Crops Analysis | January 31, 2024
Price action: March corn rose 1/2 cent to $4.48 1/4, ending just 1/4 cent from the session high.
Fundamental analysis: In tandem with soybeans, corn retreated mildly to the downside following Tuesday’s short-covering gains but ended near the session high as returned soymeal strength eased pressure across the grain and soy complexes. However, notable selling in crude oil amid sluggish economic activity in China and a surprise build in U.S. crude inventories limited the upside. Ethanol production also ramped back up during the week ended Jan. 26 to an average 991,000 barrels per day (bpd), rising 173,0000 bpd (21.1%) from the previous week but 37,000 bpd (3.6%) below the same week last year. Meanwhile, ethanol stocks dove 1.545 million barrels to 24.27 million barrels, reflecting the largest weekly drawdown in ethanol stocks in the U.S. Energy Information Administration’s 14 years of data.
More hot, dry conditions in Argentina and southern Brazil will continue to affect crops into the weekend, with a few showers popping up and increasing early next week. World Weather Inc. reports temps will be very warm to hot with daily highs in the 90’s to 108 degrees Fahrenheit in the country’s key growing areas in central and south. However, the forecaster indicates increased subsoil moisture available in central areas could carry crops through this period of stress a little better than areas to the south.
USDA will release weekly export sales data for the week ended Jan. 25 prior to Thursday’s open. Traders are expecting sales to range from 800,000 MT to 1.3 MMT. Last week, net sales of 954,796 MT were reported for the previous week, which were down 24% from the previous week but up 14% from the four-week average.
Technical analysis: March corn ended just shy of the session high after trading mostly weaker throughout the session. Initial resistance will continue serve at $4.51 1/4, then at $4.55 3/4, $4.63 1/2 and at the 40- and 100-day moving averages of $4.64 3/4 and $4.82 1/2. From there, psychological resistance remains at $5.00. Conversely, the 10-day moving average of $4.46 3/4 will continue to serve as initial support, with additional support lying at $4.44 1/4, $4.40, $4.32 1/4 and $4.28 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 rose 3 1/2 cents to $12.22 1/4. March soybean meal rose $5.30 at $368.30. March bean oil closed up 2 points at 46.02 cents. Prices in all three markets closed near their session highs.
Fundamental analysis: The soybean complex markets saw corrective selling pressure early on today but the bulls came on strong in late trading to produce high-range daily closes in all three markets. The meal futures market, especially, showed good follow-through price strength today, which is encouraging to the soy complex bulls and begins to suggest the complex is close to putting in market bottoms.
Traders continue to monitor weather patterns in South American soybean regions. World Weather Inc. today said Argentina and western and far southern parts of Brazil will continue to dry down through the weekend and into early next week. “Crop moisture stress will be on the rise in many areas, especially in Buenos Aires and La Pampa, Argentina, where it has been driest for the longest period of time. Yield potentials may be threatened if significant rain does not begin falling soon,” said the forecaster. “Rain next week will save most crops, but if it fails to evolve or only offers erratic, light, rain the impact may be negative on some crops.”
Traders are awaiting Thursday morning’s weekly USDA export sales report, which is expected to show U.S. soybean sales of 500,000 to just over 1 million MT in the 2023-24 marketing year and sales of zero to 50,000 MT in the 2024-25 marketing year.
Technical analysis: The soybean complex bears have the solid overall near-term technical advantage. A 2.5-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 $12.50. The next downside price objective for the bears is closing prices below solid technical support at $11.50. First resistance is seen at $12.25 and then at $12.38. First support is seen at today’s low of $12.06 3/4 and then at $12.00.
Soybean meal sees a 2.5-month-old downtrend in place on the daily bar chart, but now just barely. The next upside price objective for the meal bulls is to produce a close in March futures above solid technical resistance at $380.00. The next downside price objective for the bears is closing prices below solid technical support at $335.00. First resistance comes in at today’s high of $369.70 and then at $373.60. First support is seen at today’s low of $359.00 and then at $355.00.
