Crops Analysis | January 10, 2024
Price action: March corn rose 1/4 cent to $4.59 1/2, notching a high-range close.
Fundamental analysis: Nearby corn futures ultimately struggled to extend Tuesday’s gains, limited mostly by weakness stemming from the soy complex along with fading gains in crude oil amid a surprise jump in U.S. stockpiles. Traders are also positioning ahead of USDA’s barrage of data due out Friday, which includes final U.S. production figures and quarterly stocks estimates. Traders will also closely analyze global production data following a 925,000 MT cut in Conab’s Brazilian corn production estimate to 117.6 MMT, reported earlier today. The reduction was entirely for the first crop as Conab maintained its safrinha corn projection, as it normally does until February.
Earlier today, the Ethanol Information Administration released ethanol production data for the week ended Jan. 5, which totaled 1.062 million barrels per day (bpd), up 130,000 bpd from the previous week and 119,000 bpd (12.6%) from last year. Meanwhile, ethanol stocks surged 792,000 barrels to 24.371 million barrels, the highest since the week ended April 14, 2023.
USDA will release weekly export sales data for the week ended Jan. 4 prior to Thursday’s open. Traders are expecting net sales to range from 400,000 MT to 1.0 MMT. Last week, total sales of 367,484 MT were reported for the previous week, which was a marketing-year low.
Technical analysis: March corn futures have spent the week consolidating mostly between initial resistance at $4.62 1/2 and initial support at $4.53 3/4. More of the same is likely ahead of Friday’s data, though a breakout of the area will face additional resistance at the 10-, 20-, 40-, and 100-day moving averages, currently trading at $4.65 1/4, $4.71 1/4, $4.78 1/4 and $4.90. Meanwhile, additional support serves at Tuesday’s low of $4.51 3/4, then at $4.48 1/4, $4.45, then $4.00.
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 12 cents to $12.36 1/2, near the daily low and at a six-month low close. March soybean meal lost $3.30 at $364.30 and nearer the session low. Meal prices closed at a seven-month-low close. March bean oil closed down 20 points at 48.25 cents and nearer the session low.
Fundamental analysis: Technical selling pressure was featured today as nearby soybean futures prices this week have hit a more-than-two-year low with no solid chart clues that a market bottom is close at hand. Improving weather conditions in South American soybean-growing regions also weighed on the soybean complex today.
Conab has lowered its Brazilian soybean production forecast by 4.9 MMT, to 155.3 MMT, but that’s still higher than many private crop forecasters.
World Weather Inc. today said most of the oilseeds produced in Brazil, Argentina, South Africa and Australia are either in good shape or improving. There is need for greater rain in interior southern Brazil, where the region has been drying out recently, but beneficial rain is expected late this week into next week. Palm oil development conditions in southeast Asia are expected to be mostly good, although greater rain is still needed in southern Indonesia and western Philippines, said the forecaster.
Thursday morning’s weekly USDA export sales report is expected to show U.S. soybeans sales of 325,000 to 950,000 MT in the 2023-24 marketing year, and sales of zero to 50,000 MT in the 2024-25 marketing year. Soybean traders are also looking ahead to Friday morning’s monthly USDA supply and demand and quarterly grain stocks reports.
Technical analysis: The soybean, soybean meal and soybean oil futures bears have solid overall near-term technical advantages. In March soybeans, a seven-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 $13.00. The next downside price objective for the bears is closing prices below solid technical support at $12.00. First resistance is seen at today’s high of $12.50 and then at this week’s high of $12.61. First support is seen at this week’s low of $12.34 and then at $12.25.
Soybean meal futures also see a seven-week-old downtrend 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 $390.00. 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 this week’s high of $370.50 and then at $375.00. First support is seen at this week’s low of $363.30 and then at $360.00.
Soybean oil futures prices are in a six-week-old downtrend on the daily bar chart. 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 the contract low of 44.49 cents. First resistance is seen at last week’s high of 48.97 cents and then at 50.00 cents. First support is seen at Tuesday’s low of 47.70 cents and then at this week’s low of 46.30 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 3/4 cent to $6.10 3/4, ending the session above the 40-day moving average, while HRW wheat ended 2 1/2 cents lower at $6.24 1/2. March HRS wheat rose 2 1/4 cents to $7.07 3/4.
Fundamental analysis: Wheat futures spent most of the session consolidating mostly between the 40- and 10-day moving averages in narrow trade. U.S. dollar weakness lent additional support to the complex as traders position ahead of Friday’s USDA data. While the focus will likely be on corn and soybean production figures, winter wheat seedings could be a driving factor in price direction, which are expected to fall around a million acres below last year. Our research indicates analysts have historically overestimated acres, though that has switched in recent years, with last year’s seeded acreage nearly 2.5 million acres above even the highest estimate. However, a notable price drop since late July could increase the odds of lower-than-expected acreage on Friday.
Earlier news Ukraine’s agricultural product exports via its alternative Black Sea corridor reached 4.8 MMT in December, surpassing the maximum monthly total shipped via the former U.N. brokered grain deal, according to brokers, hovered over prices. Meanwhile, Romania’s Black Sea port of Constanta also posted record grain exports in 2023, thanks to a surge in shipments from Ukraine and ongoing European Union-funded infrastructure projects, according to Reuters.
Just ahead of Thursday’s open, USDA will release weekly export sales data for the week ended Jan. 4, with traders expecting sales to range from 200,000 to 450,000 MT. Last week USDA reported net sales of 131,600 MT, which were down 52% from the previous week and 79% from the four-week average.
Technical analysis: March SRW wheat ended the session above the 40-day moving average of $6.06 1/2 but was ultimately limited by the 100-day moving average, currently trading at $6.10 1/2. An extension above the 100-day, however, will face additional resistance at the 10- and 20-day moving averages of $6.13 1/4 and $6.16 and again at $6.25 1/2, $6.36 1/2 and the Dec. 6 high of $6.49 1/2. Meanwhile, the 40-day moving average will serve as initial support, with further support serving at $5.98, $5.86 1/4, $5.78 1/4 and the Nov. 27 low of $5.56 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 fell 55 points at 80.18 cents and nearer the session low.
Fundamental analysis: The cotton market today saw selling pressure due in part to lower crude oil prices and some positioning ahead of a key USDA report on Friday morning. A weaker U.S. dollar index today and this week’s rallies in the U.S. stock indexes did limit selling interest in cotton today.
Cotton traders are awaiting Thursday morning’s weekly USDA export sales report. Bulls are hoping for better Chinese demand for the U.S. fiber. On Friday comes the monthly USDA supply and demand report. The agency will update U.S. cotton production and export numbers, but no big changes are expected.
World Weather Inc. today said 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. There is some growing concern about possible returning La Nina this summer for crop areas of the southern Plains, said the forecaster. Meantime, India’s harvest is advancing well. Cotton development in Brazil and Argentina “should be advancing favorably with little change likely,” said World Weather.
Technical analysis: The cotton futures bears have the overall near-term technical advantage amid recent choppy and sideways trading. 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 this week’s high of 81.23 cents and then at 81.75 cents. First support is seen at last week’s low of 79.59 cents and then at 79.00 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.
