Crops Analysis | November 30, 2023
Price action: March corn rose 7 cents to $4.82 3/4, closing near the session high.
Fundamental analysis: March corn futures extended Wednesday’s gains amid strong weekly export sales, while outside market pressure curbed momentum. Prior to this morning’s open, USDA reported net weekly sales of 1.928 MMT for week ended Nov. 23, which was a marketing-year high and 35% above the previous week’s sales and 54% above the four-week average. The total surpassed analysts’ pre-report range of 600,000 MT to 1.2 MMT. Propitious and well-timed comments from USDA Secretary Tom Vilsack lent additional support, as the Secretary indicated the U.S. corn exports would rise again over time after a 20% drop in exports as Chinese buyers took advantage of lower prices in Brazil. Vilsack also noted the U.S. government is working hard to reduce American exporters’ over-reliance on China and other big markets, encouraging greater diversification. USDA reported diversification efforts would be focused on three regions—Africa; Latin America and the Caribbean; and South and Southeast Asia—in the first phase of the new program, deemed the Regional Agricultural Promotion Program (RAPP).
Technical analysis: March corn bulls gathered some steam in today’s session, with a close held above resistance at $4.78 1/2 and $4.81 1/4. Initial resistance will now serve at the 10-day moving average of $4.83 1/4, and again at the 20-day, currently trading at $4.85 1/2. From there, additional resistance serves at the 40-day moving average of $4.94 and again at the 100-day, currently trading at $5.03 1/2. Conversely, initial support will serve at today’s failed resistance levels, then at $4.74 1/2, $4.71 3/4, then at Wednesday’s low of $4.70 1/2 and again at $4.67 3/4 and $4.65.
What to do: Get current with advised sales.
Hedgers: You should be 50% sold in the cash market on 2023-crop.
Cash-only marketers: You should be 35% sold on 2023-crop production.
Price action: January soybeans fell 4 1/4 cents to $13.42 3/4. March soybean meal dropped $2.70 at $414.20. March bean oil closed down 43 points at 52.05 cents. All three markets closed nearer their session lows.
Fundamental analysis: Buyer interest in the soybean complex was limited today by a strong rally in the U.S. dollar index and a sell off in the crude oil market, despite OPEC agreeing on another oil-production cut. However, sellers in the soy complex were somewhat squelched by solid gains in corn and wheat futures.
USDA today reported a daily U.S. soybean sale of 134,000 MT to China for 2023-24. Meantime, the agency’s weekly export sales report showed that for the week ended Nov. 23, U.S. net soybean sales were 1.895 MMT. That’s up 97% from the previous week and up 10% from the four-week average. Net sales topped pre-report expectations.
Traders continue to monitor early soybean crop conditions in South America. World Weather Inc. today said drying is expected in center-west Brazil through Saturday and then rain is expected Sunday through Tuesday. Crops will likely develop favorably in this environment, although rainfall will continue below normal and the need for routine rainfall will remain high due to low soil moisture in many areas. Crop stress in center- west Brazil will be greatest through Saturday. Argentina soybean weather is likely to be favorably mixed and rain in southern Brazil will continue frequently, but with lighter amounts giving the region a chance to see some short-term drying and fieldwork, said the forecaster.
USDA is set to release their monthly Oilseed Crushing report tomorrow, with traders expecting crush to have jumped to a record 201.1 million bushels, according to a Reuters poll. Soyoil stocks are estimated at 1.540 billion lbs, down from 1.602 billion lbs a month prior and the tightest on record.
Technical analysis: The soybean bulls have the slight overall near-term technical advantage. A four-week-old uptrend on the daily bar chart has been negated, however. The next near-term upside technical objective for the soybean bulls is closing January prices above solid resistance at $14.00. The next downside price objective for the bears is closing prices below solid technical support at $13.00. First resistance is seen at this week’s high of $13.52 and then at $13.70. First support is seen at Wednesday’s low of $13.37 and then at this week’s low of $13.23 1/2.
The meal bulls still have the overall near-term technical advantage but are fading. A six-week-old uptrend on the daily bar chart has been negated. Prices are now trending down on the daily chart. The next upside price objective for the meal bulls is to produce a close in March futures above solid technical resistance at $432.00. The next downside price objective for the bears is closing prices below solid technical support at $400.00. First resistance comes in at Wednesday’s high of $421.70 and then at this week’s high of $426.70. First support is seen at today’s low of $411.40 and then at $408.00.
