Crops Analysis | October 10, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: December corn futures fell 2 3/4 cents to $4.85 1/2 and ended the session below the 10-day moving average.

Fundamental analysis: The corn futures market saw mild selling pressure today as risk appetite in the general marketplace is still a bit tepid amid the Middle East geopolitical turmoil. Commercial hedge pressure as corn harvest is going strong is also a seasonal negative.

This afternoon’s weekly USDA crop progress report is expected to show the U.S. corn crop in 53% good to excellent condition, which is the same as last week. Corn harvested as of Sunday is expected to be 35% complete compared to 23% complete in the prior week.

USDA reported weekly U.S. corn export inspections of 550,585 MT, down 119,539 MT from the previous week and near the low end of market expectations.  

Corn traders are starting to look ahead to Thursday morning’s monthly USDA supply and demand report.

Technical analysis: The corn futures bears have the overall near-term technical advantage. However, prices are in a fledgling uptrend on the daily bar chart, but the bulls need to show fresh power soon to keep it alive. The next upside price objective for the bulls is to close December prices above solid chart resistance at $5.10. 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 $4.90 and then at this week’s high of $4.97. First support is at $4.80 and then at the October low of $4.76.

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 7 1/4 cents to $12.71 1/2 after trading at the lowest level since June 15. December meal rose $2.90 to $377.50, closing near the session high. December soyoil fell 70 points to 53.23 cents, a mid-range close after trading at the lowest level since June 22.

Fundamental analysis: Following an overnight reach to a near four-month low, November soybean futures found increasing strength amid a second straight day of corrective buying in meal futures. Limiting gains, however, were extended selling in soyoil futures, spurred by overnight news Malaysian palm oil stockpiles hit an 11-month high at the end of September, according to the Malaysian Palm Oil Board (MBOB), raising demand concerns. Further limiting upside were earlier reports Brazilian soybean producers intend to expand 2023-24 plantings to 45.1 million hectares, representing a 2.5% increase from last year, for record output of 162 MMT, or 4.8% more than a year-ago, according to Conab. The agency also reported Brazil will likely remain the world’s biggest soybean supplier, with exports reaching an estimated 102.14 MMT in 2024.

Nonetheless, weather in Brazil will ultimately determine Brazil’s output. World Weather Inc. reports much of Brazil and Paraguay will see a mix of rain and sunshine during the nest two weeks that should allow for fieldwork to advance between rounds of rain, with the rain proving beneficial for summer crop planting with exceptions in southern Brazil and southern Paraguay where some heavy rain and flooding are likely. Meanwhile, the forecaster notes rain in northern Brazil may not be great enough to induce significant increases in soil moisture in many areas and much of the region will need greater rain soon or a continuation of regular rain into late this month to support newly planted crops. Northeastern Brazil will be the driest and the little rain that falls should not be great enough to induce more than brief improvements in soil and crop conditions.

USDA reported strong weekly export inspection data for week ended Oct. 5, which showed total soybean inspections of 1.036 MMT (38.1 million bu.), which were up 359,564 MT from the previous week and notably above the pre-report range of 500,000 to 825,000 MT.

Technical analysis: While November soybeans were able to rebound from a near four-month low, overhead resistance at the 10-day moving average of $12.78 1/4 limited gains, leading to extended sideways consolidation. However, a push above the resistance will face additional resistance at $12.85 3/4, $12.94 1/4 and again at the 20-, 100- and 200-day moving averages of $12.98 3/4, $13.09 3/4 and $13.22 1/4. Meanwhile, initial support will continue to serve at $12.55 3/4, then at $12.47 1/4 and $12.36 1/2.

December meal futures notched extended Monday’s gains, though the 10-day moving average of $378.10 served up resistance, while support held at $371.10. A turn above the 10-day will face additional resistance at $380.60, then at the 20-, 100- and 40-day moving averages of $384.80, $391.50 and $392.20. However, a turn below initial support will then face support at $367.60 and $364.60.

