Crops Analysis | January 29, 2024
Price action: March corn fell 6 cents to $4.40 1/4, a new contract low-close.
Fundamental analysis: Corn futures extended Friday’s losses, with the nearby contract giving up the largest portion of recent gains to forge a new contract low-close. The largest driving factor for today’s losses stemmed from South America as Brazil continues to experience mostly favorable weather conditions amid a progressing harvest, while hot, dry conditions in Argentina were largely ignored. Lacking outside market support also hovered over commodities today as global demand concerns continue to loom and traders reduce risk ahead of the Federal Reserve’s Open Market Committee Meeting, which begins tomorrow morning.
World Weather Inc. reports warm- to hot temps and mostly dry conditions will occur in much of the Argentina this week, likely stressing some crops, though cooler temps and relief from dryness will occur Saturday into Tuesday of next week in west-central and northwestern Argentina. Crop stress will increase in the remainder of the country where hot and mostly dry conditions will persist.
Earlier today, USDA reported weekly export inspections of 901,958 MT (35.5 million bu.) during the week ended Jan. 25, up 155,025 MT from the previous week and in the middle of the pre-report range of 700,000 MT to 1.1 MMT.
Technical analysis: March corn marked a fresh contract low close after facing pressure throughout the session. Initial support will now serve at the Jan. 18 low of $4.36 3/4, then at $4.25 and $4.00. Corrective buying efforts, however, will face initial resistance first at $4.41 1/2, then at $4.43 3/4 and the 10-day moving average of $4.45 3/4. From there, resistance serves at $4.47 3/4, $4.50 1/4, then at the 20-day moving average of $4.53 1/4 and $4.56 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 dropped 15 cents to $11.94 1/4 cents, settling near session lows. March meal futures rallied $5.30 to $354.30. March bean oil futures dropped 138 points to 45.55 cents.
Fundamental analysis: Soybean futures saw persistent selling overnight that continued into today’s session, sending March beans to the lowest level since June. The weakness in nearby futures is concerning, indicating that demand for soybeans is lacking in the near-term. That is further reinforced by the lack of export demand despite low prices, which has discouraged traders from maintaining their positions from the lows made in mid-January. USDA reported export inspections of 889,717 MT (32.7 million bu.) during the week ended Jan. 25, down 295,239 MT from the previous week but within the expected range of 500,000 MT to 1.3 MMT. Inspections continue to fall faster than the historical average, continuing to add uncertainty to whether the U.S. will be able to hit the current USDA export estimate.
Weather over the weekend in Brazil did not favor soybean bulls either. Heavy rain and a further restoration of soil moisture occurred in portions of northeastern Brazil during the weekend while rain fell on much of the region from northern Rio Grande do Sul to Bahia and Espirito Santo and into northern and central Goias, says World Weather Inc. This week is expected to see more of the same in northern Brazil, while southern Brazil will see little rain and warm temperatures, allowing for rapid fieldwork with soil moisture adequate enough to support developing crops, the forecaster says.
Technical analysis: March soybean futures saw persistent selling for the third consecutive session. Bulls failed to maintain the mid-January low as prices printed a fresh for-the-move bottom. Bears retain full control of the technical advantage. Resistance stands at the psychological $12.00 mark, $12.05 3/4, further backed by $12.21 1/2. Bulls are seeking to hold the intraday low at $11.91 1/2 on additional selling. Further support stands at $11.85, then $11.59 3/4.
March meal futures saw a volatile day of trade. Price made a fresh for-the-move low this morning before rebounding and closing higher. Despite today’s strength, bears continue to maintain full control of the technical advantage. Bulls are seeking a close above resistance at the 10-day moving average, currently at $358.90, which capped gains today. Further resistance stands at $362.00, then last week’s high of $366.80. Support stands at $351.40, the psychological $350.00 mark, then $346.20.
March bean oil saw heavy selling from likely spreading with meal futures. Bears retain full control of the technical advantage. Bulls are seeking a corrective bounce to 46.53 cents then 47.12 cents. Additional buying targets the 20-day moving average at 47.73 cents. Meanwhile, support stands at today’s for-the-move low at 45.18 cents, quickly backed by the psychological 45.00 cent mark. Additional support stands at 44.59 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 wheat fell 6 3/4 cents at $5.93 1/2. March HRW wheat closed down 6 1/2 cents at $6.18 1/4. March spring wheat futures dropped 10 1/4 cents to $6.93 1/4. Each market closed nearer their session lows.
Fundamental analysis: The wheat futures markets saw selling pressure come from a solid drop in corn futures prices, a higher U.S. dollar index and lower crude oil prices. It was also a “risk-off” trading day today in the general marketplace, following a Houthi drone attack on U.S. soldiers in Jordan that killed three and injured many others. That news squelched speculator buying interest in the grains.
USDA reported U.S. wheat export inspections of 264,666 MT during the week ended Jan. 25, down 50,520 MT from the previous week and below market expectations.
World Weather Inc. today said that in U.S. HRW wheat country, dry and unusually warm temperatures today through Thursday will melt any remaining snow and will warm the soil temperatures some. Rain and snow shower activity will then occur Friday into early Sunday with cooler temperatures due to a storm system. This system has potential to produce meaningful moisture in western production areas, which would be beneficial for spring. Meantime, in the northern U.S. Plains, unusual warmth this week “will melt snow cover and reduce winter hardiness in wheat across the region. Winter crops will remain dormant or semi-dormant, though cooler weather will be desired to protect winter crops against the potential for a sudden return of cold and to protect soil moisture,” said the forecaster.
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 fell 11 points to 84.26 cents, marking a two-week low close.
Fundamental analysis: Cotton futures extended Friday’s weakness, though nearby futures were able to limit losses due to solid technical support, despite notable outside market pressure. A general risk-off tone hovered over commodities today amid rising Middle East tensions, economic concerns from China and ahead of the Federal Reserve’s Open Market Committee meeting set to begin tomorrow morning. While the FOMC is not expected to change U.S. monetary policy at this meeting, it will likely give fresh guidance on future policy plans.
World Weather Inc. reports Australia cotton areas are receiving some beneficial rainfall this week after getting some during the weekend, while northern Argentina needs rain. Meanwhile, Brazil’s crop areas are all rated favorably and expected to see good weather for the next couple of weeks. Meanwhile, the forecaster reports West Texas later this week and again possibly next week will be welcome and good for future planting moisture, while other areas in Texas are favorably moist and expected to remain that way for a while. South Texas is not nearly as wet as the Coastal Bend and eastern parts of the Blacklands. U.S. weather will be increasingly important amid potential for a reduced 2024-25 cotton crop.
Technical analysis: March cotton futures limited losses at the 10-day moving average of 83.86 cents, which is backed by the 100-day moving average, currently trading at 83.41 cents. However, increased selling efforts could face a test of both areas, which would increase potential for a test of support at 83.10 cents and the 20- and 40-day moving averages of 82.24 and 81.24 cents. Conversely, buying efforts will face initial resistance at 84.80 cents, then at 85.44 cents and again at Friday’s high of 85.86 cents, 86.50 cents and 87.13 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.
