Crops Analysis | October 23, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: December corn rose 5 1/4 cents to $4.90 1/4, at the session low.

Fundamental analysis: Follow through selling in corn futures kicked the week off after widespread rains fell in Argentina and news of increased diplomatic efforts to contain the Israel/Hamas conflict extended crude oil weakness. However, SRW wheat strength, led by continued weakness in the U.S. dollar, limited downside.

Persisting dry conditions throughout Argentina have slowed planting efforts recently, though World Weather Inc. reports weekend rains led to a notable increase in soil moisture, with additional rains expected over the next two weeks in some central and northern crop areas. All the rain will be welcome and improve summer crop planting in all areas, according to the forecaster. Meanwhile, AgRural estimates producers have planted in center-south Brazil have planted an estimated 46% of their first 2024 corn crop as of last Thursday, up from 41% a week ago, but down from 51% a year-ago.

U.S. harvest continues to advance well, though World Weather expects rain to develop in the central and southern Plains briefly this weekend before passing through the lower and eastern Midwest and northern Delta early next week. USDA will release harvest progress and condition ratings as of Sunday following today’s close. Traders expect corn harvest to be 59% complete, which would be a 14-percentage point jump from the previous week if realized.

This morning, USDA reported weekly export inspections of 437,549 MT (17.2 million bu.) for week ended Oct. 19, which fell 29,055 MT from the previous week but were within the pre-report range of 350,000 to 650,000 MT.

Technical analysis: December corn ended the session below the 10-day moving average of $4.92 1/4, though the 20-day moving average of $4.89 1/2 remained untested throughout the session and will now serve as initial support. However, an extension below the area will find additional support at $4.85 1/2, $4.76 and the recent low of $4.67 3/4. Initial resistance will now serve at the 10-day moving average, with $5.00 serving as psychological resistance, followed by resistance at $5.05, then the 100-day moving average of $5.08 3/4, then $5.14 1/2 and $5.19 1/2.

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: January soybeans fell 14 3/4 cents to $13.05 1/2, near the session low. December soybean meal lost $3.40 at $420.50 and near mid-range. Prices hit a four-month high early on. December bean oil closed down 145 points at 51.94 cents and near the session low. Prices hit a four-month low.

Fundamental analysis: Good U.S. soybean harvest progress and the related commercial hedge selling pressured the soybean complex futures today. Solidly lower crude oil prices today were a bearish “outside market” element working against the soybean complex bulls.

USDA this morning reported U.S. soybean export inspections of 2.459 MMT during week ended Oct. 12, up 419,446 MT from the previous week and near the top-end of pre-report expectations. Shipping of U.S. soybeans abroad is nearing its annual seasonal peak of late October.

World Weather Inc. reports not much rain and hot temperatures today will stress the Brazilian soybean crop from central Mato Grosso do Sul to much of the northern part of the country, impacting newly planted crops before showers become more frequent Tuesday through Nov. 6. Paraguay and southern Brazil will see regular precip during the next couple weeks that will favorably support crop development, said the forecaster.

This afternoon’s weekly USDA crop progress reports are expected to show U.S. soybeans at 78% harvested as of Sunday. That compares to 62% harvested last week and 80% done last year at this time.

Technical analysis: The soybean bean bulls and bears are on a level overall near-term technical playing field. A six-week-old downtrend on the daily bar chart has been negated. The next near-term upside technical objective for the soybean bulls is closing January prices above solid resistance at $13.50. The next downside price objective for the bears is closing prices below solid technical support at the October low of $12.70 1/4. First resistance is seen at today’s high of $13.21 3/4 and then at the October high of $13.33 3/4. First support is seen at $13.00 and then at $12.85.

The soybean meal bulls have the solid overall near-term technical advantage. Prices are in a steep uptrend 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 the June high of $432.60. The next downside price objective for the bears is closing prices below solid technical support at $400.00. First resistance comes in at today’s high of $429.00 and then at $432.60. First support is seen at today’s low of $417.00 and then at $412.00.

