Crops Analysis | January 17, 2024
Price action: March corn fell 1 1/4 cents to $4.42 1/4 after notching a fresh contract low early on.
Fundamental analysis: Corn futures edged to a fresh contract low in early trade but rebounded mildly shortly after amid a corrective rally in SRW wheat, though outside market pressure ultimately cut buying efforts short. The weakness ensued following an overnight report that China’s economic growth had declined to the lowest level in decades in 2023, apart from the Covid lockdown years. Crude oil futures slumped consequently, while the U.S. dollar index carried forward Tuesday’s strong gains as fears of weakened demand from the top exporter rattled the marketplace.
World Weather Inc. reports Argentina will see a restricted rainfall pattern through the next two weeks, though moist soils in much of the country will favorably support crops through the period. However, the expected drying will leave many areas in need of greater rain in early February to prevent crop stress from quickly increasing.
Technical analysis: March corn found support at $4.39 3/4, though a consecutive test of the area will face additional support at $4.36 1/2, then $4.30 1/2 and $4.25. However, near-term oversold conditions could induce buying above initial resistance at $4.49 1/4, with additional resistance serving at $4.54 3/4, and again at the 10-, 20-, 40-, and 100-day moving averages of $4.55 1/2, $4.64 1/4, $4.73 3/4 and $4.88.
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 21 1/2 cents to $12.05 3/4 and near the session low. Prices closed at a six-month-low close today. March soybean meal dropped $12.40 t0 $358.70 and near the session low. March bean oil closed up 45 points at 47.70 cents and near the session high.
Fundamental analysis: Soybeans and meal were pressured by chart-based selling and a “risk-off” trading day in the general marketplace. A firmer U.S. dollar index was a bearish outside-market element for the soy complex at mid-week.
Weather in South American soybean regions also leans a bit bearish. World Weather Inc. today said Argentina “will dry out for a while, but crop development should occur normally. There will be a little crop stress in southern Buenos Aires and La Pampa next week as the soil becomes a little too dry. Most other areas will see favorable weather continue.” Meantime, in Brazil “timely rain will impact all crop areas and there should be sufficient moisture to support a very good environment for crop development; including the drier areas of Bahia, northern Minas Gerais and Espirito Santo and those in the southwest that have recently been drying down,” said the forecaster.
Despite the improved weather conditions in South America, EarthDaily Agro, a division of Canada-based EarthDaily Analytics, said Brazil’s Mato Grosso state is looking at the lowest yield trend in the past 15 years.
Technical analysis: The soybean bears have the firm overall near-term technical advantage. A two-month-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 $12.31 and then at this week’s high of $12.37 3/4. First support is seen at last week’s low of $12.03 and then at $12.00.
March soybean meal futures prices scored a bearish “outside day” down today. The meal bears have the solid overall near-term technical advantage. A two-month-old downtrend is 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 $350.00. First resistance comes in at $368.00 and then at today’s high of $373.60. First support is seen at today’s low of $359.50 and then at the January low of $353.20.
Soybean oil bears have the solid overall near-term technical advantage. Prices are in a seven-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 this week’s high of 48.59 cents and then at last week’s high of 49.65 cents. First support is seen at the January low of 46.30 cents and then at 45.00 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 rose 1/2 cent to $5.82 1/2 and closed near the session low, while March HRW fell 7 1/2 cents to $5.94, a fresh contract low. March spring wheat fell 10 1/2 cents to $6.80 1/4.
Fundamental analysis: An early morning corrective rally in SRW wheat faded as outside market pressure and sinking soybean futures weighed on the complex. Concerns over possible U.S. crop damage from the weekend and bitter cold helped induce early buying, though the excitement eased as the implications could largely be unknown until harvest. Meanwhile, poor export demand continues to loom over prices amid a shaky global economy, combined with continued competition from Black Sea exporters.
World Weather Inc. reports another surge of arctic air will arrive in HRW wheat growing areas Thursday night and last through Saturday, though threateningly cold temps should mostly occur where there is enough snow cover to protect crops. A warming trend will then occur next week as the weather pattern changes and greater Gulf of Mexico moisture begins to arrive. Meaningful rainfall is expected with this change, especially in southeaster production areas.
March HRW edged below the late Nov. lows to a fresh contract low but was able to hold a close above support at $5.93 1/2. A move below the area, however, will face additional support at $5.85 3/4 and again at $5.71 1/4 and $5.50. Meanwhile, correcting buying efforts will face initial resistance at $6.08, then at the 10-, 20- and 40-day moving averages of $6.16 3/4, $6.25 1/4 and $6.31 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 37 points at 81.70 cents and near mid-range. Prices hit a five-week high.
Fundamental analysis: The cotton futures bulls had a good day today, as they were able to sustain modest gains despite a firmer U.S. dollar index and keener risk aversion in the general marketplace. An upbeat U.S. retail sales report for December was a positive element for cotton today, suggesting better demand for apparel.
We are hearing reports of increased farmer selling of cotton in the cash market, yet the futures market is still trending higher on a near-term basis.
Weekly USDA export sales will be the next data point for the cotton market. Traders will have to wait until Friday morning for that report, as it was delayed one day by the federal holiday on Monday.
Technical analysis: The cotton futures bulls and bears are back on a level overall near-term technical playing field but the bulls have momentum on their side. 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 December low of 78.31 cents. First resistance is seen at today’s high of 82.45 cents and then at 83.13 cents. First support is seen at this week’s low of 80.68 cents and then at 80.00 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.
