Crops Analysis | January 26, 2023

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Corn

Price action: March corn futures rose 7 3/4 cents to $6.82 1/2 and nearer the session high.

Fundamental analysis: After fading last week, the corn futures bulls this week are showing the resilience to keep alive a price uptrend on the daily bar chart and to suggest more upside in the near term. Gains in the crude oil market today and some upbeat U.S. economic data were outside market forces that also supported buying interest in corn.

This morning, USDA reported net U.S. corn sales for 2022-23 delivery of 910,400 MT during the week ended Jan. 19. That’s down 20% from the previous reporting week, but a 46% increase from the four-week average. 

Recent drier weather in South American corn-growing regions may now be factored into futures prices. World Weather Inc. today said recent precipitation in Argentina, as well as that expected over the next ten days, will improve crop and field conditions for better production potential for late season crops. However, frequent follow-up rain must continue through March, said the forecaster. 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.

Technical analysis: The corn futures bulls have the firm overall near-term technical advantage and are having a good week. The next upside price objective for the bulls is to close March prices above solid chart resistance at $7.00. The next downside target for the bears is closing prices below chart support at the January low of $6.48 1/4. First resistance is seen at today’s high of $6.85 1/2 and then at the January high of $6.88 3/4. First support is at today’s low of $6.73 and then at Tuesday’s low of $6.66 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 surged 21 cents higher to $15.23 1/2, near the session high and marking the highest close since Jan. 18. March meal finished the session $11.60 higher to $477.10, while March soyoil rose 25 points to 60.79.

Fundamental analysis: Soybeans surged higher for the second straight session after the nearby contract reached over a two-week low on Wednesday, which swiftly prompted short covering back above $15.00. Strong meal gains led the complex higher along with the report of a daily export sale of 106,000 MT for delivery to China during the 2022-23 marketing year. USDA also released its weekly export sales data, which showed sales for week ended Jan. 19 at 1.146 MMT for 2022-23. This reflected a 16% increase from the previous week and was 53% higher than the previous four-week average. Sales were at the top-end of the expected range between 600,000 MT and 1.2 MMT.

Weather in South America remains a major focus as harvest efforts are slowly picking up. World Weather Inc. notes today’s forecast is wetter from Paraguay to Rio Grande do Sul Sunday into Wednesday, with some rain from western into central and southern Rio Grande do Sul into Saturday. The forecaster notes some crops will likely be stressed by warm to hot and dry conditions in advance of the coming rain, but serious stress may not occur in most areas as long as rain and relief from dryness through Wednesday occurs as advertised and continues Feb. 2-4. The remainder of Brazil will see regular rounds of showers and thunderstorms through the next two weeks that will bring enough rain to favorably support crop development while causing interruptions to soybean harvesting and Safrinha corn planting.

Argentina is forecast to receive regular rains in much of the country through Friday of next week, with further improvements in crop and soils conditions likely resulting. However, a full restoration of yield potentials will not occur as some crops were permanently damaged by hot and dry weather earlier in the season, according to World Weather. 

Technical analysis: March soybeans traded a 26 1/4 range after gapping higher overnight  and breaching resistance at $15.12, the 10-day moving average near $15.14 1/2 along with $15.21 1/2. Further resistance stands at $15.38 1/2 and the Jan. 18 high $15.48 1/2. Conversely, support stands at former resistance of $15.21 1/2, the 10-day moving average and $15.12, with psychological resistance standing at $15.00.

Meal bulls led the complex after gapping higher in the overnight session. The March contract traded a $12.90 range and was able to trade through resistance at the 20-day moving average of $469.60, then at $470.30, again at the 10-day moving average of $471.70 and $475.20. These former resistance levels will now serve as support. Advances higher will encounter additional resistance at $482.90 and at the Jan. 18 high of $487.00.

March soyoil traded a 136-point range, trading through resistance at 61.22 early in the session. Additional resistance stands at 61.90, the 10-day moving average of 62.37, then at 62.51 and the 20-day moving average of 62.94. Initial support continues to lie at 59.93, with further support at 59.32 and 58.64.     

