Crops Analysis | December 13, 2023
Price action: March corn fell 5 3/4 cents to $4.79 1/2, marking the lowest close since Nov. 29.
Fundamental analysis: Corn futures edged lower, in tandem with the soy complex and wheat futures as the marketplace remained largely subdued amid the two-day Federal Reserve monetary policy meeting which began today and ends Wednesday afternoon with a statement from Fed Chair Powell. The Federal Open Market Committee (FOMC) left U.S. interest rates unchanged and the FOMC statement leaned a bit dovish on monetary policy.
Meanwhile, uncertainties will continue to loom around SAF credit details as Bloomberg reported that even if rules are released this week, crucial components may remain undisclosed until spring. This comes after recent reports which suggest the Treasury Department is preparing to provide instructions on how to qualify for sustainable aviation fuel (SAF) credits under the Inflation Reduction Act. One significant issue revolves around the model to determine greenhouse gas emission reductions from the SAF feedstock. If the Department of Energy’s model is adopted, it could potentially include corn-based ethanol for SAF credits. In contrast, using a model developed by the United Nations might exclude certain feedstocks like ethanol from eligibility.
Weekly ethanol production in the week ended Dec. 8 declined 2,000 barrels per day (bpd) to 1.074 million bpd but were up 1.2% from the same week last year. Ethanol stocks rose 661,000 barrels to 22.100 million barrels.
USDA will release its weekly export sales data tomorrow morning at 7:30 a.m. CT. Traders anticipate sales during week ended Dec. 7 ranged from 800,000 MT to 1.6 MMT. Last week, net sales totaled 1.29 MMT, which were down 33% from the previous week and 17% from the four-week average.
Technical analysis: March corn ended the session below initial support of $4.82, while the 20- and 10-day moving averages around $4.84 1/2 limited buying efforts. Initial support will now serve at $4.78 3/4, again at $4.75 3/4 and the Nov. 29 low of $4.70 1/2. Initial resistance will now serve at today’s failed support level, then at the 20- and 10 day moving averages, and again at the 40-day, currently trading at $4.89 1/4. A move above the 40-day could see increased buying efforts, which would face additional resistance at $4.94 1/2 and the 100- and 200-day moving averages of $4.98 3/4 and $5.25 1/2.
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 16 1/4 cents to $13.07 1/2. March soybean meal dropped $8.00 to $393.60. March bean oil closed down 56 points at 49.85 cents. All three markets closed nearer their session lows.
Fundamental analysis: Forecast rains in Brazil beginning early next week were a bearish element for the soy complex futures today. World Weather Inc. said drying in center-west, northern portions of center-south and in northeastern Brazil will continue for several more days but then “relief is expected during the middle to latter part of next week. The break will bring some much-needed moisture to some very dry areas, although more moisture may still be needed,” said the forecaster.
Solid losses in the corn and wheat futures markets spilled over into selling pressure in the soybean complex futures today. Another bearish element for soybeans, meal and especially soybean oil was crude oil futures’ price drop to a 5.5-month low today. The weakening soybean meal futures market that hit a seven-week low today will likely keep the upside for soybeans limited in the near term.
The soybean bulls got no traction from USDA reporting a daily U.S. soybean sale of 125,000 MT to unknown destinations for the 2024-25 marketing year this morning. Thursday morning’s weekly USDA export sales report is expected to show U.S. soybean sales of 900,000 MT to 1.8 MMT in 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 slight overall near-term technical advantage. A four-week-old downtrend is in place on the daily bar chart. The next near-term upside technical objective for the soybean bulls is closing January prices above solid resistance at $13.52. 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 $13.23 1/2 and then at this week’s high of $13.44. First support is seen at $13.00 and then at the December low of $12.92.
The soybean meal bears have the overall near-term technical advantage. A four-week old downtrend is in place on the daily bar chart. The next upside price objective for the meal bulls is to produce a close in March futures above solid technical resistance at $415.00. The next downside price objective for the bears is closing prices below solid technical support at $375.00. First resistance comes in at $400.00 and then at this week’s high of $408.30. First support is seen at today’s low of $390.20 and then at $385.00.
