Crops Analysis | October 4, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: December corn fell 1 1/2 cents to $4.86, a mid-range close.

Fundamental analysis: Corn futures met the headwinds of plummeting crude oil futures and softening SRW wheat head on, with an additional daily export sale lending a morsel of optimism. USDA reported daily sales of 196,607 MT to Mexico, bringing this week’s total corn sales to 406,607 MT. Of today’s total, 109,226 MT were for delivery during 2023-24 and 87,381 MT was for delivery during 2024-25.

While harvest is ramping up across the Midwest amid favorable weather, Argentine producers continue to face dry conditions in western and northern regions of the country. World Weather Inc. notes rainfall the past two days has improved topsoil moisture slightly in the driest areas, though much more is needed to support early corn planting.

This morning, ethanol production was reported for the week ended Sept. 29, which was unchanged from the previous week at 1.009 million barrels per day (bpd), but up 12.5% from the same week last year. Ethanol stocks dropped 164,000 barrels to 21.884 million barrels during the week.

USDA will release its weekly export sales data for the week ended Sept. 28 early tomorrow morning. Traders are expecting net sales between 1.4 to 2.0 MMT for 2023-24 and 600,000 to 750,000 MT for 2024-25. Last week, the government reported net sales of 841,783 MT for 2023-24 and 15,240 MT for 2024.25.

Technical analysis: December corn futures continue to face solid overhead resistance at $4.89 3/4, a level that bulls have not been able to close above since Aug. 28. In order to break the recent consolidation, a close above the area is essential, though additional resistance will serve at $4.92 and $4.94 3/4, then at the psychological $5.00 level and the 100-day moving average of $5.11 1/2. Meanwhile, support continues to hold steadily around the 40- and 20-day moving average of $4.83 3/4 and $4.81, respectively. Additional areas of support include $4.79 3/4 and the Sept. 19 low of $4.67 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 rose 1/4 cent to $12.73 and nearer the session low. December soybean meal rose $0.30 to $372.00 and nearer the session low. December bean oil lost 114 points at 55.99 cents and nearer the session low.

Fundamental analysis: The big drop in crude oil prices today forced the soybean complex bulls to mostly stand on the sidelines at mid-week. Risk appetite in the general marketplace is still not robust, amid a seemingly relentless rise in U.S. Treasury yields and the unprecedented oust of the U.S. Speaker of the House on Tuesday afternoon.

Weather in the U.S. Midwest leans bearish for soybean prices. World Weather Inc. today reported weather will be favorably mixed for soybean harvest over the next couple weeks “with just enough rain falling to briefly disrupt farming activity.” Weekend frost and freezes in the northern Plains and upper Midwest “will only help to expedite harvesting by increasing leaf droppage in soybean fields,” said the forecaster. Meantime, weather in South America soybean regions will remain tenuous in western and northern Argentina, but rain will fall in most summer crop areas of Brazil during the next ten days.

Thursday morning’s weekly USDA export sales report is expected to show U.S. soybean sales of 400,000 to 900,000 MT for the 2023-24 marketing year, and sales of zero to 50,000 MT in the 2024-25 marketing year.

Technical analysis: The soybean bears have the overall near-term technical advantage. Prices are in a five-week-old downtrend on the daily bar chart. The next near-term upside technical objective for the soybean bulls is closing November prices above solid resistance at $13.50. The next downside price objective for the bears is closing prices below solid technical support at $12.50. First resistance is seen at today’s high of $12.85 and then at $13.00. First support is seen at this week’s low of $12.56 3/4 and then at $12.50.

The meal bears have the solid overall near-term technical advantage. Prices are in an accelerating five-week-old downtrend on the daily bar chart. The next upside price objective for the meal bulls is to produce a close in December futures above solid technical resistance at $390.00. The next downside price objective for the bears is closing prices below solid technical support at the May low of $361.80. First resistance comes in at today’s high of $378.20 and then at this week’s high of $382.10. First support is seen at this week’s low of $367.10 and then at $361.80.

