Crops Analysis | February 1, 2023
Corn
Price action: March corn futures rose 1 1/4 cents to $6.81 and near the session high.
Fundamental analysis: The corn market saw choppy and two-sided trading action today. A weaker U.S. dollar index and a near-term bullish technical posture aided the market bulls. However, a big drop in crude oil prices today limited buying interest in corn, as did a weaker U.S. stock market.
Corn traders continue to monitor weather in South American corn-growing regions, although it has become less of a price-moving element the past couple weeks. However, World Weather Inc. today said dryness returning to Argentina after Thursday “will be an attention-getter for the marketplace.” Northeastern Argentina will be dry for the next ten days and the region is already critically dry. The more important grain and oilseed production areas of the southwest, however, “are favorably moist and should get through much of the coming week without a great deal of threat to production.”
Thursday morning’s weekly USDA export sales report is expected to show U.S. corn sales of 600,000 to 1.2 million MT in the 2022-23 marketing year and zero to 150,000 MT in the 2023-24 marketing year.
Technical analysis: The corn futures bulls have the overall near-term technical advantage. 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 $6.85 and then at the January high of $6.88 3/4. First support is at today’s low of $6.72 3/4 and then at $6.66.
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 17 3/4 cents to $15.20 1/4 after trading as low as $15.10 3/4. March meal futures rose 50 cents to $484.70 and March soyoil dropped 154 points to 60.79.
Fundamental analysis: Soybeans plummeted after having made solid gains to round out the first month of the year. Continued crude oil weakness was the likely catalyst for profit taking, sending meal and soyoil futures notably lower.
South American weather continues to be a focus as harvest efforts are occurring in earnest, with expectations of a record Brazilian crop. World Weather Inc. notes that much of Brazil outside of northeastern and a few far southern areas will see regular rounds of showers and thunderstorms through the next two weeks that will bring enough rain to favorably support crop development while slowing soybean harvesting and safrinha planting. Production powerhouse Mato Grasso and nearby areas will have opportunities for fieldwork around the showers expected during the next two weeks, but longer stretches of dry weather will be needed soon to ensure soybeans are harvested in time to allow the safrinha crop to be planted during the favorable period, according to the forecaster.
Recent rains in Argentina have helped replenish severely drought-ridden soils, with additional rains expected from west-central to southern Argentina through Thursday, which will induce further improvements in soil moisture that will help ensure most crops have adequate soil moisture when drier weather returns Friday through at least Feb. 11. Persisting hot, dry weather in the country led the U.S. ag attaché in Argentina to slash its estimate of the country’s soybean crop to 36 MMT, 9.5 MMT below USDA’s January forecast.
USDA reported December crush this afternoon at 187.4 million bu., which was slightly below pre-report estimates of 188.0 million bu. and down from November’s 189.5 million bu. Though the figure was well below December 2021 crush of 198.2 million bu.
USDA will release export sales for week ended Jan. 26 on Thursday morning, with traders expecting a figure between pre-report expectations ranging from 700,000 MT to 1.2 MMT. USDA reported export sales for the previous week at 1.145 MMT.
Technical analysis: March soybeans traded a 32-cent range, dipping below support at $15.27, $15.16 1/4, along with the 10-day moving average near $15.12 3/4. Additional support lies at the 20-day moving average near $15.06, as well as at $15.08 and at the 40-day moving average of $14.93 3/4. Conversely, a turn higher would encounter resistance at former support at $15.27, then at $15.35 1/2 and again at $15.46 1/4.
March meal futures traded an $8.80 range, dipping below support at $480.10, but held above the level into the close. Additional support lies at $475.90, with solid support at the near convergence of the 10- and 20-day moving averages around $473.00. Initial resistance stands at $488.80, again at $493.30 and $497.50.
March soyoil traded a 220-point range, breaching the 20-day moving average of 62.26 early in the session, as well as 61.83, the 10-day moving average of 61.45 and 61.28. Additional support lies at the Dec. 12 low of 58.50. Initial resistance stands at former support at 61.28, along with the 10- and 20-day moving averages.
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 fell 1 1/2 cents to $7.59 3/4. March HRW wheat gained 5 1/2 cents to $8.84 1/4 and scored a three-week high. Prices closed nearer the session highs. March spring wheat futures rallied 3 3/4 cents to $9.26.
Fundamental analysis: Short covering was featured in the winter wheat futures markets today, with HRW leading the way. A weaker U.S. dollar index today limited selling interest in wheat. However, a big drop in crude oil prices and weaker U.S. stock indexes kept buying interest tepid in wheat futures.
World Weather Inc. today reported any precipitation in hard red winter wheat country in the next seven days will be mainly focused in southeastern production areas. “A larger, more generalized precipitation event will be needed later this month due to the approaching growing season. For now, the dryness is not an issue, but it could be an issue if greater moisture doesn’t occur in February and early March,” said the forecaster. “Some increase in precipitation is expected in the second week of the outlook, but much more will be needed.”
Thursday morning’s weekly USDA export sales report is expected to show U.S. wheat sales of 300,000 to 600,000 MT in the 2022-23 marketing year and zero to 275,000 MT in the 2023-24 marketing year.
Technical analysis: Winter wheat futures bears have the overall near-term technical advantage. However, 3.5-month-old downtrends on the daily bar charts have been at least temporarily negated to begin to suggest market bottoms are in place. 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 this week’s high of $7.66 3/4 and then at $7.75. First support is seen at this week’s low of $7.42 and then at $7.30. 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 $8.90 and then at $9.00. First support is seen at this week’s low of $8.59 1/4 and then at $8.50.
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
Advice: We advise cotton hedgers and cash-only marketers to sell an initial 20% of expected 2023-crop production for harvest delivery.
Price action: March cotton fell 61 points to 85.61 cents, ending the session below the 10-day moving average and nearer the session low.
Fundamental analysis: Cotton spent the session steadily lower as persisting weakness in crude oil futures weighed on the fiber, though a lower U.S. dollar helped underpin futures. Though commodities in general took a risk-off attitude in anticipation of this afternoon’s FOMC meeting and comments from Fed Chair Powell. As expected, the Federal Reserve raised rates by 25 basis points, a pullback from last month’s 50 basis point rate increase and November’s 75 basis point increase, ultimately indicating that inflation has peaked. The U.S. central bank said in a statement that although “inflation has eased, it remains somewhat elevated.”
A series of conflicting labor data likely also weighed on markets as employers only added 106,000 jobs in December, which was the slowest pace in two years significantly below expectations for a gain of 170,000 and well below half of December’s upwardly revised increase of 253,000 jobs. However, U.S. job openings unexpectedly rose to a five-month high in December to 11.0 million, up from November’s 10.4 million, and an indication the American Labor market remains hot, according to the Labor Department. Economists had expected job openings to drop slightly in December.
Technical analysis: March cotton traded a 170-point range, falling below the 10-day moving average of 86.17, making a low just above support at 85.20. Additional support lies at the 20-day moving average of 84.88, the 100-day moving average of 84.41 and the 40-day moving average of 84.04. An attempt higher, however, will encounter resistance at the 10-day moving average, again at 87.04, then 87.87 and 88.88.
What to do: Get current with advised sales. Wait to extend 2022-crop sales.
Hedgers: NEW ADVICE -- Sell an initial 20% of expected 2023-crop production for harvest delivery. You should be 70% sold in the cash market on 2022-crop production.
Cash-only marketers: NEW ADVICE -- Sell an initial 20% of expected 2023-crop production for harvest delivery. You should be 70% sold on 2022-crop production.
