Crops Analysis | December 28, 2023
Price action: March corn futures dropped 2 1/4 cents to $4.74 1/4, settling on session lows.
Fundamental analysis: Corn futures failed to hold onto this morning’s gains as crude oil continues to fall under heavy selling pressure, while ethanol stocks rose to the second highest level since 2010 during week ended Dec. 22. Meanwhile, ethanol production for the week jumped to 1.107 million barrels per day (bpd) from 1.071 million bpd the week prior. Higher stocks likely discouraged traders from continued high corn for ethanol use.
Northern Argentina is expected to see a good mix of rain and sunshine over the next two weeks, favoring normal crop development and fieldwork, World Weather Inc says. Most of Argentina will receive a healthy mix of rain and sunshine over the next two weeks.
USDA is set to release the weekly export sales report tomorrow morning, a day late due to the holiday on Monday. Net sales are expected to come in between 600,000 MT and 1.4 MMT, according to a Reuters poll. Last week, net sales totaled 1.013 MMT.
Technical analysis: March corn futures fell for the second consecutive session. Prices fell below initial support at $4.76 1/2, marking that area as initial resistance, with backing from the 20-day moving average at $4.79. Beyond that, bulls are eyeing $4.81. Meanwhile, support stands at $4.72 3/4, $4.69 3/4, then the contract low of $4.68 1/4.
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: March soybeans closed 8 1/2 cents lower at $13.12, ending the session below the 10- and 200-day moving averages, while March soymeal fell $3.10 to $390.70. March soyoil closed 68 points lower at 47.98 cents.
Fundamental analysis: Soybeans turned decidedly lower shortly after this morning’s open, weighed down by persisting optimism around improving weather in Brazil. World Weather Inc. reports northern Brazil will see frequent rain and significant increases in soil moisture this weekend through Jan. 8 and crop conditions will improve while rain is less frequent and lighter in central and southern Brazil where fieldwork should advance well while soil moisture in place supports developing crops. Meanwhile, in Argentina, some of the details of the two-week rainfall forecast have changed since Wednesday with greater rain in the driest areas of west-central Argentina, allowing for mostly favorable crop conditions across the country.
Delayed a day due to the Christmas holiday, USDA will release weekly export sales data prior to the open tomorrow morning. Traders are expecting sales to have ranged from 800,000 MT to 1.7 MMT during the week ended Dec. 21. Last week, net sales of 1.99 MMT were reported for the previous week, which were up 84% from the previous week and 51% from the four-week average.
Technical analysis: March soybeans lost technical traction, with a close held below the 10- and 200-day moving averages of $13.20 1/4 and $13.19 1/4. Initial support will now serve at $13.03 1/2, then at $12.98 and the Oct. 11 low of $12.82 1/4. Conversely, initial resistance will stand at the 200 and 10-day moving averages, again at the 20-, 100- and 40-day moving averages of $13.27 3/4, $13.45 1/2 and $13.48 1/2.
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 8 1/2 cents to $6.31 1/2 but closed off session highs. March HRW futures rallied 8 3/4 cents to $6.43 3/4. March spring wheat futures rose 3 3/4 cents to $7.35 1/4.
Fundamental analysis: Wheat futures showed relative strength throughout the session despite both corn and soybeans turning lower. News of a bulk carrier striking a mine in route to a Romanian port in the Black Sea helped lift wheat prices Thursday. Despite the risks to cargo ships, Zelensky noted that Black Sea corridor exports have reached 12 million tons since the Black Sea grain initiative ended, and that December produced “particularly significant results.”
Recent precip has improved the moisture profile across much of the central and southwestern Plains, while the potential is growing from a more significant cold air mass to arrive in the northern Plains after Jan. 7, states World Weather. Greater snow cover will be needed by then to protect crops from the cold, especially in the second half of January.
USDA is set to release the weekly export sales report in the morning. Traders expect net sales between 200,000 and 600,000 MT, according to a Reuters poll. Last week, export sales totaled 322,702 MT.
Technical analysis: March SRW wheat surged, though stayed within both Tuesday and Wednesday’s range. Bulls are seeking a close above resistance at $6.36 1/4 with further backing from $6.42 1/4, then $6.49 1/2. Support stands at $6.22 1/4, the 10-day moving average which capped losses today, then $6.17.
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 42 points to 80.95 cents, the highest close since Dec. 13.
Fundamental analysis: Cotton futures extended modest gains for the fourth consecutive session amid a move in the U.S. dollar to a five-month low and noteworthy moves in equities amid persisting sentiments the Fed will cut interest rates in the coming year. Moreover, U.S. weekly unemployment claims rose 12,000 to 218,000, which was weaker than market expectations. However, followthrough weakness in crude oil futures likely curbed strength in the natural fiber.
World Weather Inc. reports returning rain to some of Brazil’s crop areas this weekend and next week will be supportive of planting, germination and emergence in Bahia and center west. Argentina cotton will get periods of rain during the next couple of weeks, supporting crops favorably.
USDA will release its weekly export sales data, delayed a day due to Monday’s holiday. Last week, USDA reported net sales of 146,700 RB for week ended Dec. 14, which were up noticeably from the previous week, but down 18% from the four-week average.
Technical analysis: March cotton has finally turned former resistance at the 10-, 20- and 40-day moving averages of 79.89, 80.24 and 80.34 cents into solid support, though additional resistance remains at 81.02 cents, 81.52 cents and 82.27 cents, along with the 100-day moving average, currently trading at 84.18 cents. Support will continue to serve at the 10-, 20- and 40-day moving averages, though additional support lies at 79.02 cents, 78.52 cents and the Nov. 8 low of 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.
