Crops Analysis | January 19, 2023

Corn

Price action: March corn fell 4 cents to $6.77 1/4, near the session low.

Fundamental analysis: Corn futures spent the overnight session trading either side of unchanged but was able to work a bit higher following a daily U.S. export sale to Mexico for 195,000 MT, for delivery during the 2022-23 marketing year. Continued crude oil strength remains supportive, along with a sideways to lower U.S. dollar index. However, an improving weather trend in Argentina for the next ten days to two weeks reversed the session’s early gains. World Weather, Inc. notes central and southern Argentina should receive multiple rounds of rain over the next ten days, and although temperatures will be hot at times, no long-lasting periods of excessive heat are expected. However, the forecaster says crop conditions should deteriorate into early next week in northern Argentina where temperatures will be hot to excessively hot, with rains not great enough to do more than briefly improve crop and soil conditions.

Weekly ethanol production for the week ended Jan. 13 rose 65,000 barrels per day (bpd) from the previous week to an average of 1.008 million bpd, which was 4.3% below the same week last year. Ethanol stocks fell 400,000 barrels from a week ago.

USDA’s weekly export sales report is delayed until Friday morning due to Monday’s government holiday. For week ended Jan. 12, traders are expecting a range of sales between 250,000 and 800,000 MT. Sales for the previous week were reported at 255,687 MT.

Technical analysis: March corn traded a 9 1/4-cent range, dipping below support at $6.76 1/2, which remains as a close was held above the level at the end of the session. Additional support lies at the 100-day moving average near $6.74 1/2, along with $6.71 3/4 and the 20-day moving average at $6.67 and the 10-day moving average at $6.66. Conversely, attempts higher will continue to encounter resistance at $6.87 1/4, then at $6.93 1/2 and $6.98.  

What to do: Get current with advised sales. Wait to make additional 2022-crop sales.

Hedgers: You should have 50% of 2022-crop sold in the cash market.  

Cash-only marketers: You should have 50% of 2022-crop sold.

Soybeans

Price action: March soybeans fell 9 3/4 cents to $15.14 3/4. March soybean meal declined $6.90 to $471.20. March bean oil closed down 97 points at 63.15 cents. All three markets’ prices closed nearer their session lows.

Fundamental analysis: More routine profit-taking from the shorter-term speculators was featured today after soybean futures prices hit a seven-month high and meal futures scored a contract high on Wednesday. Better rainfall chances in Argentina over the next several days were also a negative for the soybean complex today. 

World Weather Inc. today reported Argentina soybean region weather “will improve over the next two weeks with all crop areas getting rain at one time or another. The precipitation should improve topsoil moisture and crop conditions in time, although most of that improvement is expected next week.” Meantime, Brazil weather will remain more favorably rated with timely rain and seasonably mild to warm temperatures prevailing to support crops in most areas.

Friday’s weekly USDA export sales report (delayed by one day due to the federal holiday Monday) is expected to show U.S. soybean sales of 600,000 to 1.2 million MT in the 2022-23 marketing year and sales of zero to 100,000 MT in the 2023-24 marketing year.

Technical analysis: The soybean futures bulls still have the solid overall near-term technical advantage. A three-month-old price uptrend is in place on the daily bar chart. Next near-term upside technical objective for the soybean bulls is closing March prices above solid resistance at contract high of $15.72 1/4. The next downside price objective for the bears is closing prices below solid technical support at the January low of $14.65. First resistance is seen at today’s high of $15.28 1/2 and then at the December high of $15.37 1/2. First support is seen at today’s low of $15.09 and then at $15.00.

The soybean meal futures bulls still have the solid overall near-term technical advantage. A three-month-old uptrend 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 $500.00. The next downside price objective for the bears is closing prices below solid technical support at $450.00. First resistance comes in at today’s high of $480.30 and then at the contract high of $487.00. First support is seen at this week’s low of $468.40 and then at $465.00.

Soybean oil futures bulls and bears are on a level overall near-term technical playing field. The next upside price objective for the bean oil bulls is closing March prices above solid technical resistance at 66.97 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at the December low of 58.50 cents. First resistance is seen at this week’s high of 64.75 cents and then at 66.00 cents. First support is seen at today’s low of 62.71 cents and then at the January low of 61.89 cents. 

