Crops Analysis | January 30, 2023
Corn
Price action: March corn futures firmed 3/4 cent to $6.83 3/4. Corn futures finished near the middle of today’s trading range.
Fundamental analysis: Buyer interest faded during daytime trade after better gains overnight. The modest gains and mid-range closes were disappointing given strong rallies in soybeans and soymeal. A firmer U.S. dollar index and weaker crude oil futures capped buyer interest in corn.
Weekly corn export inspections were disappointing at 527,932 MT (20.8 million bu.), which was below the expected range of 600,000 to 950,000 MT. Corn inspections now need to average 43.0 million bu. per week during the remainder of 2022-23 to hit USDA’s export forecast. While there was a daily corn sale of 112,000 MT to Mexico and weekly tallies have shown improvement the past two weeks, it still appears USDA’s export forecast will need to be further lowered.
Argentina received needed rains last week, with more precip forecast for Wednesday and Thursday in southern areas of the country. But the 10-day forecast after this week’s rains is mostly dry. Crop stress may have peaked, but given drought conditions, timely rains will be needed to halt crop losses.
Brazilian weather is expected to remain wet through central areas of the country, further delaying soybean harvest and the planting of safrinha corn. Concerns aren’t high yet, but they could build if safrinha planting delays become severe around mid-month.
Technical analysis: Bulls hold the technical upper hand in corn futures. Near-term resistance for March corn is at $6.85 and $6.88 3/4, the December and this month’s highs respectively. Above that, bulls would target the psychological $7.00 mark. Near-term support is clustered in the $6.80 to $6.70 area, with the last reaction low at $6.61 1/4 being strong support.
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 25 3/4 cents to $15.35 1/4, marking the highest close since Jan. 18. March meal futures surged $15.20 to $488.70, a new contract high, while March soyoil rose 70 points to 61.32 cents.
Fundamental analysis: Soybeans surged higher overnight, gapping up 6 3/4 cents from Friday’s close as Argentine weather concerns resurface along with heightened Chinese demand prospects following the week-long Lunar New Year holiday. The return of hot, dry weather at the end of this week through mid-week next will lead to steady rate of drying across Argentina, raising moisture stress for some time over the area, according to World Weather Inc. The forecaster noted that the GFS and European Ensemble model runs suggested below-normal precipitation will linger for up to two weeks. If the trend is correct, portions of Argentina will be drying down again during February, but conditions may not get back to the same level of stress as reported earlier in January.
Brazil’s weather outlook continues to retain a wetter bias, with rains forecast in nearly all crop areas during the next two weeks. The greatest frequency and intensity occurring in Minas Gerais, Sao Paulo, Parana and immediate neighboring areas, where saturated or nearly saturated soil will prevail, keeping fieldwork advancing slowly. Brazil’s need for drier weather will not be fulfilled right away, though improvements in the northeast are expected.
AgRural estimated last week that Brazilian farmers have harvested 5% of the planted soybean area in the 2022-23 cycle, this compares to 10% in 2022. AgRural noted that the harvest delay comes as top producing state Mato Grasso faces a lack of sunshine in between rain periods, creating “winter-like” weather.
USDA released export inspections for week ended Jan. 26, totaling 1.855 MMT (68.2 million bu.), which was a 16.576 MT increase from the previous week and near the top-range of pre-report estimates between 900,000 MT and 1.9 MMT.
Technical analysis: March futures traded a 21 3/4-cent range, breaking above resistance near $15.22 1/4 and $15.34 3/4, with bulls maintaining enough momentum to close above each level. An extension higher would encounter further resistance at $15.42 3/4 and the Jan. 18 high of $15.48 1/2. A turn lower, however, would find support first at former resistance at $15.34 3/4 and $15.22 1/4, then at the 10-day moving average of $15.13 1/2 as well as the 20-day moving average of $15.05 1/2 and $15.01 3/4.
March meal futures traded a $15.00 range, after gapping higher overnight and trading through resistance at $479.70, $485.90 and $490.10. Support lies at former resistance at $485.90 and $479.90, with solid support near the confluence of the 10- and 20-day moving averages near $472.00 and $471.60, respectively.
March soyoil traded a 100-point range, breaching resistance at 61.33, with additional resistance standing at 62.03, the 20-day moving average of 62.48 and the 40-day moving average of 62.89. Support lies at 59.91, again at 59.19 and 58.49.
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 firmed 2 1/2 cents to $7.52 1/2. March HRW wheat gained 4 1/2 cents to $8.73 3/4. March HRS wheat settled unchanged for the day at $9.21 1/2.
Fundamental analysis: Wheat futures were supported by the bitterly cold temps that moved into the central U.S. late in the weekend and persisted today. There’s sufficient snowcover in most areas to prevent serious winterkill issues, but the cold temps were enough to encourage traders to cover some short positions. Negative outside markets capped buyer interest today. For wheat to work higher, corn and soybeans, along with outside markets likely need to lead the way.
Wheat export inspections totaled 445,433 MT (16.4 million bu.). That was the highest weekly inspections figure since early October and lowered the weekly “required” pace to 12.6 million bushels. Key for wheat will be whether the pickup in export sales and inspections the past couple weeks continues if prices rise. With wheat actively flowing from the Black Sea region, we have concerns USDA’s export forecast may have to be further lowered.
Technical analysis: The technical posture remains bearish for wheat futures. March SRW wheat remains in the downtrend drawn off the October and November highs. That trendline intersects around $7.72 3/4 on Tuesday and drops about 2 1/2 per day. Bulls must violate the downtrend and push above the last reaction high at $7.99 to signal a market bottom. Near-term support is layered from $7.46 to last week’s low at $7.12 1/2.
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 179 points to 85.10, marking the lowest close since Jan. 19.
Fundamental analysis: Cotton futures surged lower, extending Friday’s losses as crude oil futures pushed below $80.00 per barrel and the U.S. dollar index churned higher for the third straight session. Traders are likely taking a risk-off approach in anticipation of OPEC’s virtual meeting set for Feb. 1, along with the expected Federal Reserve announcement on an interest rate rise. Although OPEC is not expected to make any major changes, the Fed’s decision on interest rates could prove a surprise with a few calling for a 50-basis-point rise, while the market in general anticipates a 25-basis-point increase.
World Weather Inc. predicts a wintry mix of precipitation will occur daily through Thursday from West Texas into southwestern Oklahoma, where enough precipitation should fall to induce increases in soil moisture in some southern areas while most areas do not receive enough moisture to induce a significant impact on soil conditions. The forecaster further noted a drier weather pattern will resume in western Texas and southwestern Oklahoma Friday through Feb. 7 and moisture from precipitation this week will steadily be lost to evaporation.
Technical analysis: March cotton traded a 290-point range, dipping below support at 86.15, the 10-day moving average of 85.75 as well as 85.40 and the convergence of the 100- and 20-day moving averages of 84.68 and 84.62, respectively. An attempt lower will encounter further support at the 40-day moving average of 83.94 and 82.00 cents. Conversely, a turn higher will encounter resistance first at 87.60, again at 88.30, then at 89.05.
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.
