Crops Analysis | January 25, 2023

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Corn

Price action: March corn fell 2 1/4 cents to $6.74 3/4, maintaining a close above the 100-day moving average of $6.74 1/4.

Fundamental analysis: Corn futures maintained a narrow range, trading either side of unchanged throughout the session, despite strength in soybeans and wheat. Crude oil futures were weaker early in the session, but turned mildly higher, although the strength failed to provide corn enough to momentum to re-test last week’s highs.

USDA released a daily export sale of 100,000 MT for delivery to “unknown destinations” for the 2022-23 marketing year, which did little to change the uninspired tone of the corn market. Still, USDA’s typical Thursday release of weekly export sales could lend a bit more impetus as traders are expecting a range of weekly sales between 600,000 MT and 1.4 MMT for the week ended Jan. 19. Export sales for the previous week were reported at 1.132 MT, which topped expectations by over 330,000 MT.

The Rosario grains exchange reported today that recent rains in Argentina were heavier than expected, though many fear it may not have been enough to compensate for the losses caused by the worst drought that the country has seen in the past 60 years. While the volumes exceeded even the most optimistic forecast models, the variability was extreme.

Weekly ethanol grind for week ended Jan. 20 was released earlier, which showed a 4,000 barrel per day (bpd) increase in production to an average of 1.012 million bpd, up from 1.008 million bpd the previous week, but down 2.2% from the same week last year. Ethanol stocks also rose 1.68 million barrels on the week to 25.1 million barrels, which is the largest weekly build ever and a nine-month high.

Technical analysis: March corn traded a narrow, 7 1/4 cent range, marking a high just above initial resistance around $6.80 3/4. A further test of the level will find bulls targeting $6.84 3/4, along with the Jan. 18 high of $6.88 3/4, then $6.91 3/4 and $7.00, which continues to serve as strong psychological resistance. Conversely, initial support lies around the intersection of the 10- and 100-day moving averages around $6.74, again at $6.69 3/4, then at $6.62 ¼ and $6.58 1/4.

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 rose 14 cents to $15.02 1/2 and near the session high. March soybean meal gained $5.70 at $465.50, nearer the session high. March bean oil fell 44 points to 60.54 cents, near mid-range, hitting a five-week low.   

Fundamental analysis: Soybeans were supported by a daily export sale and by gains in meal futures. USDA reported a daily export sale of 130,000 MT of soybeans to “unknown destinations” for delivery in the 2022-23 marketing year. Weather in South American soybean regions also continues to lean bullish, with World Weather Inc. noting recent precipitation in Argentina and that expected over the next ten days will improve crop and field conditions for a better production potential for late-season crops. However, the forecaster said frequent follow up rain must continue through March. Most of Brazil will get rain periodically and sufficient amounts will occur to maintain wet conditions in some areas while parts of Rio Grande do Sul continue drier-biased.

Soybean oil futures are seeing pressure as Malaysian palm oil futures saw the biggest daily loss in over six weeks Wednesday.

 

Soybean traders are awaiting Thursday morning’s weekly USDA export sales report, which 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 60,000 MT in the 2023-24 marketing year.

 

Technical analysis: The soybean futures bulls have the firm 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 January high of $15.48 1/2. 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 this week’s high of $15.06 1/2 and then at $15.25. First support is seen at today’s low of $14.78 1/4 and then at $14.65.

The meal futures bulls still have the overall near-term technical advantage. However, a three-month-old uptrend on the daily bar chart is in jeopardy. Also, a rare and bearish broadening pattern has formed on the daily bar chart, which suggests a topping process is occurring. The next upside price objective for the meal bulls is to produce a close in March futures above solid technical resistance at the contract high of $487.00. The next downside price objective for the bears is closing prices below solid technical support at $443.40. First resistance comes in at $470.00 and then $475.00. First support is seen at today’s low of $454.80 and then at this week’s low of $452.80.

