Crops Analysis | October 16, 2023
Price action: December corn fell 3 1/4 cents to $4.90 and closed near the session low.
Fundamental analysis: Corn futures kicked the week off under mild pressure despite increasing strength across the grain and soy complex as the session progressed. A daily export sale of 200,000 MT to Mexico for delivery during 2023-24 added little excitement, with a retreat in crude oil futures a limiting factor. Meanwhile, USDA’s late-morning release of weekly export inspections data added fuel to the fire, with inspections during week ended Oct. 12 falling nearly 370,000 MT from the previous week to 434,471 MT (17.1 million bu.) and were short of pre-report estimates between 550,000 and 800,000 MT.
While harvest weather continues to prove mostly favorable across the U.S., planting efforts in South America are being hindered by varying weather patterns. World Weather Inc. reports conditions remain a concern as the outlook for Argentina continues too dry for the emergence and establishment of spring and summer crops. Center west and northeastern Brazil will also experience net drying this week, adding more concern over poor emergence and establishment. Meantime, more flooding rain is expected in southern Brazil.
USDA will update its weekly crop progress following the close. A Reuters poll shows traders expect harvest to be 46% complete as of Sunday, which would reflect a 12% increase on the week. Conditions are expected to remain unchanged from the previous week at 53% “good” to “excellent.”
Technical analysis: December corn futures spent the session trading mostly between the 10-day moving average of $4.90 1/4 and resistance at $4.97 3/4, which has proven a difficult level to breach since early August. A close above initial resistance is key for bulls, though success would find additional resistance at $5.02 1/4 then $5.06 and the 100-day moving average of $5.10 1/4. While today’s session featured a close just below the 10-day moving average, additional support lies at $4.89 1/2 and again at the 20- and 40-day moving averages of $4.85 1/2 and $4.84 1/4.
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.
Price action: November soybeans rallied 6 cents to $12.86 1/4, closing nearer the session high. December soybean meal rose 20 cents and settled at $390.2, despite favoring the downside most of the session. December soyoil surged 152 points to 55.90 cents.
Fundamental analysis: Soybean futures showed relative strength today despite weaker outside markets, thanks to impressive inspections and a record NOPA crush number for the month. After last week’s revision due to double counting in the Pacific Northwest, USDA revised week ago inspections over 13 million bushels higher to 51.6 million bu. (1.404 MMT), and this week’s inspections were 73.9 million bu (2.011 MMT), a marketing year high. This encouraged bulls that prices have reached value level, as export interest is seemingly improving.
Midday, NOPA announced crushings of 165.456 million bushels of soybeans, a record for September and well above expectations of 161.683 million bu. in a Reuters poll. Soyoil stocks came in tighter than expected at 1.107 billion lbs, compared to the Reuters poll at 1.208 billion lbs. Soyoil use has continued to show increases, thanks to additional renewable diesel plants coming online. This has quickly tightened soyoil stocks to a nine-year low.
Much of the Midwest saw rain over the weekend, bringing disruptions to harvest. Only two rounds of rain are expected in the next two weeks, allowing harvest to continue at a healthy pace. Soybean harvest is expected to continue quicker than expected, with a Reuters poll of analysts showing harvest at 57% complete compared to 43% a week ago. USDA will update the official figure in this afternoon’s Crop Progress report.
Technical analysis: November soybeans rallied on better-than-expected inspections, though prices struggled against overnight highs. Initial resistance stands at the 20-day moving average, currently at $12.90. Prices have not closed above this resistance since early September. Additional resistance lies at the psychological $13.00 level, which is backed by $13.06. While prices struggled against resistance, the 10-day moving average continues to limit the downside, currently residing at $12.79 1/2. Additional support comes in at $12.71 1/2.
December soybean meal broke a month and a half long downtrend on the daily bar chart last week but continues to struggle with followthrough buying, though bulls quickly rallied futures into the close today. Losses have remained relatively tight as prices are supported by 40-day moving average support, currently at $388.60. Additional support lies at $385.00, then $377.50. Bulls are seeking a daily close above $394.00 before tackling additional resistance at $395.20, then the psychological $400.00 level.
December soyoil futures have quickly reversed a three-week steep downtrend in a buying spree the past three days. Futures closed above prior resistance of 55.00 cents today as bulls target 57.84 cent resistance, with 56.29 cent resistance on the way. Bulls are looking to hold initial support of 55.25 cents with additional backing 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.
Price action: December SRW wheat fell 2 1/2 cents to $5.77 1/4 and nearer the session low. Prices hit a three-week high early on. December HRW wheat lost 1/4 cent to $6.68 3/4 and near mid-range. Spring wheat futures rallied 6 3/4 cents before settling at $7.28 3/4.
Fundamental analysis: The wheat futures markets languished today, with weaker corn prices and firmer soybean prices providing little outside-market direction. There is still some risk aversion in the general marketplace, amid the still-unfolding Middle East crisis, and that is keeping grain market bulls tentative at present.
Wheat traders continue to monitor weather patterns in major global wheat regions. World Weather Inc. today reported U.S. hard red winter wheat areas will see dry weather most of this week and then may get some rain next week. Winter wheat planting and establishment in the lower U.S. Midwest should advance favorably. Rain is needed in the Pacific Northwest as well as the west-central and southwestern high Plains region. Western Australia dryness will continue a concern for the nation’s wheat production. Argentina wheat has seen with poor rainfall and not much change will occur until next week. Southern Brazil wheat is suffering from too much rain and more is expected for at least another week.
USDA today reported U.S. wheat export inspections of 354,771 MT, which were up 48,708 MT from the previous week and within the pre-report expectations.
This afternoon’s weekly USDA crop progress report is expected to show U.S. winter wheat planted (as of Sunday) at 68% versus 57% last week and 69% one year ago at this time.
Technical analysis: Winter wheat futures prices are still 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 today’s high of $5.88 1/2 and then at $6.00. First support is seen at $5.60 and then at last week’s low of $5.47 1/4. 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 the October high of $6.90 1/4 and then at $7.00. First support is seen at the October low of $6.55 1/4 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.
Price action: December cotton fell 91 points to 85.15 cents, marking a low-range close.
Fundamental analysis: Strength in equities combined with a weaker U.S. dollar seemingly had little effect on the natural fiber but likely limited losses amid weakness in crude oil futures. Demand concerns from top importer China amid economic issues continue to plague the bull camp. However, weather issues in key growing areas could spur imports as the marketing year progresses.
World Weather Inc. reports good harvest weather is expected in the U.S. and China over the next week and perhaps a little longer, with harvest conditions in Central Asia and the Middle East has advanced well with more of the same expected. The forecaster indicates while irrigated crop planting has begun and will continue to advance well, dryland production areas will not likely be planted prior to a significant rain event and none is expected anytime soon. Meanwhile, rains are expected in northern Argentina, which will be helpful for early season planting progress, though Brazil is expected to remain too wet for center-south planting at least for another week.
USDA will release its weekly crop progress estimates following today’s close. Last week, harvest was estimated to be 25% complete, which was up seven percentage points from the previous week and one point ahead of the five-year average. The “good” to “excellent” rating rose two points on the week, while the portion rated “poor” to “very “poor” decreased two points.
Technical analysis: December cotton futures continue to face resistance at the 10-day moving average of 86.17 cents, though support at 85.03 cents remains initial support despite being tested in the past four sessions. Success above the 10-day will find additional resistance at the 20- and 40-day moving averages of 86.84 and 86.87 cents, then at 87.52 and 88.55 cents. Conversely, an extended push below initial support will find additional support at the 100-day moving average of 84.11 cents and again at 83.27 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.
