Crops Analysis | January 16, 2024
Price action: March corn futures fell 3 1/2 cents to $4.43 1/2 and near the session low. Prices closed at a contract low close today.
Fundamental analysis: A strong U.S. dollar index that today hit a four-week high, along with a “risk-off” day in the general marketplace to start the U.S. trading week, sunk the corn futures market today. Follow-through selling pressure after last Friday’s bearish USDA supply and demand report was also featured today.
USDA today reported a daily U.S. corn sale of 126,700 MT of corn to Mexico during 2023-24. Weekly U.S. corn export inspections today came in at 875,621 MT compared to 1.092 million MT in last week’s report.
World Weather Inc. today said there is not much adverse weather that will threaten the South America corn crop this week or next. “There are some dry pockets in Brazil and Argentina, but they will eventually be relieved. The drier bias in some areas may raise a little wishful worry over production, but the timeliness of returning rain later this month will wipe out that concern relatively quickly,” said the forecaster.
Pro Farmer’s South American crop consultant Dr. Michael Cordonnier lowered his Brazilian corn crop estimate 2 MMT, to 115 MMT, but raised his Argentina production estimate 3 MMT, to 56 MMT.
Technical analysis: The corn futures bears have the solid overall near-term technical advantage. Prices are in a 2.5-month-old downtrend on the daily bar chart. The next upside price objective for the bulls is to close March prices above solid chart resistance at $4.75. The next downside target for the bears is closing prices below chart support at $4.25. First resistance is seen at today’s high of $4.51 1/4 and then at $4.60. First support is at the contract low of $4.41 and then at $4.35.
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 rose 3 cents to $12.27 1/4, a near mid-range close, while March soymeal rallied $6.40 to $367.40. March soyoil fell 96 points to 47.68 cents.
Fundamental analysis: Soybean futures spent the session trading within Friday’s upper range, as traders continued to mull over production updates for both the U.S. and South America. Meanwhile, commodities in general were affected by a broad risk-off tone and sharply higher U.S. dollar, though stronger-than-expected NOPA crush in December lifted soymeal, which allowed soybeans to notch mild gains into the close.
South American crop consultant Dr. Michael Cordonnier lowered his Brazilian soybean production estimate 2 MMT to 149 MMT, noting that every state in Brazil is reported lower-than-expected early soybean yields despite increased expectations following an increase of rainfall as of late. To compare, both Conab and USDA each lowered their forecasts for the 2023-24 Brazilian soybean crop to 155.26 MMT and 157 MMT, respectively. Cordonnier did offset Brazil’s reduction, however, with a 2 MMT increase to his Argentine soybean crop estimate to 52 MMT, due to a continued improvement in weather conditions and favorable forecast as soybeans enter reproduction.
Record December crush, published by the National Oilseed Processors Association (NOPA) late this morning lifted soymeal futures after coming in well above pre-report expectations. NOPA crush in December totaled 195.328 million bushels, up 6.29 million bushels from November and 10% from year-ago. However, NOPA soyoil stocks proved more robust than expected at 1,369.97 million pounds, up from expectations of 1,291 million pounds and 146.46 million pounds on the month.
USDA released its weekly export inspection data late this morning, delayed by technical difficulties. During the week ended Jan. 11, 1.264 MMT of soybeans were inspected for export, up 223,840 MT from the previous week and near the upper end of the pre-report range.
Technical analysis: March soybeans were ultimately able to catch a slight edge from a rally in soymeal. An extension of today’s gains, however, will face resistance at $12.46 1/4, and again at $12.68 1/4 and the 20-day moving average of $12.83. From there resistance will serve at $13.00, then at the convergence of the 40- and 200-day moving averages, each trading at $13.16 1/2. Conversely, initial support lies at Friday’s close of $12.24 1/4, then at $12.02 1/2, $11.80 3/4 and $11.58 3/4.
March soymeal gapped higher overnight and rallied into the close, ending above resistance at $366.80, $371.50 and the 10-day moving average of $370.10. Bulls now hold a bit more of an edge at a move at additional resistance of $378.20, then the 20-, 200-, 100-, and 40-day moving averages of $381.20, $390.80, $396.10 and $396.40. Meanwhile, initial support lies at $360.10, then $355.40, $348.70 and $344.00.
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 wheat closed down 14 cents at $5.82. March HRW wheat closed down 13 3/4 cents at $6.01 1/2. Both markets closed near their session lows and hit six-week lows today. March spring wheat fell 8 3/4 cents to $6.90 3/4.
Fundamental analysis: A strong rally in the U.S. dollar index to a four-week high and risk aversion in the general marketplace due to heightened Middle East tensions sunk the wheat futures markets today. Spillover selling pressure from lower corn futures prices was featured, too. Wheat bulls have been disappointing they got no traction from a friendly U.S. winter wheat seedings figure in last Friday’s USDA supply and demand report.
There was also apparently little concern over possible wheat crop damage from the weekend’s bitter cold weather in the central U.S. World Weather Inc. today said, “with the coldest conditions abating soon the worry may subside after a while.” Meantime, reports said heavy frosts across almost all Ukrainian regions in the first half of January did not have a negative impact on winter grain crops.
USDA today reported lackluster U.S. wheat export inspections of 234,205, well down from 501,910 MT in last week’s report.
Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. Prices are in five-week-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing March prices above solid chart resistance at $6.25. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.56 1/4. First resistance is seen at $6.00 and then at $6.15. First support is seen at today’s low of $5.76 3/4 and then at $5.65. The HRW bulls' next upside price objective is closing March prices above solid technical resistance at $6.50. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.95. First resistance is seen at today’s high of $6.22 1/2 and then at $6.35. First support is seen at $5.95 and then at $5.85.
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 2 points to 81.33 cents, a high-range close.
Fundamental analysis: Cotton futures were able to notch mild gains despite notable pressure from outside markets amid a broad risk-off tone due to rising tensions in the Red Sea. The U.S. dollar index surged to its highest level in over a month as traders look to safe-haven assets following Houthi attacks on vessels in the Red Sea and U.S. and U.K retaliatory air strikes in Yemen. Meanwhile, traders continue to weigh USDA’s production, supply and demand data, which included lower U.S. production, but also a decreased outlook for world consumption in 2023-24.
World Weather Inc. reports West Texas will continue dry for at least another week and South Texas precip will be restricted. Most other southern U.S. crop areas have favorable soil moisture with little changes likely. Meanwhile, Cotton in Brazil is still rated favorably with planting advancing across many areas and earlier planted crops are developing favorably. Argentina’s current bout of drying is not expected to last long without at least some timely rain, though net drying is expected this week.
Technical analysis: March cotton continues to face initial support at 80.84 cents and the 10-day moving average of 80.64 cents. A move below the area will face additional support at the 40- and 20-day moving averages of 80.42 and 80.28 cents, and again at 79.68 cents, $78.00 cents and the Nov. 8 low of 77.66 cents. A move higher, however, will continue to face initial resistance at 81.53 cents, then at 82.00 cents, 82.69 cents and 83.16 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.