December soyoil bears picked up technical traction with a close held below support at 53.00 cents. Extended selling efforts will face additional support at 52.08 and 50.39 cents. Conversely, corrective buying efforts will face headwinds at today’s failed support level, then at the 10-day moving average of 55.93 cents and again at the 200-, 100-, and 20-day moving averages of 56.98, 57.86 and 57.93 cents, respectively.

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 closed down 14 1/4 cents at $5.58 1/2 and near the session low. December HRW wheat fell 14 3/4 cents to $6.71 1/4, while December spring wheat futures fell 7 1/2 cents to $7.23 1/2.

Fundamental analysis: The wheat futures markets today were pressured by the geopolitical turmoil in the Middle East that has the general marketplace unsettled. That’s keeping the speculative bulls in the grain markets on the sidelines at present. Weaker corn futures prices were also a negative for the wheat markets today. Wheat traders today decided to overlook the potential for global wheat production declines.  Ukraine’s ag ministry said farmers had sown around 3.7 million hectares of winter crops as of Oct. 9, including 2.35 million hectares of winter wheat. That’s 54% of the expected area for 2023-24.

World Weather Inc. today said U.S. hard red winter wheat and wheat in the Pacific Northwest will need greater rain for improved crop establishment. Planting in the Midwest and northwestern Plains has been and will continue to advance well with favorable emergence over time. Dry weather in western Australia “is still a big concern” for the wheat crop there, said the forecaster. Brazil wheat is still facing a grain quality decline because of too much moisture. Argentina is still dealing with drought, although recent showers and those coming will offer some temporary relief.

Today’s weekly USDA export inspections report for U.S. wheat was disappointing and came in at 265,242 MT compared to 428,774 MT in last week’s report. This afternoon’s weekly USDA crop progress report is expected to show the U.S. winter wheat crop at 54% planted as of Sunday, compared to 40% complete in the prior week.

Technical analysis: Winter wheat futures prices are in 2.5-month-old downtrends on the daily bar charts. Bears have the solid near-term technical advantage. SRW bulls' next upside price objective is closing December prices above solid chart resistance at $6.10. The bears' next downside objective is closing prices below solid technical support at $5.25. First resistance is seen at $5.70 and then at this week’s high of $5.81 1/2. 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 this week’s high of $6.90 1/4 and then at $7.00. First support is seen at the September 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 plunged 151 points to 85.45 cents, marking the lowest close since Sept. 7.

Fundamental analysis: December cotton futures faced heavier selling amid concerns demand from China will wane as the country looks to Brazil and Australia amid U.S. production curbs. Recent reports indicate Brazil is on track for record cotton shipments in 2023-24, an additional blow to U.S. producers, especially in Texas, which have been battling poor crop conditions when Brazil has already surpassed the U.S. as the world’s biggest soybean and corn exporter. Meanwhile, Australia and China trade relations are normalizing, adding fuel to the fire. Chinese warehouses have been stockpiling Australian cotton, betting that an import ban may be lifted, with Australian shipments to China totaling 61,319 MT, the most since July 2014.

Meanwhile, World Weather Inc. notes limited rain in cotton maturation and harvest areas of Texas and Delta will be great for protecting fiber quality. However, some rain in the southeastern U.S. will slow harvesting and could discolor some of the cotton fiber, but the rain should not last long enough or be heavy enough to cause a serious threat to the crop. Windy conditions are expected in West Texas and Oklahoma later this week that may raise the potential for some cotton blow out.

Technical analysis: December cotton bears gained additional traction with a close held below support at the 40-day moving average of 86.76 cents as well as 86.24 and 85.52 cents, which serve as pivot areas. Extended selling efforts will face additional support at 84.26 cents and again at the 100-day moving average of 84.03 cents. On the flip side, corrective buying will face resistance at today’s failed support levels, then at the 20- and 10-day moving averages of 87.18 and 87.24 cents and again at 88.22, 89.48 and 90.20 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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