Soybean oil bears have the slight 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 bean oil bulls is closing September prices above solid technical resistance at 60.00 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at 52.50 cents. First resistance is seen at this week’s high of 58.07 cents and then at 59.00 cents. First support is seen at this week’s low of 55.56 cents and then at 55.00 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 futures fell 8 1/2 cents before settling at $5.60, near mid-range. December HRW futures fell 16 3/4 cents and closed at $6.66 1/2. December spring wheat futures fell 13 3/4 cents to $7.11 3/4.

Fundamental analysis: Wheat futures fell sharply in overnight trading before rebounding slightly after the open, though bulls were unable to garner much momentum as prices ultimately fell on the session. Rumors are circulating that Russia is willing to re-enter the Black Sea grain deal, which likely weighed heavily on prices today. Despite several ships reportedly entering the humanitarian corridor set up by the Ukrainian navy, grain shipments are sharply lower year over year following the prior grain deal’s expiration in mid-July.

Rain is expected to fall throughout Oklahoma and southeastern Kansas today, which is likely to delay some planting, but the rain is welcomed as dry conditions continue to plague HRW acres, World Weather Inc says. Some severe weather is possible throughout the region today as well. Temperatures are expected to fall from highs in the 80’s to highs in the 50s and 60s by this weekend but are expected to rise once again next week.

The USDA is set to release the weekly export sales report Thursday morning, in which traders expect net sales of 250,000 to 600,000 MT. Last week sales came in at 544,539 MT.

Technical analysis: December SRW bulls continue to struggle to garner anything more than corrective buying, as the 10-day moving average once again stifled buyers this week. That resistance currently stands at $5.71 1/4 and is backed by $5.75 and then $5.83. Bears are targeting initial resistance at $5.51 3/4, backed by last week’s contract low at $5.40.

December HRW futures continue to consolidate in a bear flag on the daily bar chart, pointing to a breakdown in the latter half of the week. Bulls are seeking to hold support at $6.65 1/4, then $6.62, further selling would target the $6.50 level. Bears continue to control the technical advantage. Initial resistance is at $6.90 1/4 and is backed by $7.03, then $7.07.

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 42 points to 87.01 cents, ending below the 10- and 20-day moving averages.

Fundamental analysis: December cotton futures posted modest losses for the second straight day despite heavy selling in crude oil futures. However, the U.S. dollar’s downturn from Tuesday’s fresh high helped counter crude’s downside move. Traders continue to weigh the implications of reduced U.S. production along with fading demand from top importer, China. Traders will get a look into the government’s weekly export sales data for week ended Sept. 28 early tomorrow morning, which will help provide market direction over the next few days. Last week, USDA reported net sales of 55,300 MT for the previous week, which were down 48% from the previous week and 31% from the four-week average. Meanwhile, the Labor Department will release September employment data, which is expected to show a non-farm payroll increase of 170,000, compared to an increase of 187,000 in last month’s report.

Rains in West Texas and southwestern Oklahoma have delayed harvest efforts and discolored some cotton in the region. However, World Weather Inc. notes showers and thunderstorms will bring additional rain to a large part of West Texas and southwestern Oklahoma today, bringing additional harvest delays and discoloration, with other areas seeing significant rain and similar impacts to cotton on Friday. However, drier weather is expected to follow and little additional rain is expected through Oct. 18, reducing concerns over boll rot and quality declines as the crop should have good opportunities to bleach white.

Technical analysis: December cotton futures ended the session below the 10- and 20-day moving averages of 87.51 and 87.25 cents, with bears gaining increased technical traction. Initial support will now serve at 87.03 cents, then at the 40-day moving average of 86.76 cents and again at 86.23 cents. Conversely, resistance will now serve at today’s failed support levels, along with 87.83 cents, 88.24 and 88.63 cents, then at the Sept. 1 high of 90.00 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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