Crops Analysis | February 1, 2024
Price action: March corn fell 1 cent to $4.47 1/4 and finished near the session high.
Fundamental analysis: Corn futures succumbed to pressure stemming from losses in the soy complex, though losses were limited as the nearby contract held an inside day. While crude oil losses also hovered over prices today, consolidative weakness in the U.S. dollar helped limit losses as did noteworthy weekly export sales. USDA reported net U.S. corn sales of 1.21 MMT during the week ended Jan. 25, up 26% from the previous week and 58% from the four-week average. Top destinations included Japan, Mexico and South Korea. Meanwhile, shipments during the week totaled 911,400 MT, down 2% from the previous week and unchanged from the four-week average.
World Weather Inc. reports Argentina’s rainfall will remain minimal for 6-7 days but will start getting more meaningful showers and thunderstorms starting a week from now and may occur periodically into mid-month. However, the forecaster states confidence on the significance of rain anticipated is low because of the presence of high pressure in various locations across the South American continent. Meanwhile, western and southern Brazil are drying down and there is a need for greater rain and less heat.
Technical analysis: March corn spent the session trading lower in narrow trade but was able to end the session above support at $4.44 3/4 following a test of the area in early trade. An additional test of the area, however, will face additional support at $4.41 1/4, $4.39 1/4 and Tuesday’s low of $4.36 1/2. Conversely, upside efforts will continue to face initial resistance at Wednesday’s high of $4.48 3/4, then at the 20-day moving average of $4.50 1/4, again at $4.52 1/4 , $4.55 3/4 and the 40- and 100-day moving averages of $4.63 3/4 and $4.82.
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 dropped 19 cents to $12.03 1/4, settling nearer session lows. March meal futures sunk $6.6 to $361.7, nearer session lows. March bean oil closed 42 points lower at 45.60 cents.
Fundamental analysis: Soybeans saw heavy selling as prices failed to overcome initial technical resistance, with poor export sales adding fuel to bears’ momentum. USDA reported U.S. soybean export sales of 164,500 MT during the week ended Jan. 25, a marketing-year low. Net sales were down 71% from the previous week and 64% from the four-week average. Traders were expecting sales to range from 500,000 MT to 1.05 MMT. Export sales continue to trend below the five-year average. Historically, one would expect sales to be trend roughly sideways around 800,000 MT from January to mid-February, though sales have failed to hit that mark since mid-December. Traders will be looking to the monthly crush total this afternoon to make up for weak export demand. Analysts expect USDA to report December soybean crush totaled 206.5 million bu. in December, according to a Bloomberg survey, which would be the most ever for any month and 19.4 million bu. (10.2%) above last year.
Western and southern Brazil are drying down and there is need for greater rain and less heat. Temporary relief is expected in the second half of next week and into the following weekend, World Weather Inc says. Sufficient rain is expected to restore favorable crop conditions, but there is some concern over seasonal rains coming to an early end, which will be closely monitored over the coming weeks, the forecaster says.
Technical analysis: Bears continue to sell rallies in March soybean futures as they continue to hold the near-term technical advantage. Bulls failed to overcome resistance at $12.22 despite closing on that level Wednesday. Further resistance stands at $12.33 3/4. Support stands at $11.99 1/2, $11.94 1/4, then $11.87 3/4.
Bulls challenged bears control of the technical advantage in March soymeal, but bears reinforced their grasp of the advantage, dragging prices lower today. Bulls failed to hold support at $365.6, marking that area as initial resistance. Further resistance stands at $368.3 then $370.4. Meanwhile, support stands at $361.2, the 10-day moving average, $358.8, then $355.8.
March soyoil futures continue to trade on recent lows as bears retain control of the technical advantage. Resistance stands at the psychological 46.00 cent mark, which capped most of the upside the last three sessions. Further resistance stands at 46.38 cents, then the 10-day moving average at 46.55 cents. Support stands at 45.32 cents, the psychological 45.00 cent mark, then 44.59 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 6 1/4 cents to $6.01 1/2. March HRW wheat closed down 1 1/4 cents at $6.20 3/4. Prices closed nearer the session highs today. March spring wheat rose 3 3/4 cents to $6.96.
Fundamental analysis: Winter wheat futures put in a mixed performance today. SRW futures saw mild short covering. Buying interest was limited by solidly lower soybean prices and slight losses in corn. A weaker U.S. dollar index was a positive daily influence for the wheat markets, but a sell-off in the crude oil market was an offsetting negative outside-market element.
USDA this morning reported U.S. wheat export sales of 322,500 MT during the week ended Jan. 25, down 29% from the previous week and down 9% from the four-week average. This week’s reported sales were in line with market expectations.
World Weather Inc. today said a beneficial rain event will still occur in U.S. HRW country Friday through Sunday. “This is likely to mostly miss the southwestern 30% of the region. However, most other areas should receive enough rain to increase soil moisture. This will be most beneficial in northern Colorado, northwestern Kansas, and western Nebraska where topsoil moisture is quite low.” Southwestern production areas will have an opportunity for better precipitation in the second week of the outlook. Meantime, in the northern Plains the eastern half of the region will receive little if any moisture in the next seven days. However, some beneficial precipitation is expected in the western half of the region where soil moisture is lowest, said the forecaster.
Technical analysis: Winter wheat futures bears have the firm overall near-term technical advantage. SRW bulls' next upside price objective is closing March prices above solid chart resistance at $6.50. 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 this week’s high of $6.06 3/4 and then at last week’s high of $6.17 1/4. First support is seen at this week’s low of $5.84 1/2 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 the December high of $6.77 1/2. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.86 3/4. First resistance is seen at last week’s high of $6.41 and then at $6.50. First support is seen at this week’s low of $6.07 1/4 and then at $6.00.
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 futures surged 132 points to 86.49 cents, marking the highest close since October 13.
Fundamental analysis: Cotton futures surged to fresh for-the-move highs, supported by continued robust export sales. This morning’s USDA export sales report showed sales of 362,900 RB, which were well above week ago and over 100,000 RB above the four-week average. Sales rise historically from November to March, but sales since the turn of the calendar have significantly outpaced the five-year average. Exports surged to 407,900 RB, a marketing year high, for the week ended Jan. 25, which further bolstered futures today. Exports will continue to attract the attention of traders as domestic demand has been lacking.
The stock market rebounding from Wednesday’s selloff supported cotton prices as well. Cotton futures continue to track the stock market tightly. The U.S. dollar index slipped from recent highs as well as today’s session went on. Slipping bond yields likely pressured the dollar index, which ultimately leads to relatively more affordable U.S. cotton for importers.
Technical analysis: March cotton futures continue to show relative strength to commodities as a whole. Bulls retain full control of the technical advantage. Initial resistance stands at 86.90 cents, which coincides with the Oct. 27 peak. A daily close above that mark targets resistance at 87.51 cents. Bulls are seeking to hold support at 85.76 cents then 85.00 cents on corrective selling. Further support lies at the 10-day moving average at 84.65 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.