Soybean oil futures bears have the overall near-term technical advantage. A six-week-old downtrend is in place on the daily bar chart. The next upside price objective for the bean oil bulls is closing December prices above solid technical resistance at the October high of 58.07 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at 50.00 cents. First resistance is seen at today’s high of 54.00 cents and then at 55.00 cents. First support is seen at the October low of 52.08 cents and then at 51.00 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 rose 1 1/4 cents to $5.87 1/2, while HRW rose 3/4 cent to $6.70 3/4. December spring wheat rose 7 cents to $7.37 3/4.

Fundamental analysis: Despite a flurry of bearish news, the wheat complex was able to hold onto very slight gains, led mostly by another day of weakness in the U.S. dollar index.

Ukrainian producers are increasingly optimistic around exports through the temporary humanitarian corridor after Russia’s exit from the Black Sea grain deal in July. Recent sentiments suggest the new corridor could enable exports of up to 2.5 MMT of food a month, almost offsetting the impact of Russia quitting the former deal, brokered by the U.N.

Earlier today, APK-Inform increased Ukraine’s 2023-24 export forecast to 34.8 MMT, up from previous estimates of 34.2 MMT. However, production forecasts continue to be trimmed due to the ongoing conflict. APK-Inform trimmed Ukraine’s 2023 grain harvest projection to 53.4 MMT, down from 54.2 MMT. Meanwhile, Russian agricultural consultancy IKAR estimates Russia’s grain production at 142.4 MMT, a 600,000 MT increase from its prior forecast. IKAR also reported the country’s exports could reach 65 MMT, up from earlier estimates of 64.7 MMT.

World Weather Inc. indicates growing and harvest conditions around the globe have recently improved. The forecaster expects rain and snow in the U.S. Plains, rain in Europe as well as southern and western parts of Russia, good soil moisture in India and favorable harvest weather in China and recent rains in Argentina, which are heightening a bearish bias from a weather perspective.

This morning, USDA reported export inspections of 168,868 MT (6.2 million bu.) during the week ended Oct. 19, which were down 29,055 MT from the previous week and below the pre-report range of 275,000 to 500,000 MT.

Technical analysis: SRW wheat futures have seen a 2.5-month-old downtrend on the daily bar chart negated and prices are starting to trend higher, which begins to suggest a near-term market bottom is in place. Bears still have the overall near-term technical advantage. SRW bulls' next upside price objective is closing December prices above solid chart resistance at $6.20. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.40 1/2. First resistance is seen at today’s high of $5.95 1/4 and then at $6.00. First support is seen at today’s low of $5.82 and then at $5.75.

HRW futures bears have the solid overall near-term technical advantage. However, a 2.5-month-old downtrend on the daily bar chart has stalled out. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at $7.00. The bears' next downside objective is closing prices below solid technical support at the October low of $6.55 1/4. First resistance is seen at the October high of $6.90 1/4 and then at $7.00. First support is seen at $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.

 

 

Cotton 

Price action: December cotton futures rose 133 points to 83.73 cents today and nearer the session high.

Fundamental analysis: Cotton futures prices today rebounded on short covering and perceived bargain hunting after hitting a 2.5-month low Friday. The bears are calling today’s price action just a routine corrective bounce in an existing price downtrend. Key for the bulls will be showing good follow-through buying strength on Tuesday that would then suggest a near-term market bottom is in place.

The weaker U.S. dollar index today may have somewhat helped the cotton market bulls. However, any bullish impact on cotton by the stronger greenback was mostly offset by sharply lower crude oil prices today.

World Weather Inc. today said rain coming to Texas over the next week “will slow or stall harvesting and raise a little concern over fiber quality.” Harvest weather in the U.S. Delta and southeastern states will be mostly good over the next 10 days, although some rain is expected in the Delta during the weekend into next week.

Technical analysis: The cotton futures bears still have the slight overall near-term technical advantage. A three-week-old downtrend is in place on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in December futures above technical resistance at 87.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 80.00 cents. First resistance is seen at today’s high of 84.90 cents and then at 86.00 cents. First support is seen at 83.00 cents and then at 82.00 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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