What to do: Get current with advised cash sales. Be prepared to advance sales.  

Hedgers: You should be 60% sold in the cash market on 2022-crop production.

Cash-only marketers: You should be 60% sold on 2022-crop production.

Wheat

Price action: March SRW fell 8 cents to $7.34 1/2, the lowest close since Jan. 10. March HRW fell 9 1/2 cents to $8.32, while March spring wheat rose 3 cents to $9.04.

Fundamental analysis: SRW futures found moderate support early in the session but failed to hold onto gains despite supportive outside markets as crude oil futures continue to linger around $80.00 per barrel while the U.S. dollar index grinds sideways to lower. Traders are trying to grasp the state of global supply following mixed sentiments from Russia this week, along with a backlog of ships in Turkish waters and persisting adverse weather conditions in several key growing regions.

Russian President Vladimir Putin said on Tuesday that Russia needed to maintain stable food reserves, if necessary, by restricting exports, though the country’s agriculture ministry said today that it expected Russia to export 55-60 million MT of grain in the 2022-23 season, with no plans to lower the grain export quota.

The U.N. has called out inefficiencies in the operation the Black Sea export deal as more than 100 ships remain backlogged in Turkish waters, which are waiting on travel approval and inspections. Since November, three inspections teams have been deployed daily and have concluded 5.3 inspections a day, according to the United Nations, with the average waiting time of vessels between application and inspection being 21 days.

USDA will release its weekly export sales data tomorrow for the week ended Jan. 12, delayed a day by Monday’s government holiday. Traders are expecting a range of sales between 75,000 and 400,000 MT. Export sales for the previous week were reported at 90,803 MT. U.S. wheat exports for the 2022-23 marketing year are forecast to be the lowest since 1971-72 and indicate a record low of only around 10% of global wheat shipments.  

Technical analysis: March SRW futures traded a 14 1/2-cent range, marking a session low at initial support of $7.35 and closing below the 10-day moving average for the second straight session. Additional support lies near $7.27 1/2 and the Jan. 10 low of $7.20 1/2. A steady turn to the upside, however, would face resistance first at the 10-day moving average of $7.41 3/4, and then at the 20-day moving average at $7.56 and the 40-day moving average of $$7.61 3/4. A breach of these levels would find bulls then targeting $7.67 1/2 and $7.75.

What to do: Wait on an extended price rally to increase cash sales.

Hedgers: You should be 85% sold in the cash market on 2022-crop. You should be 30% forward-priced on expected 2023-crop for harvest delivery next year.

Cash-only marketers: You should be 85% sold on 2022-crop. You should also be 30% forward-priced on expected 2023-crop production for harvest delivery next year. 

Cotton

Price action: March cotton fell 142 points to 83.39 cents and near the session low.

Fundamental analysis: The cotton futures market today fell victim to keener risk aversion in the general marketplace, as U.S. and/or global economic recession fears have up-ticked a bit this week following downbeat U.S. retail sales numbers Wednesday and weaker economic data coming out of China earlier in the week. The U.S. stock market has turned wobbly again, which further undermined any bullish attitudes in the cotton market.

Last week’s bearish USDA monthly supply and demand report for cotton also appears to be lingering on the minds of cotton traders.

Traders are awaiting Friday morning’s weekly USDA export sales report—delayed one day by the federal holiday on Monday. Cotton market watchers will be especially interested in sales/shipments numbers for China.

Technical analysis: Cotton futures bulls and bears are on a level overall near-term technical playing field amid recent choppy trading. The next upside price objective for the cotton bulls is to produce a close in March futures above technical resistance at the November high of 89.92 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 77.50 cents. First resistance is seen at 85.00 cents and then at this week’s high of 86.30 cents. First support is seen at Wednesday’s low of 82.86 cents and then at last week’s low of 81.65 cents.

What to do: Wait on an extended corrective rebound to get current with advised 2022-crop sales.

Hedgers: You should be 70% sold in the cash market on 2022-crop production.

Cash-only marketers: You should be 70% sold on 2022-crop production.