Crops Analysis | December 14, 2023
Price action: March corn futures fell 1/4 cent before settling at $4.79 1/4, on session lows.
Fundamental analysis: Corn futures saw action on both sides of unchanged as bulls were unable to maintain overnight gains, continuing the recent downtrend. Risk attitude in the marketplace tamed as the day went on as the European Central Bank and the Bank of England were more hawkish than the Federal Reserve, noting that rates are going to be left at restrictive levels for as long as needed. Front-month crude oil futures shrugged off the general risk off tone, continuing corrective buying from Wednesday’s for-the-move low, which is concerning for corn bulls as there was little carryover strength.
The Argentine crop continues to see favorable rainfall. Heavy rain fell across northeastern and north-central Argentia Wednesday and early today, World Weather Inc says. Southwestern Argentina will also begin to receive significant precipitation this weekend into Monday, which could cause some localized flooding, slowing crop planting, the forecaster says.
USDA reported corn export sales of 1.419 MMT for week ended Dec. 7, up 10% from the previous week but down 12% from the four-week average. Sales were near the top-end of the pre-report range between 800,000 MT and 1.6 MMT.
Technical analysis: March corn futures continue to trend lower on the daily bar chart. Prices remain supported by downtrend line support at $4.78 1/4 and capped by downtrend line resistance at $4.84, with today’s session testing both levels. Further support lies at Wednesday's low of $4.77 1/2, then $4.73 1/2. Bulls are eyeing initial resistance at $4.82 3/4, $4.84, then the 40-day moving average, which capped gains last week, currently at $4.88 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: January soybeans rose 6 1/2 cents to $13.14, ending the session above the 10-day moving average, while January meal rose $1.50 to $403.70. January soyoil fell 32 points to 49.51 cents.
Fundamental analysis: Overnight strength eased into this morning’s open amid tepid weekly export sales data, while a fourth straight daily sale added little optimism. Traders remain focused on Brazilian weather forecasts which show a notable increase rainfall in northeast Brazil, northern center-south and center- west Brazil during the middle to latter part of next week and through the following weekend. However, skepticism around the materialization of such rains looms as previous rains have proven lighter than expected. World Weather Inc. reports the rainfall will be highly variable, with some areas of heavy rain possible, though most will be light to locally moderate.
Earlier today, USDA reported weekly export sales of 1.084 MMT for week ended Dec. 7, which were down 23% from the previous week and 46% from the four-week average. Traders were expecting sales to range from 900,000 MT to 1.8 MMT. Meanwhile, USDA released a fourth straight daily export sale of 400,000 MT to unknown destinations, bringing this week’s total to 855,000 MT, which will show up in next week’s weekly export sales data.
NOPA data will round out the week, with data set for release Friday at 11 a.m. CT. Members of NOPA are estimated to have crushed 185.980 million bushels in November. If realized, it would be down 2% from October’s crush of 189.774 million bushels, but up 3.8% from the November 2022 crush of 179.184 million bushels. It would also be the third-largest crush on record for any month.
Technical analysis: January soybeans spent the session trading within Wednesday’s range but were ultimately able to edge above the 10-day moving average of $13.12 3/4 into the close. However, the 200-day moving average of $13.18 1/2 will continue to serve up notable resistance, along with the 20-, 40- and 100-day moving averages of $13.31 1/2, $13.34 1/2 and $13.38 3/4. Momentum from there will then face resistance at the Nov. 15 high of $13.98 1/2. Conversely, initial support will now serve at the 10-day moving average, then at $12.98 3/4, $12.90 ¼ and $12.77 3/4.
January meal continues to face pressure at the 100-day moving average of $404.40, while the 200-day of $401.10 continues to curb selling efforts. A breakout above the 100-day will face additional resistance at the 10-day moving average of $408.80, again at $417.70 and then the 20- and 40-day moving averages of $422.40 and $425.30. A move below the 200-day will find further support at $396.20, then #390.10 and $382.40.
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 rose 10 1/2 cents at $6.15 3/4. March HRW wheat gained 4 1/2 cents at $6.36 1/2. Prices closed nearer their daily highs. March spring wheat rose 3 3/4 cents to $7.17 1/4.
Fundamental analysis: The wheat futures markets saw corrective price gains today following Wednesday’s stronger selling pressure. A sharply lower U.S. dollar index that hit a 4.5-month low today aided the wheat market bulls. Also, trader and investor risk appetite in the general marketplace has up-ticked significantly following Wednesday afternoon’s dovish pivot on U.S. monetary policy by the Federal Reserve.
The languishing corn futures market has been constraining wheat market bulls the past few sessions. If corn continues to trade sideways at lower price levels, the upside for wheat futures will likely remain limited.
USDA this morning reported U.S. wheat export sales of 1.491 MMT during the week ended Dec. 7, a marketing-year high. Sales were near the top-end pre-report expectations.
Technical analysis: Winter wheat futures bears 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 the December high of $6.49 1/2. 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 $6.25 and then at this week’s high of $6.33 1/4. First support is seen at $6.00 and then at $5.90. 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 this week’s high of $6.63 1/2 and then at the December high of $6.77 1/2. First support is seen at $6.25 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 37 points to 80.81 cents, closing near the session low.
Fundamental analysis: Cotton futures continued in sideways consolidative trade, mostly between the 40- and 10-day moving averages, despite strong support from the outside markets. USDA’s weekly export sales data for week ended Dec. 7 was especially disappointing at 57,800 RB, which were down 50% from the previous week and 77% from the four-week average. Top purchasers included Vietnam, Honduras and El Salvador. Meanwhile, exports during the week totaled 148,700 RB, up 7% from the previous week and 42% from the four-week average.
World Weather Inc. reports cotton planting and development are continuing in a challenging environment for South Africa and Australia where drier weather is expected for a while, though cotton harvesting efforts are advancing well in Africa and mostly good in India. The forecaster maintains Argentina’s crop conditions are improving and the prospects for cotton in Brazil are also improving as timely rain falls to raise soil moisture for planting and early development in various locations.
Technical analysis: March cotton continues to find support at the 10- and 20-day moving averages of 80.71 and 80.59 cents, while the 40-day moving average of 81.58 cents continues to limit upside efforts. A move above the 40-day, however, will face additional resistance at 81.67 cents, then 82.15 cents, 82.60 cents and the 100-day moving average of 84.68 cents. Meanwhile, a move below the 10- and 20-day will find additional support at 80.29 cents, 79.81 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.
