Crops Analysis | October 3, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: December corn futures fell 1 1/4 cent at $4.87 1/2, ending nearer the session high.

Fundamental analysis: The corn market saw mild selling pressure today amid keener risk aversion in the general marketplace as the U.S. stock indexes sold off and U.S. Treasury yields continue to climb. A surging U.S. dollar index that hit another 10-month high today is another bearish outside market force working against the grain market bulls. Lower soybean complex futures prices also aided the corn bears today.

On Monday afternoon USDA rated 53% of the corn crop as “good” to “excellent.” That’s unchanged from last week. Harvest was 23% complete as of Sunday, which was two percentage points ahead of the five-year average but two points slower than market expectations.

World Weather Inc. today said dry weather and favorable conditions for corn harvesting in the Midwest will continue through much of the next two weeks, outside of one round of organized rain occurring later today into Thursday.

Technical analysis: The corn futures bears have the firm overall near-term technical advantage. However, recent sideways and choppy price action at lower levels begins to suggest a “basing” process that puts in market bottoms. The next upside price objective for the bulls is to close December prices above solid chart resistance at $5.00. The next downside target for the bears is closing prices below chart support at the September low of $4.67 3/4. First resistance is seen at $4.91 and then at $4.95. First support is at $4.81 and then at last week’s low of $4.73 3/4.

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 4 1/4 cents to $12.72 3/4, a high-range close after trading at the lowest intraday level since June 28. December meal fell $2.60 to $371.70, marking the lowest close since June 12. December soyoil fell 30 points to 57.13 cents.

Fundamental analysis: Soybean futures fell amid a third day of strong selling in meal futures but were able to make a remarkable rebound from the intraday low. Overnight weakness stemmed from weaker-than-expected crush data, reported following Monday’s close. Though, early selling efforts gathered steam despite a second straight day of daily export sales to China, bringing the total for the week to 397,000 MT, all for delivery during 2023-24. Casting a shadow over commodities was the U.S. dollar’s reach to a fresh for-the-move high following hawkish Fed comments late Monday and stronger-than-expected August Job Openings and Labor Turnover (JOLTS) report, released this morning by the Bureau of Labor Statistics. However, as the morning progressed, the dollar turned from earlier highs, easing pressure across commodities.

Adding further weight to the soy complex was a move by Argentina’s government to extend its program to boost grain and soy exports through Oct. 25 to bolster the country’s foreign reserves. Under the program, Argentine exporters can swap 25% of the foreign currency they make on alternative exchange markets that offer better rates than the official rate, which was frozen at 250 pesos per dollar in August.

As of Sunday, USDA reported the soybean crop as 52% “good” to “excellent,” a two-point increase from last week, while the portion rated “poor” to “very poor” declined one point to 17%. Meanwhile, harvest progress was estimated to be 23%, one point ahead of the five-year average but two points slower than traders anticipated. Crop consultant, Dr. Michael Cordonnier left his U.S. soybean production estimate unchanged this week at 4.05 billion bushels, at a yield of 49.0 bu. per acre and noted a neutral bias going forward.

Technical analysis: November soybeans tested support at $12.68 1/2 and $12.60 1/4 but were able to end the session above both levels, though if additional selling ensues, additional support will serve at $12.54 3/4, then at the May 31 low of $11.30 1/2. However, persisting oversold conditions could induce corrective selling, which would face initial resistance at $12.82 1/4, with additional resistance layered from $12.87 3/4 to the 40-day moving average of $13.35 3/4.

December meal futures ended lower for the third straight session but managed to hold a close above support at $371.10 and $367.90. An extension lower, however, will face additional support at $362.40. Meanwhile, initial resistance serves at Monday’s low of $373.40, then at $379.80, with additional resistance at the 10-, 20-, 100-, 40- and 200-day moving averages.

December soyoil was able to test the 100- and 10-day moving averages of 57.52 and 57.80 cents, but ultimately ended right at the 200-day moving average of 57.13 cents. Initial support will now serve at 56.15 cents, then at 54.86 and 54.17 cents. Conversely, resistance will continue to serve at the 100- and 10-day moving averages, then at the 20- and 40-day moving averages of 59.45 and 60.89 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 3/4 cents to $5.68 1/2, a near mid-range close. December HRW wheat gained 6 1/2 cents to $6.83 1/4, marking a high-range close. Spring wheat rose 6 3/4 to $7.25 1/2.

Fundamental analysis: The winter wheat futures markets today saw tepid short covering after prices last Friday hit new for-the-move lows. Bullish fundamental news came today when USDA reported a daily sale of 220,000 MT of U.S. SRW wheat for delivery to China during 2023-24. That’s the first daily sale of SRW since July of 2021. However, the risk-off trading day in the general marketplace that saw the stock market sell off, rising bond yields and another push higher in the U.S. dollar index limited the upside in wheat futures. Lower corn and soybean futures prices today also kept wheat market bulls timid.

On Monday afternoon USDA estimated 40% of the US. winter wheat crop was planted as of Oct. 1, which was down three percentage points from the five-year average.

World Weather Inc. today said U.S. hard red winter wheat areas will get some sporadic rainfall this week, benefiting some areas more than others and some follow-up moisture will be needed. A similar situation is expected in the Pacific Northwest and in parts of the Midwest. Planting progress is expected and some of the wetter areas should get enough moisture to support germination and emergence. Meantime, the forecaster said Argentina wheat areas still need significant rain. Australia rain in the southeast will be ideal for supporting reproduction and filling in New South Wales and maintaining good soil moisture in Victoria and southeastern South Australia. Greater rain is now needed in Western and parts of South Australia where the ground is becoming too dry.

Technical analysis: Winter wheat futures prices are in nine-week-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing December prices above solid chart resistance at $6.00. The bears' next downside objective is closing prices below solid technical support at $5.25. First resistance is seen at $5.80 and then at $5.90. First support is seen at $5.50 and then at the contract low of $5.40. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at $7.25. The bears' next downside objective is closing prices below solid technical support at $6.25. First resistance is seen at $6.90 and then at $7.00. First support is seen at last week’s low of $6.62 and then at $6.50.

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 fell 32 points to 87.43 cents, marking a mid-range close.

Fundamental analysis: December cotton futures were seemingly unimpressed by the U.S. dollar’s move to a near 11-month high this morning. The greenback billowed higher in the wake of hawkish Fed comments indicating interest rates will remain higher-for-longer, with equities falling to a four-month low following the Bureau of Labor Statistic’s stronger-than-expected August Job Openings and Labor Turnover (JOLTS) report this morning.

Cotton bulls are eager for the government to release its October Crop reports, as traders anticipate a continued decline in U.S. production. Though market participants continue to weigh reduced demand implications from China amid increasing odds the country looks to Brazilian supplies to fulfill its import needs.

As of Sunday, USDA rated the cotton crop as 30% “good” to “excellent,” unchanged from last week, though the portion rated “poor” to “very poor” rose one point to 43%. Harvest was estimated to be 18% complete, up five percentage points on the week and one-point ahead of the five-year average. Harvest efforts in Texas had reached 28% complete, which was four points ahead of average for the date.

Technical analysis: December cotton futures continue to find support at the 20-day moving average of 87.25 cents, while the 10-day moving average of 87.49 cents limits upward momentum. A break below the 20-day will find additional support at 86.98 cents, then at the 40-day moving average of 86.71 cents, 86.21 cents and the 100-day moving average of 83.78 cents. A push above the 10-day will find bulls battling additional resistance at 88.24 cents, then at 88.73 and 89.50 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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