Crops Analysis | December 27, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: March corn fell 3 3/4 cents to $4.76 1/2; a low-range close.

Fundamental analysis: Corn futures took back a portion of Tuesday’s gains as technical pressure from the 20-day moving average curbed buying along with spillover weakness from SRW wheat and crude oil futures. Meanwhile, a persisting decline in the U.S. dollar to a five-month low, underpinned commodities and pulled corn from the session low. The dollar’s move lower stems from broad sentiments that the Federal Reserve will implement rate cuts in the coming year.

As of late, improving South American weather prospects has hovered over prices. Rains have increased in key growing areas of Brazil, while weather in Argentina has proven favorable in a noteworthy recovery from prolonged drought. An increase in precip in Argentina has raised production prospects from the Rosario Grains Exchange, which estimates the country’s grain production for 2023-24 at 137 MMT, which would be the second largest harvest in history for the country.

Technical analysis: March corn spent the session consolidating between initial support of $4.74 1/4 and the 20-day moving average of $4.85 1/4. A consecutive test of the 10-day moving average of $4.76 1/4 and initial support could open up a move towards last week’s low of $4.68 1/4. A move below the area would then face support at $4.64 1/2 and then around $4.50. Conversely, a move above the 10- and 20-day moving averages will then battle resistance at the 40-day moving average of $4.83 1/2, then the 100-day of $4.93 1/2 and at the psychological $5.00 area.

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.

 

 

Soybeans

Price action: March soybean futures rallied 1 1/2 cents to $13.20 1/2, despite trading lower most of the session. March soybean meal dropped $2.10 to $393.80, settling near the session’s midpoint. March soyoil rose 15 points to 48.66 cents.

Fundamental analysis: Soybean futures showed relative strength to the flailing wheat and corn markets, following through on Tuesday’s gains. The U.S. dollar index sinking to the lowest level in five-months helped support prices on Wednesday. Lacking export demand despite a weaker dollar and down trending prices, evidenced by no daily sales, seems to be weighing on futures prices.

Improving rainfall is expected in northern Brazil during the late weekend and next week, with Bahia, Piaui, Tocantins and northern Minas Gerais receiving greater than usual rainfall in that period, according to World Weather Inc. Mato Grosso do Sul and southern Goias will receive rain this weekend and into early next week, though more rain will be needed for more than temporary improvements, the forecaster says.

Technical analysis: March soybeans continue to trend lower on the daily chart despite the recent bounce. Bulls are seeking to hold support at $13.11 3/4 then $12.98 1/4 on continued weakness, while resistance lies at $13.21 then $13.29 1/2.

March soybean meal futures saw profit taking early on but closed well off session lows. A downtrend persists on the daily bar chart, with bears targeting support at $392.10, $389.00, then $384.70. Meanwhile, resistance stands at $397.00, then the 20-day moving average at $399.30.

March bean oil futures saw corrective buying following a fresh seven-month low early on. Further selling targets support at 48.50 cents with backing from 47.57 cents. Bulls are targeting resistance at 49.62 cents, then the psychological 50.00 cent level.

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.

 

 

Wheat

Price action: March SRW fell 13 1/4 cents to $6.23, ending low range, while March HRW fell 7 3/4 cents to $6.35. March spring wheat ended 7 1/2 lower at $7.21 3/4.

Fundamental analysis: SRW wheat futures faced mild profit-taking following the largest daily gain since Nov. 8 on Tuesday. Notable technical support limited losses along with persistent weakness in the U.S. dollar as traders anticipate rate cuts in the coming year. Meanwhile, traders will continue to monitor tensions between Ukraine and Russia and exports from both countries. Earlier today, Russia’s agricultural consultancy SovEcon lowered its forecast for Russian exports for 2023-24 to 48.6 MMT, down slightly from previous estimates of 48.8 MMT.

World Weather Inc. reports recent precip in the U.S. central and southern Plains as well as South Dakota has been a boon to future wheat development, though moisture is still needed in Montana, western North Dakota and Canada’s Prairies. Most of the Midwest, Delta and southeastern states will continue to see favorable weather for a while. The forecaster indicates snow and rain will continue frequently in Russia and Europe, while late season harvesting in South Africa and Australia should be winding down.

Technical analysis: March SRW wheat traded within Tuesday’s range, as support at the 10-, 20- and 100-day moving averages of $6.18 3/4, $6.18 1/4 and $6.16 1/4 limited losses. However, a move below the technically significant area would again find support at the 40-day moving average of $6.03 1/2, then at $5.90 1/4 and the Nov. 27 low of $5.75. Returned strength will face initial resistance at Tuesday’s high of $6.39 3/4, then at $6.45 3/4, $6.57 1/4 and $6.75.

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.

 

 

Cotton 

Price action: March cotton futures rallied 48 points before ending the day at 80.53 cents.

Fundamental analysis: Cotton futures edged higher for the third straight session but continue to trade largely sideways near the 80-cent mark. Early session cotton gains were undercut by sinking crude oil futures and overall bearish trade in the ag complex. The U.S. dollar index trading on five-month lows helped support cotton futures throughout the session on hopes relatively cheaper cotton will help spur export demand. Some positioning is likely to take place in the coming week ahead of the new year, keeping cotton trade choppy and largely sideways. Traders will look to this week’s Export Sales Report on Friday (delayed due to the holiday) for improved demand, but a substantial move is unlikely before production estimates are updated in the January USDA Crop Production Report. Skepticism remains over the USDA production estimate, due to the drought-stricken Texas crop, so a substantial revision is not off the table.

Technical analysis: March cotton futures surged late in the session, closing at the highest level since Dec. 14. Despite this, prices remain in a three-month downtrend on the daily bar chart. Resistance stands at 80.95 cents, with backing from 82.00 cents. Meanwhile, support lies at 80.25 cents, with firmer backing from 79.50 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.

 

 

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