Crops Analysis | January 30, 2024
Price action: March corn futures rose 7 1/2 cents to $4.47 3/4 and near the session high. Prices hit a contract low early on.
Fundamental analysis: The corn futures market saw a short-covering bounce from today’s contract low, with buying interest prompted in part by friendly outside markets that saw higher crude oil prices and a weaker U.S. dollar index. Solid gains in the soybean and wheat futures markets today also spilled over into buying support in corn.
Pro Farmer’s South American crop consultant, Dr. Michael Cordonnier, left his Brazilian and Argentine corn production estimates unchanged at 115 MMT and 56 MMT, respectively. Cordonnier said he has a lower bias going forward for the Brazilian crop and a neutral bias toward the Argentine corn crop.
World Weather Inc. today reported concern over Argentina weather “will likely provide some bullishness for market mentality” in the near term, “although if timely rain comes along next week as advertised it will likely be supportive of many crops in the nation that will be stressed until that period of time.” Missed rain next week could present a problem for the drier areas in Argentina. Meantime, Brazil will get timely rainfall and should continue to experience “very good crop weather for full season crops, the maturation and harvest of first season and early season crops and the planting of Safrinha crops,” said the forecaster. Parts of southwestern Brazil will dry out for a week and then start getting rain once again.
Technical analysis: The corn futures bears still have the solid overall near-term technical advantage. Prices are in a three-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 $4.60. The next downside target for the bears is closing prices below chart support at $4.25. First resistance is seen at $4.50 and then at $4.55. First support is at today’s contract low of $4.36 1/2 and then at $4.30.
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 24 1/2 cents to $12.18 3/4, while March soymeal rallied $8.70 to $363 and March soyoil rose 45 points to 46 cents, all high-range closes.
Fundamental analysis: March soybeans rallied in corrective trade from a near eight-month low carved in overnight trade as followthrough soymeal strength propped up the complex. South American weather continues to catch the eye of the marketplace, with Argentine conditions gradually declining amid hot/dry forecasts, while Brazil continues to experience a mostly favorable weather environment. Meanwhile, Crop consultant Dr. Michael Cordonnier left his soybean production estimates unchanged for both Brazil and Argentina at 149 MMT and 52 MMT, respectively. Cordonnier noted that recent rains in Brazil have favored northern and northeastern areas, while central and southern growing areas have been drying out for the last several weeks, which could be worrisome for later planted soybeans. He notes dry weather and hot temps in Argentina will lead to moisture stress, especially for the soybeans that are already setting pods. Cordonnier maintained a neutral to lower bias regarding the Brazilian crop but reduced his outlook from neutral to higher to “neutral” towards the Argentine crop amid current weather conditions.
Technical analysis: March soybeans notched their largest daily gain since Dec. 11 and were able to end the session above the 10-day moving average of $12.18 1/4. Initial resistance will now serve at the 20-day moving average of $12.33 1/2, then at the 40-day of $12.79, with notable resistance serving at the 200- and 100-day moving averages of $13.12 and $13.18 1/2. Meanwhile, initial support will now serve at the 10-day moving average, then at $12.00, and again at $11.86 1/4, $11.78 1/4 and $11.65 1/4.
March soymeal futures extended Monday’s gains, carrying gains past the 10-day moving average of $358.10, but ended short of the 20-day moving average of $364.10, which will now serve as initial resistance. From there, resistance stands at $372.90 and again at the 40-, 200- and 100-day moving averages of $380.00, $388.60 and $392.20. Conversely, initial support will now lie at the 10-day moving average and again at $353.20, $340.40 and $334.50.
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 surged 12 cents to $6.05 1/2, settling near session highs. March HRW futures jumped 12 1/2 cents to $6.30 3/4, settling within a penny of session highs. March spring wheat rose 6 1/2 cents to $6.99 3/4.
Fundamental analysis: Wheat futures surged despite trading lower overnight, as commodities in general saw significant rallies throughout today’s session. The strength in the front-months in winter wheat futures shows significant front-end demand, which gives wheat bulls hope for potential renewed export demand as importers buy the dip. The surge in futures was especially surprising given the improvement of winter wheat crop conditions in HRW acres. State-level winter wheat crop condition ratings released on Monday signaled a general improvement in the HRW crop over the past month, led by top producer Kansas. When the state crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-poing scale, with 500 being perfect), the HRW crop improved 11.6 points from the end of December to 345.3 and stood 22.0 points above USDA’s final national rating at the end of November.
Dry and unusually warm temperatures through Thursday will warm soil temperatures and reduce winter hardiness in HRW acres across the U.S. A beneficial storm system is expected this weekend, bringing rain to the area, though dryness is expected to come next week. Temperatures are likely to remain above freezing over the coming weeks, the forecaster says.
Technical analysis: March SRW futures saw a strong rally, but remain below last week’s highs. The near-term trend remains sideways to moderately lower. A close above $6.15 resistance would challenge that trend, though resistance lies at $6.12 1/4 on the way. Prices just above $6.04 1/2, the 40-day moving average, today, marking that area as initial support. Further support stands at the psychological $6.00 mark, quickly backed by $5.96, which has attracted significant buying interest, with further selling targeting $5.88 1/2.
March HRW futures showed impressive gains today, though bears retain the near-term technical advantage. Bulls are seeking to close prices above resistance at $6.37, with further backing from $6.41, then the psychological $6.50 mark. Support stands at $6.29, $6.22, then $6.18 1/4.
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 52 points to 84.78 cents, ending in a high-range close.
Fundamental analysis: Cotton futures regained strength after a touch to a one-week low in early trade inspired corrective buying as outside market strength and increasing gains in the grain and soy complexes aided the natural fiber. Meanwhile, solid technical support continues to limit losses, though traders are waiting patiently for comments from the Federal Reserve following the adjournment of the FOMC meeting Wednesday afternoon. While no changes to U.S. monetary policy are expected from this meeting, traders will be looking for indicators which point to any fluctuations in the coming months.
The Bureau of Labor Statistics reported a stronger-than-expected Jobs and Labor Turnover (JOLTS) data, which signaled the U.S. economy is holding up quite well despite sharply higher interest rates for business and consumers. The report indicated U.S. employers posted 9 million jobs openings in December, up from 8.9 million in November, which was revised higher today. Job openings have declined since peaking at a record 12 million in March 2022, but remain at historically high levels.
Technical analysis: March cotton tested the 10-day moving average of 84.22 cents and support at 83.68 cents, though buying efforts ultimately lifted the natural fiber from session lows and above both levels into the close. However, initial resistance at 85.03 cents limited a move higher, with additional resistance serving at 85.79 cents, 86.38 cents. Conversely, initial support will remain at the 10-day moving average and 83.68 cents, along with the 100-, 20- and 40-day moving averages of 83.39 cents, 82.43 cents and 81.36 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.
