears is closing prices below chart support at $4.47. First resistance is seen at this week’s high of $4.62 1/2 and then at $4.69. First support is at today’s contract low of $4.51 3/4 and then at $4.47.

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 rose 2 cents to $12.41 1/2 after reaching a near seven-month low early on, while March soymeal fell 90 cents to $367.60. March soyoil rose 64 points to 48.45 cents.

Fundamental analysis: Mild corrective buying surfaced in nearby soybean futures following a reach to Monday’s low in early morning trade. Soybeans were led higher by corrective strength in the grain complex, though continued selling in meal futures ultimately curbed gains. Trade will likely remain sideways to choppy as traders position for USDA’s final U.S. production figures, along with global production and supply and demand updates.

South American crop consultant Dr. Michael Cordonnier left his Brazilian soybean production estimate unchanged this week at 151 MMT in anticipation of additional harvest reports as well as USDA’s production estimates on Friday as well as updates from Conab, due out Wednesday. Early soybean yields were noted to be very low but are expected to improve as harvest moves into the later developing varieties. Cordonnier also left his Argentine soybean production estimate unchanged at 50 MMT but maintained a neutral-to-higher bias going forward.

Technical analysis: March soybeans were able to rebound following a test of initial support of $12.34, which will continue to serve as initial support. An extension lower, however, will face additional support at $12.22 1/2, then $12.09 and again at the May 31 low of $11.45 1/4. Meanwhile, initial resistance stands at $12.59, then at $2.72 1/2 and again at the 10-, 20- and 200-day moving averages of $12.81 1/2, $13.04 1/4 and $13.18 1/4.

March soymeal notched a fresh near-term low, testing support at $366.30 and $364.10 along the way, however, both levels will continue to serve as support amid a close above both. A consecutive test could find increased selling toward $362.00 and the June 8 low of $353.50. Conversely, initial resistance will continue to serve at $370.60, then at $372.70 and $374.90, while the 10-, 20-, 200- and 100-day moving averages of $380.80, $388.00, $391.50 and $396.70  stand from there.

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 futures rallied 13 3/4 cents to $6.10, settling nearer session highs. March HRW futures firmed 11 3/4 cents to $6.27. March spring wheat futures saw relative weakness, rising just 3 cents to $7.05 1/2.

Fundamental analysis: Winter wheat futures surged on the session though failed to make up all of Monday’s losses. The string of wide daily ranges continues as prices continue to trade in a 40-cent range stemming back to the early December highs. Corrective buying seen in the corn and soybean markets helped spur buying activity today, though volume was less than the recent average, which is concerning for bulls.

Bitter cold is expected to roll into the central U.S. this weekend and linger into next week, with extreme lows near in the -20s in the northern Plains, World Weather Inc says. The recent bout of four to 13 inches of snow throughout the Plains and into the Midwest will help shield winter wheat from winter kill, though some portions of the southern Plains with less snow cover will need to be closely monitored, according to World Weather Inc.

Census bureau released November wheat exports this morning totaling 42.2 mil bushels. November tends to post weaker exports as the focus shifts to soybeans and this year was no different, though inspections data showed a significant increase in December’s exports.

Technical analysis: March SRW futures led the wheat complex higher today, though prices continue to chop in a slight downward trend from the early December high. Today’s rally was capped by 40-day moving average resistance at $6.11 1/4, which is quickly reinforced by the 10-day and 20-day moving averages at $6.12 and $6.13 1/4, respectively. Further buying targets resistance at $6.35. Support lies at $5.96 1/4, with further backing from $5.91 1/4, with selling likely to accelerate to $5.75 below that mark.

March HRW futures continue to trade in a slight downtrend on the daily bar chart. Bulls are targeting resistance at $6.32 1/4, with a daily close above that mark negating the recent downtrend. That resistance is backed by $6.41, then $6.50.  Meanwhile, support lies at $6.21 1/2, $6.15 1/4, then $6.09 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.

 

 

Cotton 

Price action: March cotton rose 31 points to 80.73 cents but ended near the session low.

Fundamental analysis: Cotton futures extended gains for the third straight session as corrective buying in crude oil futures bolstered the fiber, while U.S. dollar strength and weakness across equities curbed momentum. Ahead of Friday’s USDA’s January crop updates, the Bureau of Labor Statistics will release December’s Consumer Price Index (CPI) data, set for release Thursday at 7:30 a.m. CT. CPI data in recent months has cooled, increasing sentiments of interest rate cuts in 2024, though the timing and magnitude of such cuts will largely depend on a continued slide in inflation.   

World Weather Inc. maintains rain is still needed in West and South Texas, although the situation is not critical right now. Meanwhile, recent rains in California, the Delta and southeastern states was good for U.S. production potentials in 2024. The forecaster notes there is some growing concern about a possible returning La Nina this summer for crop areas in the southern Plains.

Technical analysis: March cotton futures were able to hold above the 40-day moving average of 80.35 cents but failed to secure a close above initial resistance of 80.95 cents after an early test of the area. A consecutive test of the area could find increased buying efforts towards additional resistance at 81.49 cents, 82.16 cents and the 100-day moving average of 83.81 cents. Meanwhile, initial support will continue to serve at the 40-day moving average along with the 10- and 20-day, currently trading at 80.48 cents and 80.32 cents. From there, additional support serves at 79.74 cents, 79.07 cents and 78.53 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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