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 gained 11 1/4 cents at $7.52 1/2 and nearer the session high. March HRW wheat rose 21 1/2 cents to $8.64 3/4, near the session high and hit a three-week high. Spring wheat futures advanced 8 1/2 cents to a close at $9.18.

Fundamental analysis: Winter wheat futures markets today saw more short-covering featured after March SRW hit a nearly 1.5-year low on Monday. Strength in corn and soybean futures markets today also helped to boost wheat.

Also supportive for the wheat markets today, USDA officials report Russia’s official wheat crop estimate is “not feasible.” The chairman of the USDA World Agricultural Outlook Board says the agency’s analysis of weather and previous crops does not support such high Russian crop estimates.

This morning’s weekly USDA export sales report was also a bit friendly. USDA reported U.S. wheat sales of 500,400 MT in week ended Jan. 19 for 2022-23, which is up 6% from the previous week and 84% from the previous four-week average.

World Weather Inc. today reported melting snow in the southern Plains will allow recent moisture from this week’s snow to soak into the ground. Nebraska, northern Kansas and Colorado should see some snow melt later this week, but most areas will remain covered in snow long enough to protect crops from the bitter cold expected Sunday and Monday, said the forecaster. Crops in the northwestern Plains will get snow this week to better protect crops ahead of colder weather late this week into early next week.

Technical analysis: Winter wheat futures bears still have the firm overall near-term technical advantage. SRW prices are in a 3.5-month-old downtrend on the daily bar chart. SRW bulls' next upside price objective is closing March prices above solid chart resistance at $8.00. The bears' next downside objective is closing prices below solid technical support at $7.00. First resistance is seen at $7.70 and then at $7.80. First support is seen at today’s low of $7.38 and then at $7.25. In March HRW, a 3.5-month-old downtrend on the daily bar chart has been at least temporarily negated. The HRW bulls' next upside price objective is closing March prices above solid technical resistance at $9.00. The bears' next downside objective is closing prices below solid technical support at $8.00. First resistance is seen at $8.85 and then at $9.00. First support is seen at today’s low of $8.41 1/4 and then at $8.25.

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 84 points to 87.50 cents, a mid-range close after trading as high as 88.88.

Fundamental analysis: Cotton futures were able to mark gains for a second straight session, in unison with crude oil gains, though the U.S. dollar was higher, capping gains in the fiber. A barrage of better-than expected U.S. economic news also fueled positivity as Q4 GDP rose 2.9% (quarter/quarter annualized), which was stronger than expectations of a 2.6% rise. Also, weekly initial unemployment claims unexpectedly dropped 6,000 to a 9-month low of 186,000, indicating a stronger labor market. New home sales in December rose surprisingly by 2.3% from November to 616,000, notably higher than the expected decline to 612,000. December durable goods order increased 5.6% from November, which was also notably stronger than the expected 2.5% and reflected the biggest increase in nearly 2 1/2 years.

Increased travel and consumer spending in China during its week-long Lunar New Year holiday is helping underpin gains in crude oil and cotton as tourism recovers to pre-pandemic levels.

USDA released weekly cotton sales earlier, which showed net sales of 213,000 RB for week ended Jan. 19. This was a 2% increase from the previous week and a notable increase from the four-week average. Sales were primarily to China (59,200 RB), Turkey (55,200 RB) and Vietnam (42,400 RB, including 3,500 RB switched from China and 200 RB switched from Japan). 

Technical analysis: March cotton traded a 225-point range, trading through resistance at 88.81 early in the session. Additional resistance stands at the Dec. 21 high of 89.65 along with 90.11. While bulls continue to grasp the near-term technical advantage, a turn lower would encounter support first at 85.35, with solid support near intersection of the 10-day moving average of 85.11 and the 100-day moving average of 84.98. A breach of the level would find bears gaining control and bidding a breach of the 20-day moving average of 84.37 and support at 84.05.

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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