Crops Analysis | December 12, 2023
Price action: March corn futures rose 3 3/4 cents at $4.85 1/4 and near mid-range.
Fundamental analysis: The corn futures market today saw some short covering and a “Turnaround Tuesday” trading phenomenon following Monday’s losses. Risk-on attitudes in the general marketplace also helped to lift corn today, as the U.S. stock indexes hit new for-the-move highs amid a “Santa Claus” rally. Solidly higher wheat futures prices today also spilled over into some buying interest in corn. Market watchers are also wondering if China may have been in the market buying some corn this week.
Traders continue to monitor growing conditions in South American corn regions. World Weather Inc. today reported dry weather in center-west, northern portions of center-south and in northeastern Brazil will continue for another week and then relief is expected during the middle to latter part of next week. “The break will bring some much-needed moisture to some very dry areas, although more moisture may still be needed,” said the forecaster.
Technical analysis: The corn futures bears still have the solid overall near-term technical advantage. The next upside price objective for the bulls is to close March prices above solid chart resistance at $5.00. The next downside target for the bears is closing prices below chart support at $4.50. First resistance is seen at last week’s high of $4.93 3/4 and then at $5.00. First support is at this week’s low of $4.81 3/4 and then at $4.76 1/2.
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: The soy complex featured low-range closes across the board, with soyoil leading the way lower amid sharply lower crude oil futures, while meal gains ultimately faded to losses. March soybeans fell 12 1/4 cents to $13.23 3/4, while January soymeal fell $2.90 to $410.30. January soyoil fell 69 points to 50.42 cents.
Fundamental analysis: Soybean futures took back a portion of Monday’s gains amid technical pressure and improved South American weather forecasts for next week. A daily sale of 198,000 MT of soybeans for delivery to unknown destinations during 2023-24 provided little excitement as soyoil pressure weighed on the complex.
South American crop consultant Dr. Michael Cordonnier left his Brazilian soybean crop estimate unchanged at 157 MMT but noted a neutral/lower bias going forward. Cordonnier reported rainfall remains erratic and there is still about ten percent of the crop left to plant, which opens “definite downside risk” for the Brazilian soybean estimate. Cordonnier left his Argentine soybean production estimate unchanged at 50 MMT, with a neutral/higher bias. He maintains the soybean estimate could move higher due to some corn acreage being switched to soybeans, though that will not be known for several more weeks.
World Weather Inc. predicts drying in center-west, northern portions of center-south and in northeastern Brazil will continue for another week and then relief is expected during the middle to latter part of next week. The break will bring some much-needed moisture to some very dry areas, although more moisture may still be needed, according to the forecaster.
Technical analysis: January soybeans are seemingly caught in a technical crossfire, as upside momentum continues to be hemmed by the 40-, 20- and 100-day moving averages of $13.35, $13.39 and $13.41, while the 10- and 200-day moving averages of $13.19 3/4 and $13.19 proved solid support in today’s session. An upside breakout will face additional resistance at $13.47 1/4, $13.58 1/2 and again at $13.78 3/4 and then the Nov. 15 high of $13.98 1/2. Meanwhile, heavier selling will face additional resistance at $13.15 3/4, then at $12.95 1/2, $12.84 1/4 and the Oct. 11 low of $12.70 1/4.
January meal trade continues to largely track the 10-day moving average, currently trading at $413.30, with today’s session featuring a breach of the level for the first time since Nov. 21. However, a failure to close above the area will allow it to continue to serve as initial resistance. Buying efforts above the 10-day will face additional resistance at $416.60, $420.00 and again at the 40- and 20-day moving averages $425.10 and $427.50. Meanwhile, initial support will continue to serve at $407.10, with solid support at the 100- and 200-day moving averages of $404.40 and $401.10.
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 up 16 cents at $6.25 1/2 and nearer the session high. March HRW wheat rose 24 1/2 cents to $6.56 3/4 and nearer the session high. March spring wheat futures ended the day at $7.00 1/4, up $12.50 on the day and nearer the daily high.
Fundamental analysis: The wheat market bulls made a save today as they were able to recover nearly all of Monday’s sizeable losses, to keep some upside momentum in their favor. A lower U.S. dollar index today also worked in favor of the wheat market bulls.
Somewhat supportive for wheat today, Argentina on Monday suspended its registry where companies exporting grains officially report trades “until further notice,” the CIARA-CEC grains chamber said. Traders are wondering about a potential devaluation of the Argentine peso, and the uncertainty of the matter lent support to wheat futures prices.
Also friendly for wheat prices, reports said Ukraine could harvest its smallest wheat crop in 12 years next summer due to a further drop in planting, according to Argus Media.
World Weather Inc. today said that in U.S. hard red winter country rain tonight into Friday “will be welcome for future wheat development.” Sufficient rain is expected in the drier areas of the southwest to improve soil conditions for use in the spring. In the northern Plains spring wheat areas, warmer- and drier-than-usual conditions will dominate over the next 10 days. A slightly more active weather pattern may evolve after Dec. 22, said the forecaster.
Technical analysis: Winter wheat futures bears still have the overall near-term technical advantage. However, recent price gains suggest near-term market bottoms are in place. SRW bulls' next upside price objective is closing March prices above solid chart resistance at $6.70. 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 the December high of $6.49 1/2 and then at $6.70. First support is seen at this week’s low of $6.07 1/4 and then at $6.00. The HRW bulls' next upside price objective is closing March prices above solid technical resistance at $7.00. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.95. First resistance is seen at the December high of $6.77 1/2 and then at $7.00. First support is seen at this week’s low of $6.30 1/4 and then at $6.15.
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 95 points to 81.05 cents, a low-range close.
Fundamental analysis: Cotton futures posted a third day of consecutive losses, with pressure stemming from plunging crude oil futures to a six-month low amid heightened concerns of oversupply amid forecasts of softening demand into 2024. Meanwhile, a lower U.S. dollar helped pare seller interest following this morning’s consumer price index (CPI) data showed cooling inflation, though it may not be enough for the Fed to trim rates early in the new year as anticipated. Annual U.S. inflation in November slowed to 3.1%, the lowest reading in five months and down from the October reading of 3.2%. On a monthly basis, consumer prices rose by 0.1%, slightly exceeding expectations of a flat reading. Core inflation remained steady at 4% and the monthly rate increased 0.3% from 0.2%, in line with forecasts.
World Weather Inc. maintains cotton planting and development is continuing in a challenging environment in South Africa and Australia where drier weather is expected for a while. Cotton harvesting is advancing well in Africa and mostly good in India as well. Argentina crops are improving while there is still some concern over crop development potential in Brail during 2024, but conditions are expected to begin improving next week.
Technical analysis: March cotton continues to face consolidation as the 40-day moving average of 81.81 cents continues to limit upside, while support at the 20- and 10-day moving averages of 80.58 and 80.44 cents limit selling efforts. A move above the 40-day in earnest would face additional resistance at 82.54 cents, then 83.07 cents, 83.65 cents and then the 100-day moving average of 84.78 cents. Conversely, a move below the 20- and 10-day moving averages would face additional support at 80.32 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.
