Crops Analysis | September 12, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: December corn futures fell 9 1/4 cents to $4.76 1/2, nearer the session low.

Fundamental analysis: The corn market today was hit by a batch of bearish USDA data. Today’s monthly supply and demand report saw the agency raise its U.S. corn production estimate by 23 million bu. from last month; traders expected a 103 million-bu. decline. The national average corn yield was cut 1.3 bu. from last month to 173.8 bu. per acre. However, harvested acres increased by 774,000 acres to 87.096 million, more than offsetting the cut to yield. USDA lowered its old-crop corn ending stocks 5 million bu. from last month. The agency lowered the 2022-23 national average cash price by 5 cents to $6.55. New-crop corn ending stocks increased 19 million bu. from last month. USDA made no changes to the demand side of the 2023-24 balance sheet. It kept its 2023-24 national average cash price projection at $4.90. On global carryover, corn stocks were pegged at 299.47 MMT for 2022-23. That’s up from 297.92 MMT in August. Stocks were estimated at 313.99 MMT for 2023-24, up from 311.05 MMT in the August report.

The weekly crop progress report, out Monday afternoon, showed that as of Sunday, USDA rated 52% of the corn crop as “good” to “excellent,” a 1 percent drop from the previous week. The crop rated “poor” to “very poor” remained unchanged at 18%.

Technical analysis: The corn futures bears have the firm overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. The next upside price objective for the bulls is to close December prices above solid chart resistance at $5.07 1/2. The next downside target for the bears is closing prices below chart support at the August low of $4.73 1/2. First resistance is seen at last week’s high of $4.90 1/4 and then at $4.95. First support is at today’s low of $4.73 1/2 and then at $4.65.

What to do: Get current with advised sales.

Hedgers: You should be 100% sold in the cash market on 2022-crop. You should be 50% forward priced for harvest delivery on expected 2023-crop.

Cash-only marketers: You should be 100% sold on 2022-crop. You should be 35% forward priced for harvest delivery on expected 2023-crop production.

 

 

Soybeans

Price action: November soybeans fell 22 1/2 cents to $13.46 1/2, ending the session below the 20- and 40-day moving averages and marking the lowest close since Aug. 22. December meal fell $6.80 to $398.10, while December soyoil fell 43 points to 60.07 cents.

Fundamental analysis: Soybean bulls seemingly relented ahead of USDA’s September crop reports, though selling was amplified following their release, with the new-crop November contract reaching the lowest level in nearly three weeks. USDA lowered the national yield to 50.1 bu. per acre, down from August’s projection of 50.9 bu., though a slight increase in planted and ultimately harvested acres partially offset the yield reduction. Production of 4.146 billion bu. was short of market expectations of 4.157 billion bu. and is down from 4.276 billion bu. a year ago. Meanwhile, old-crop ending stocks fell 10 million bu. due to an increase in exports. New-crop ending stocks were trimmed by 25 million bu. from August to 220 million bu., following a 70 million bu. reduction on smaller beginning stocks and crop estimate. On the demand side of the balance sheet, USDA slashed total use by 45 million bu., with crush down 10 million bu., while exports were lowered 35 million bu. from August.

In its weekly crop condition ratings report, USDA rated the soybean crop as 52% “good” to “excellent,” down a point from the previous week, while the potion rated “poor” to “very poor” rose one point to 18%. On our weighted CCI, the soybean crop fell 2.1 points to 333.4, which was 8.8 points (2.6%) below last year.

Technical analysis: November soybeans ended the session below the 20- and 40-day moving averages of $13.62 and $13.60 1/4, marking the lowest intraday level since Aug. 23. The next major area of support lies at the 200-day moving average of $13.31 and again at the 100-day moving average of $13.00. However, corrective buying efforts will now serve at today’s failed levels of resistance, again at the 10-day moving average of $13.69 1/2, then $13.74 and $13.79.

December meal futures ended the session below the 200-, 10-, 40- and 20-day moving averages of $403.20, $402.20, $401.10 and $399.70, respectively. Initial support will now serve at $397.70, again at the 100-day moving average of $394.50 and the mid-August low of $379.00. Meanwhile, resistance will serve at today’s failed support levels, again at $408.20, $411.50 and $415.10.

December soyoil was able to rally from early session lows, which breached support at 60.00 and 59.50 cents. However, a consecutive downside push could see increased selling efforts towards 59.00 cents and the 200- and 100-day moving averages of 57.29 and 56.35 cents. Conversely, bull efforts will face initial resistance at 61.00 cents, again at 61.50 cents, then the 10- and 40-day moving averages of 61.88 and 61.93 cents. 

