Crops Analysis | August 28, 2023
Price action: December corn futures gapped higher and closed 8 1/4 cents higher at $4.96 1/4.
USDA reported weekly export inspections of 597,144 MT (23.5 million bu.) for the week ended Aug. 24, which was up from last week’s revised 510,559 MT and above pre-report expectations. Old crop corn quickly went from experiencing near-monthly cuts in export demand to outpacing the current USDA forecast. While this will likely tighten the balance sheet, it is still likely to expand from a year ago. New-crop demand has picked up as well, with USDA reporting a daily sale of 123,000 MT to Mexico this morning.
Technical analysis: December corn futures saw sustained gains throughout the session after last night’s gap higher. Price traded at the highest level since August 21, which saw a gap higher and failure at resistance that was overcome in today’s bullish push. Resistance can be expected at the psychological $5.00 level then $5.06 1/4. Support can be found at $4.89 3/4 then $4.78 1/2. An interim low is likely in place as bulls have negated the near-term price downtrend.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold in the cash market on 2022-crop. You should be 50% forward priced for harvest delivery on expected 2023-crop.
Cash-only marketers: You should be 100% sold on 2022-crop. You should be 35% forward priced for harvest delivery on expected 2023-crop production.
Price action: November soybeans led the complex higher, rising 18 cents before settling at $14.05 3/4. September soybean meal rose $2.90 and settled at $425.7. September soyoil rallied 17 points before setline at 66.90 cents.
Fundamental analysis: Soybean futures gapped higher in last night’s open and saw sustained strength throughout the session, though struggled against psychological $14.00 resistance. The excessive heat over the last week has likely taken a severe toll on the soybean crop, evidenced by analysts cutting expected soybean conditions three percentage points to 56% “good” to “excellent” week-over-week in this afternoon’s Crop Progress report, according to a Bloomberg survey. The concern seems to be on early maturation of the crop, leading to a poorer than expected yield. Early season dryness and drought conditions persisting over the summer did not do much to prepare soybeans for last week’s heat, which helped spark today’s rally in futures.
The Midwest is likely to stay dry over the next ten to 12 days, though some showers are expected to pop up. Net drying is likely to continue to stress the crop, especially when heat rolls back over the Corn Belt late this week and into next week.
This morning, USDA reported sales of 296,000 MT of soybeans to unknown destinations in the 2023-24 marketing year. This marks the sixth Monday in a row of a daily export sale in soybeans. Old crop soybean exports are also seen as outpacing the prior USDA estimate, tightening an already tight old crop balance sheet.
Technical analysis: November soybeans saw sustained strength throughout today’s session. Bulls retain the technical advantage and target the July resistance zone around $14.25, backed by the July 24 high of $14.35. Bulls are aiming to keep price above $14.00 support, which is backed by the $13.80 prior resistance turned support zone. While bulls retain the technical advantage, the recent four-day 60 cent rally may encourage some profit-taking.
September soybean meal is in an uptrend on the daily bar chart as well with an interim low likely in place. Bulls struggled to garner momentum throughout much of the session but pressed price higher into the close. Support stands at $423 and is backed by $417. Bulls are targeting a daily close above $430 before challenging stiff $450 psychological resistance.
September soyoil saw early gains but spreading likely limited gains into the close. Bulls retain the technical advantage with an uptrend in place on the daily bar chart. Initial support lies at 66.33 cents, backed by 65.25 cents. Bulls are targeting 68.5 resistance before tackling the August 21 high of 69.48.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold in the cash market on 2022-crop. You should be 45% forward sold for harvest delivery on expected 2023-crop production.
Cash-only marketers: You should be 100% sold on 2022-crop. You should be 40% forward sold for harvest delivery on expected 2023-crop production.
Price action: December SRW wheat fell 4 3/4 cents to $6.17 and nearer the session low. December HRW wheat closed down 14 3/4 cents to $7.49 3/4 and nearer the session low. December spring wheat futures fell 10 1/2 cents to $7.91 1/2.
Reports said Ukrainian officials are in conversations with commodity traders and global insurance companies to establish a government-supported plan to facilitate ships traveling to the country’s ports.
World Weather Inc. today reported that in the northern Plains, a lack of rain in the next seven days with above average temperatures “will be great for harvest progress but will be an issue for any remaining late-season immature crops. Dryness and returning warmer-than-usual weather will stress late season crops,” said the forecaster.
This afternoon’s weekly USDA crop progress reports are expected to show the U.S. spring wheat crop in 37% good to excellent condition, compared to 38% last week and 68% a year ago at this time. Spring wheat harvested as of Sunday is seen at 54%, compared to 39% last week and 50% complete one year ago at this time.
Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. Prices are in four-week-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing December prices above solid chart resistance at $6.60. The bears' next downside objective is closing prices below solid technical support at the May low of $6.08 1/4. First resistance is seen at today’s high of $6.28 1/2 and then at last Friday’s high of $6.37 3/4. First support is seen at the August low of $6.12 and then at $6.08 1/4. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at $7.90. The bears' next downside objective is closing prices below solid technical support at the May low of $7.36. First resistance is seen at last week’s high of $7.71 3/4 and then at $7.85. First support is seen at $7.36 and then at $7.25.
What to do: Get current with advised sales.
Hedgers: You should be 50% sold in the cash market on 2023-crop production.
Cash-only marketers: You should be 50% sold on 2023-crop production.
Price action: December cotton futures fell 44 points before settling at 86.87 cents, near the mid-point of today’s range.
Fundamental analysis: Cotton futures succumbed to selling pressure in the latter half of the session after rejecting off the prior high close. Prices continue to struggle gaining traction above 88 cents in the December contract. Economic data out of China remains disappointing, with industrial profits falling 6.7% in July versus last year. Crude oil futures have stalled near the $80 level as well, which has not helped cotton break through technical resistance. The 10-year Treasury rate has remained steady over the last few days and continued strength in bonds (which lowers rates) will continue to give confidence to traders to carry risk. Whereas if bond prices turn lower again and resume the four-month long downtrend traders will eye safe-haven assets to avoid unnecessary risk. Crop conditions are likely to continue to deteriorate in this afternoon’s Crop Progress report. Ratings are at historic lows and the cut in production due to poor yield paired with our expectation for a significant cut in planted acres give bulls momentum to continue the recent uptrend, despite woes from top-buyer China.
Technical analysis: December cotton futures struggled against 88 cent resistance and ultimately closed lower on the session, though bulls still maintain the technical advantage. Today’s price action can be chalked up to profit-taking after last week’s run higher. Initial resistance remains at 88 cents with bulls targeting 90 cents above there. Support lies at today’s low of 86.11 cents and is backed by 85.72 cents.
What to do: Get current with advised sales.
Hedgers: You should be 100% priced on 2022-crop in the cash market. You should have 60% of expected 2023-crop production forward sold for harvest delivery.
Cash-only marketers: You should be 100% priced on 2022-crop. You should have 60% of expected 2023-crop production forward sold for harvest delivery.