Soybean oil futures bears have the solid overall near-term technical advantage. The next upside price objective for the bean oil bulls is closing March prices above solid technical resistance at the November high of 53.32 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 this week’s high of 51.66 cents and then at 52.00 cents. First support is seen at 49.00 cents and then at the November low of 48.56 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 fell 20 1/4 cents before settling at $6.05 1/4, nearer session lows. March HRW futures dropped 24 3/4 cents to $6.32. March spring wheat fell 16 cents to $7.13 1/2.
Fundamental analysis: Wheat futures continue to face volatility day to day, with bears owning the advantage today. Agricultural commodities struggled garnering much bullish momentum on Wednesday, as wheat futures led the way lower. Front-month crude oil futures saw a fresh for-the-move low overnight before corrective gains brought prices off intrasession lows.
HRW acres along with most of the southern Plains will benefit from rain today through Friday, with rainfall from .50 to 1.50 inches expected in general, with some acres receiving more, World Weather Inc. says. The moisture will improve soil conditions, which will be beneficial this spring. The northern Plains and upper Midwest are likely to receive rain and snow in the second half of the outlook, bringing much needed moisture to the region.
USDA releases their weekly export sales in the morning for the week ended Dec. 7, with analysts expecting net sales between 1.2 and 1.6 MMT. Net sales are likely to be a marketing year high, thanks to Chinese SRW purchases in the reporting period. Last week, USDA reported net sales of 356,412 MT for the 2023-24 marketing year.
Technical analysis: March SRW futures fell sharply on the session, negating all and more of Tuesday’s gain. Bulls failed to hold support at the 20-day moving average, currently at $6.07 3/4, which now marks initial resistance. This is further backed by $6.14 3/4, then the 100-day moving average at $6.26, which capped gains the last two sessions. Meanwhile, support lies at $6.03 1/2, where buyers stepped up today, with backing from the psychological $6.00 mark. Further selling targets $5.91 1/2.
March HRW futures continue to see large price swings on the daily chart, as losses today outweighed gains seen on Tuesday. Bulls are eyeing resistance at $6.45, with backing from today’s high at $6.59 1/2. Last week’s high of $6.77 1/2 remains bulls’ primary target. Support lies at $6.28 1/4 with backing from $6.16 1/2, then the psychological $6.00 mark.
What to do: Get current with advised sales.
Hedgers: You should be 60% priced in the cash market for 2023-crop. You should also have 10% of expected 2024-crop production sold for harvest delivery next year.
Cash-only marketers: You should be 60% priced for 2023-crop. You should also have 10% of expected 2024-crop production sold for harvest delivery next year.
Price action: March cotton rose 13 points to 81.18 cents and near mid-range.
Fundamental analysis: The cotton futures market saw the bullish element of rallies in the U.S. stock indexes to new multi-month highs today offset by crude oil prices dropping to a 5.5-month low early today. The Federal Reserve today surprisingly leaned a bit dovish on its U.S. monetary policy outlook, while leaving interest rates unchanged. This may provide some buying support for the cotton futures market on Thursday.
World Weather Inc. today said rain in west Texas this week “will be ideal in bolstering topsoil moisture for improved cotton planting prospects in spring 2024.” Argentina crop conditions are improving and the prospects for cotton in Brazil are also improving as timely rain falls. Cotton harvesting is advancing well in Africa and mostly good in India as well, said the forecaster.
Cotton traders are looking forward to Thursday morning’s weekly USDA export sales report.
Technical analysis: The cotton bears have the overall near-term technical advantage amid choppy trading. The next upside price objective for the cotton bulls is to produce a close in March futures above technical resistance at 85.00 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 this week’s high of 82.50 cents and then at the December high of 83.13 cents. First support is seen at this week’s low of 80.60 cents and then at 80.00 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.