What to do: Get current with advised sales.

Hedgers: You should be 100% sold in the cash market on 2022-crop. You should be 45% forward sold for harvest delivery on expected 2023-crop production.

Cash-only marketers: You should be 100% sold on 2022-crop. You should be 40% forward sold for harvest delivery on expected 2023-crop production.

 

 

Wheat

Price action: December SRW wheat rose 3 cents to $5.87 1/2, closing nearer the session high. Prices hit another contract low today. December HRW wheat gained 7 cents at $7.30 3/4. Prices closed nearer the session high and hit another two-year low early on.  December spring wheat rose 12 1/4 cents to $7.79.

Fundamental analysis: There were no big surprises in today’s USDA monthly supply and demand report. The agency kept its 2023-24 U.S. wheat ending stocks projection unchanged from last month. The 2023-24 national average cash price forecast remained at $7.50. For global carryover, wheat was pegged at 267.13 MMT for 2022-23. That’s down from 268.31 MMT in August. Stocks were pegged at 258.61 MMT for 2023-24, down from 265.61 MMT in the August report.

On Monday afternoon, USDA reported the U.S. spring wheat harvest reached 87% as of Sunday, equal to the five-year average, while winter wheat plantings rose six points to 7% complete, in line with the five-year average.

World Weather Inc. today reported that in the Plains and Midwest coming rain events will be beneficial for winter wheat planting, but most of the rain will be too light to induce lasting increases in soil moisture and greater rain will be needed in much of the region. Meantime, dry weather in the Pacific Northwest and Canada’s Prairies will support good harvest conditions that preserve grain quality even though yields will be down due to dryness, said the forecaster.

Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. Prices are in steep six-week-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing December prices above solid chart resistance at $6.40. The bears' next downside objective is closing prices below solid technical support at $5.50. First resistance is seen at $6.00 and then at the September high of $6.15 1/2. First support is seen at today’s contract low of $5.70 and then at $5.60. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at $7.70. The bears' next downside objective is closing prices below solid technical support at $7.00. First resistance is seen at $7.40 and then at $7.50. First support is seen at today’s low of $7.09 and then at $7.00.

What to do: Get current with advised sales.

Hedgers: You should be 50% sold in the cash market on 2023-crop production.

Cash-only marketers: You should be 50% sold on 2023-crop production.

 

 

Cotton 

Price action: December cotton rose 52 points to 88.30 cents, ending near the session high and marking the highest close since Sept. 5.

Fundamental analysis: Cotton futures found a bid following the release of USDA’s September crop reports, which featured notable reductions in anticipated production. The government slashed the cotton crop estimate by 860,000 bales from August’s projection, which was more than double the decline the market was expecting. Although the national average yield rose 7 lbs. to 786 lbs. per acre, a harvested acreage reduction of 603,000 acres offset the yield increase. The states with the largest acreage cuts were Texas (340,000 acres) and Georgia (80,000 acres). Meanwhile, old crop ending stocks rose 550,000 bales from last month, with supply increasing 300,000 bales amid an increase to beginning stocks (2021-22 carryover). Old-crop exports were cut by 30,000 bales, while unaccounted use was cut 220,000 bales. New crop ending stocks were lowered 100 million bales, with larger beginning stocks more than offset by the reduced crop estimate, lowering total supply 310,000 bales. The demand side of the balance sheet realized a 200,000-bale cut in exports and a 10,000-bale reduction in unaccounted use.

In its weekly crop condition ratings, USDA rated the cotton crop as 29% “good” to “excellent,” down two percentage points from the week prior. The portion of the crop rated “poor” to “very poor” remained unchanged at 41%. Harvest progress was pegged at 8%, up one point from the five-year average.

Technical analysis: December cotton futures continues to face resistance at 88.85 cents, though a turn above the area will find bulls looking towards the Sept. 1 high of 90.00 cents. Conversely, initial support lies at the 10-day moving average of 87.57 cents, again at the 20- and 40-day of 86.34 and 85.78 cents, respectively. From there, support lies at 84.82 cents, 83.75 cents and the 100-day moving average of 82.76 cents.

What to do: Get current with advised sales.

Hedgers: You should be 100% priced on 2022-crop in the cash market. You should have 60% of expected 2023-crop production forward sold for harvest delivery.

Cash-only marketers: You should be 100% priced on 2022-crop. You should have 60% of expected 2023-crop production forward sold for harvest delivery.

 

 

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