Soybean oil futures prices are in a nine-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 50.00 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 47.14 cents and then at last week’s high of 48.65 cents. First support is seen at this week’s low of 44.89 cents and then at 44.00 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 fell 10 1/4 cents to $5.95 1/4, while March HRW gave up 8 3/4 cents, closing at $6.22. March spring wheat fell 7 1/2 cents to $6.92 1/4, with low range closes featured across the wheat complex.
Fundamental analysis: SRW wheat gave up the biggest portion of Tuesday’s gains, despite U.S. dollar weakness, as notable overhead resistance continues to dampen buying efforts. Casting a shadow over the complex was a report from the USDA attaché in Ukraine, which indicated the country had independently resumed operations of its major marine ports on the Black Sea, Chornomorsk, Odesa and Pivdennyi, as throughput was increased on Danube export routes. The attaché noted that if Ukraine maintains average monthly exports of around 4 MMT for all grains combined for the remained of the marketing year, they will export most of their harvest.
World Weather Inc. reports wheat conditions in most of the world are holding at status quo, though corner remains over the potential for spring flooding in the western Commonwealth of Independent States, while crops in Europe are mostly in good shape. Meanwhile, Spain, Portugal and northwestern Africa need rain and are going to need timely spring rains to improve production potentials in unirrigated areas. The forecaster rates the U.S. wheat crop as mixed as most Midwest and HRW wheat crops are in good shape, though more moisture is needed in the high Plains. Warming in the U.S. is reducing winter hardiness this week with frost coming out of the ground in many areas as far north as the southwestern Canada Prairies.
USDA will release weekly export sales data for the week ended Jan. 26, with traders expecting net sales to range from 275,000 MT to 600,000 MT. Last week, net sales of 451,368 MT were reported for the previous week, which were down 36% from the previous week but up 45% from the four-week average.
Technical analysis: March SRW held an inside day but faded below the 100-, 20- and 10-day moving averages of $6.04 1/4, $6.00 and $5.98 3/4, ultimately succumbing to selling efforts and closing below each level. Initial support will now serve at $5.91, then at $5.76 1/2, $5.68 3/4 and the Nov. 27 low of $5.56 1/4. Meanwhile, resistance will serve at today’s failed support levels, then at $6.35 1/2, and the Dec. 6 high of $6.49 1/2.
March HRW spent the session consolidating mostly between the 40-day moving average of $6.30 1/4 and the 20-day moving average of $6.18 1/4. A move above the 40-day would find additional resistance serving at $6.38 1/4, $6.45 3/4 and then the 100-day moving average of $6.57 1/4. Conversely, a move below the 20-day will face additional support at $6.04 1/4, then at $5.96 3/4 and the Jan. 18 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 closed up 39 points at 85.17 cents and nearer the session high.
Fundamental analysis: The cotton futures market showed bullish follow-through buying strength from Tuesday’s gains, to keep the technical posture near-term bullish and encouraging speculator and chart-based buying interest. Upbeat U.S. economic data recently and a booming U.S. stock market that has seen the major index hit new record highs recently are also bullish for the cotton market. Cotton futures the past several weeks have very closely tracked daily price action in the U.S. stock indexes. Solid losses in the crude oil market today did limit the upside for cotton.
This afternoon’s conclusion of the Federal Reserve’s FOMC meeting saw no major surprises, although the FOMC statement and Fed Chair Powell’s comments at his press conference did lean just lightly hawkish. That did put a bit of pressure on the U.S. stock indexes and could put some mild selling pressure on the cotton market on Thursday.
World Weather Inc. today said West Texas is unlikely to get “much precipitation during the next ten days, although the region’s moisture profile is not far off from normal. South Texas needs a little rain near the lower Rio Grande Valley while the Delta, Texas Blacklands and southeastern states are plenty wet,” said the forecaster. The far western U.S. will get some timely rain in the next two weeks which will also be welcome and beneficial.
Traders are awaiting Thursday morning’s weekly USDA export sales report. The cotton bulls are hoping for more solid U.S. cotton sales to China.
Technical analysis: The cotton futures bulls have the overall near-term advantage. Prices are in a five-week-old uptrend on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in March futures above technical resistance at 88.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 82.00 cents. First resistance is seen at today’s high of 85.37 cents and then at last week’s high of 85.86 cents. First support is seen at today’s low of 84.50 cents and then at 84.00 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.
