Crop Analysis | January 22, 2024
Price action: March corn rose 1/4 cent to $4.45 3/4, a low-range close.
Fundamental analysis: Corn futures captured marginal corrective gains for the third straight session amid a U.S. dollar weakness and crude oil rally. Meanwhile, USDA’s midmorning release of weekly export inspection data and looming overhead technical pressure continued to limit buying efforts. During the week ended Jan. 18, USDA reported inspections of 713,290 MT (28.1 million bu.), down 233,127 MT from the previous week and near the lower end of the pre-report range of 650,000 MT to 1.05 MMT.
Safrinha planting efforts have commenced in Brazil, with efforts reaching 4.9% complete as of last Thursday, 1% ahead of year-ago, according to AgRural. However, World Weather Inc. reports most of Brazil will receive rain during the next ten days, with heavy rains possible, which could influence the planting pace over the next two weeks. Meanwhile, Argentina is expected to experience restricted rainfall through the next ten days, though adequate to favorable subsoil moisture in much of the country should support crops through the period. Many areas will need rain in early February to prevent crop stress from quickly increasing.
Technical analysis: March corn continues to consolidate sideways, with resistance at the 10-day moving average of $4.49 3/4 hemming upward momentum. Meanwhile, initial support lies at $4.42 1/2, then at $4.39 1/2 and again at last week’s low of $4.36 3/4. From there, the next area of support lies at $4.25 and then $4.00. A push above the 10-day moving average will face additional resistance at $4.52 1/2, then at $4.55 1/2 and again at the 20-, 40- and 100-day moving averages of $4.60 1/4, $4.70 1/2 and $4.86 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 rallied 11 cents before closing at $12.24 1/4, near session highs. March soymeal closed 70 cents lower to $355.8, after trading as low as $351.4. March soyoil futures surged 126 points to 48.16 cents, closing near session highs.
Fundamental analysis: Soybean futures notched corrective gains but failed to take out Friday’s high. Soybean bulls have rallied two out of the last three days, though volume continues to fall day to day, which could indicate buying efforts are merely corrective gains. Bulls are seeking followthrough strength and a close over meaningful resistance to indicate an interim low could be in place. Front-month crude oil futures surging to a four-week high helped support the grain complex today, as prices broke above significant technical resistance.
Today’s strength despite favorable weather over the weekend in Brazil is a good sign for bulls, especially considering the forecast remains largely favorable. Rainfall over the next two weeks will be most concentrated on center west, northern central south and northeastern parts of Brazil, which will support normal crop development. Most of Brazil is expected to see normal crop growth over the next couple of weeks, despite seasonally warm temperatures, World Weather Inc says.
USDA reported export inspections of 1.16 MMT (42.7 million bu.), down 117,068 MT from the previous week but within the pre-report range of 750,000 MT to 1.45 MMT. Inspections continue to struggle hitting the pace required to hit the current USDA export estimate and are expected to decline seasonally until the summer.
Technical analysis: March soybean futures rallied today but failed to overcome any meaningful resistance. Bears retain full control of the technical advantage, targeting $12.25, which has attracted significant volume over the past week. A close above that mark would have bulls targeting the 10-day moving average at $12.31 1/4, then $12.35. Meanwhile, support stands at $12.13 1/4, $12.05 3/4, then $12.01.
March soymeal futures made a fresh for-the-move low today though closed well off intraday lows. Bears retain full control of the technical advantage. Bulls are seeking to overcome initial resistance at $356.50, which is backed by $358.70, $360.00, then $363.80. Support stands at $353.40, $351.40, then the psychological $350.00 mark.
March bean oil futures surged on the session, helping lift the soy-plex. While prices surged today, the overarching trend remains largely sideways. Bulls are seeking to close prices above resistance at 48.34 cents, further backed by 48.72 cents, then 49.29 cents. Meanwhile, support stands at 47.62 cents, then 46.90 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 up 3 1/4 cents at $5.96 1/2 and nearer the session high. March HRW wheat fell 1 cent to $6.07 and near mid-range. March spring wheat futures rallied 5 cents to $7.00 1/2.
Fundamental analysis: It was a quieter start to the trading week in the wheat futures markets. Losses were limited by keener “risk-on” attitudes in the general marketplace, evidenced by the U.S. stock indexes hitting 12-month highs today. Higher crude oil prices were also supportive for the grain markets today. Near-steady price action in corn futures today kept the wheat market bulls squelched, too.
World Weather Inc. today said that in U.S. hard red winter wheat country beneficial precipitation, mostly in the form of rain, will occur today through Friday in eastern and southern production areas. The precip is expected to miss western Nebraska, northern Colorado and northwestern Kansas, as that part of the region will continue to need greater moisture for spring. Temperatures this week will be warmer-biased compared to the previous week and mostly near average. Meantime, in the northern Plains spring wheat region, temperatures this week will also be warmer-biased. The arctic air has exited the region and is not expected to return for a while. Temperatures will become warm enough to melt some snow, especially in southwestern areas.
USDA this morning reported U.S. wheat export inspections of 314,521 MT, up 72,112 MT from the previous week and within pre-report trade expectations. U.S. wheat inspections are still running behind USDA’s annual projected pace.
Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. Prices are in six-week-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing March prices above solid chart resistance at $6.25. 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 $6.15 and then at $6.25. First support is seen at today’s low of $5.87 and then at the January low of $5.73 1/4. The HRW bulls' next upside price objective is closing March prices above solid technical resistance at $6.50. The bears' next downside objective is closing prices below solid technical support at $5.50. First resistance is seen at last week’s high of $6.22 1/2 and then at $6.35. First support is seen at $6.00 and then at the contract low of $5.86 3/4.
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 88 points to 84.83 cents and marked the highest close since Oct. 30.
Fundamental analysis: Cotton futures extended gains for the fifth straight session to a near-three month high as buying continued in the wake of strong exports shown in USDA’s Weekly Export Sales Report last Friday. Supportive outside markets also lent support as the U.S. dollar continued to weaken while crude oil rallied to a near one-month high and equities notched fresh record highs.
World Weather Inc. reports Argentina cotton areas are unlikely to get much rain for a while which may eventually lead to crop stress since the topsoil is already a little dry. Greater rain will be needed, but it’s at least ten days away. In Brazil, safrinha planting is advancing well with timely rain in both Bahia and Mato Grosso expected to continue along with seasonal temps. Meanwhile, the forecaster notes West Texas is not expecting a big soaking rain and dryness remains a concern in the long term. South Texas will get some timely rain in the coming week, with most of the Texas Coastal Bend and Blacklands to receive moisture abundantly in the coming week, saturating the soil and inducing some local flooding.
Technical analysis: March cotton notched a high-range close as a finale to today’s session, though resistance at 85.01 cents stopped bulls in their tracks. In order to carry on recent gains, bulls will need to edge above the area, and will face additional resistance at 86.07 cents and 87.42 cents. Meanwhile, a corrective pullback could ensue as the week progresses, though solid support lies at the 100-day moving average of 83.57 cents, then at 82.60 cents and again at the 10, 20- and 40-day moving averages of 81.83 cents, 81.04 cents and 80.64 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.