Soybean oil bears have the overall near-term technical advantage. Prices are in a four-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 65.00 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 62.36 cents and then at 64.00 cents. First support is seen at today’s low of 60.00 cents and then at 59.00 cents.

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

Hedgers: You have 70% of 2022-crop sold in the cash market. No 2023-crop sales have been advised.

Cash-only marketers: You have 70% of 2022-crop sold. No 2023-crop sales have been advised.

 

 

Wheat

Price action: March SRW wheat futures gained 6 3/4 cents to $7.41 1/4, ending the session above 10-day moving average for the first time since Jan. 17. March HRW rose 9 1/2 cents to $8.43 1/4, and March spring wheat increased 6.5 cents to $9.09 1/2.

Fundamental analysis: The wheat complex extended the previous session’s gains on continued bargain buying and looming questions if recent rains in the U.S. Plains have adequately replenished winter wheat fields. Soaring wheat prices in India also improved demand prospects for U.S. exports. Wheat prices in that country jumped to a record high on Wednesday as farmers and traders have run out of stocks despite an export ban in May 2022 after rising temperatures curbed production. However, India has said it will provide 3 million tonnes of wheat to bulk customers such as flour millers, as part of an effort to bring down prices, according to Reuters.

World Weather Inc. notes some precipitation will occur this week in HRW growing areas, though likely not enough to further raise topsoil moisture with the exception of northern areas, with temperatures trending warmer into Saturday. The forecaster expresses that this is important because it will likely melt most of the snow across the southern half of the region, just before an artic air mass arrives Saturday afternoon. The snowmelt will improve topsoil moisture, but some traders and analysts are worried that this will lead to a risk of winterkill because of impending colder weather. World Weather Inc. notes that temperatures will likely not be cold enough to raise the risk of crop damage in this next full week and probably not for ten days since the only bitter cold in the hard red winter wheat will be in Nebraska, northern Kansas and northeastern Colorado where some snow will be left behind to protect crops.

Technical analysis: March SRW futures traded an 11 3/4 cent range, breaching the 10-day moving average of $7.39 1/4 and resistance near $7.42 1/2. Continued efforts to the upside will encounter further resistance at the 20-day moving average near $7.50 and the 40-day moving average of $7.54 1/4 and at $7.61 1/2. A turn lower, however, will find bears looking to breach support at $7.23 and Monday’s low of $7.12 1/2, with an eye on $7.03 3/4 and $7.00.

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 rose 42 points to 86.66 cents and nearer the session high.

Fundamental analysis: The cotton futures market has seen some friendly fundamentals news develop this week. S&P Global has lowered its U.S. cotton seedings forecast by 400,000 acres. Also, the publication Nikkei Asia reports the risk of a “sharp rise in cotton prices as last year's flooding in Pakistan and concerns about trade barriers in India combine with an improving global economic outlook that could boost clothing demand.” Pakistan is the world's fifth-largest cotton producer.

World Weather Inc. today said West Texas precipitation will help to lift topsoil moisture in a few areas briefly. Additional moisture is likely in West Texas, the Texas Panhandle, Oklahoma, the Texas Blacklands and Coastal Bend today with drier weather resuming Wednesday and prevailing for a while. The moisture boost will be welcome and good for use in the spring, although much more precipitation will be needed. 

Cotton traders are awaiting Thursday morning’s weekly USDA export sales report, with the bulls hoping for a repeat performance from last week’s report that saw 209,400 bales in U.S. sales—the highest since last July.

Technical analysis: Cotton futures bulls have the slight overall near-term technical advantage. However, there are stiff chart resistance levels that lie just overhead. 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 the January low of 80.47 cents. First resistance is seen at today’s high of 87.50 cents and then at this week’s high of 88.68 cents. First support is seen at today’s low of 85.12 cents and then at 84.00 cents.

What to do: Be prepared to extend 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.

 

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