Soybean oil bears have the overall near-term technical advantage. However, a 2.5-month-old downtrend on the daily bar chart has been negated. The next upside price objective for the bean oil bulls is closing March prices above solid technical resistance at 56.00 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at 45.00 cents. First resistance is seen at last week’s high of 53.32 cents and then at 55.00 cents. First support is seen at Tuesday’s low of 50.83 cents and then at this week’s low of 49.89 cents.
What to do: Get current with advised sales.
Hedgers: You should be 55% priced in the cash market on 2023-crop production. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Cash-only marketers: You should be 50% priced on 2023-crop production. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Price action: March SRW futures rallied 12 1/4 cents before closing at $5.98, near session highs. March HRW futures firmed 8 3/4 cents and settled at $6.43. March spring wheat rose 4 1/4 cents to $7.29 1/2.
Fundamental analysis: Wheat futures surged on spillover strength from the corn market, despite outside markets favoring the downside. Export sales, which topped expectations and came in at the highest level in over a month at 622,800 MT, also helped spur buying activity today. Russia’s IKAR agricultural consultancy said it expects Russia’s 2024-25 grain crop to total 145 MMT, including 92 MMT of wheat. IKAR projects Russia will export 63 MMT of grain in 2024-25, including 48 MMT of wheat. Russia is coming off back-to-back bumper crops and agencies are beginning to look at a potential downtick in production. Cheap Russian wheat has kept a lid on prices for the better part of a year, so while it is still early in predicting the 2024-25 crop, it warrants attention.
Canada releases its Canadian crop production report on Monday, with results coming from farmer surveys. All wheat production is estimated to come in well above the September forecast of 29.83 MMT at 31.1 MMT from a survey of analysts, with a bulk of the increase coming from spring wheat. If analysts are proven correct, it would continue to indicate that there are plentiful amounts of wheat in the world market, providing increased competition for U.S. grain in the world market.
Technical analysis: March SRW futures struggled garnering much bullish momentum overnight but rallied on this morning’s open. While bears still retain the technical advantage, that advantage has weakened slightly this week. Prices overcame 20-day moving average resistance, now support at $5.87 though stopped short of the 40-day moving average, which will remain resistance at $5.96. That is quickly backed by the psychological $6.00 mark, with further backing at $6.12. Support stands at $5.87 then $5.83, with firmer backing from $5.70 1/2.
March HRW futures reversed nearly all of the second half of November weakness in the last three sessions, with prices taking out the 20-day moving average, which capped all rally attempts since late July. That prior resistance, now support at $6.37 will be key support on Friday, with a failure below which indicating a false breakout- reversal, a bearish omen. Further resistance stands at the psychological $6.50 mark, then the 40-day moving average at $6.56 3/4. Bulls are looking to hold support at $6.37, backing by $6.28 3/4, then $6.20 1/4.
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: March cotton rose 47 points to 80.06 cents and near mid-range.
Fundamental analysis: Tepid short covering was featured in the cotton futures market today. Gains were limited by a solid rally in the U.S. dollar index and a sell-off in the crude oil market despite OPEC announcing another oil-production cut. Downbeat manufacturing and service purchasing managers index (PMI) numbers out of China today also favored the cotton market bears.
USDA in its weekly export sales report this morning showed U.S. cotton net sales of 217,700 running bales (RB) for 2023/2024 were down 32 percent from the previous week and 42 percent from the prior 4-week average. Increases were primarily for Vietnam (100,000 RB), China (64,600 RB) and Guatemala (36,900 RB). Total net sales of 15,400 RB for 2024/2025 were for Turkey. Shipments of 88,800 RB were up 14 percent from the previous week, but down 14 percent from the prior 4-week average. The destinations were primarily to China (37,600 RB) and Mexico (13,600 RB). It may be that China’s bigger fall U.S. cotton purchases may have been due to that country’s desire to look good as China’s President Xi met with President Biden last month.
Technical analysis: The cotton futures bears have the firm overall near-term technical advantage. The next upside price objective for the cotton bulls is to produce a close in March futures above technical resistance at 84.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at the November low of 77.66 cents. First resistance is seen at Wednesday’s high of 80.40 cents and then at this week’s high of 80.99 cents. First support is seen at this week’s low of 78.86 cents and then at 77.66 cents.
What to do: Get current with advised sales.
Hedgers: You should have 60% of 2023-crop production forward sold in the cash market.
Cash-only marketers: You should have 60% of 2023-crop production sold.
