Crops Analysis | December 18, 2023
Price action: March corn futures dropped 6 cents to $4.77 and settled nearer session lows.
Fundamental analysis: Corn futures traded sharply lower following this morning’s open despite growing concerns over Brazilian safrinha acres. Brazilian producers have been slow to purchase fertilizers, executives told Reuters. As of early December, farmers had purchased only 60% of their estimated fertilizer needs in the safrinha corn-producing states of Parana and Mato Grosso do Sul, compared with the normal 80% at this time of year.
Argentine weather continues to be favorable, with near ideal conditions following last year’s disaster crop. Some concerns remain over acres switching to soybeans, but the corn crop is likely to be a record regardless. While temperatures were above average over the weekend, widespread rainfall occurred with the greatest amounts in the central and east where totals of 1.00 to 2.75 inches occurred, according to World Weather Inc. Additional rain and thunderstorms are forecast in the coming weeks, leading to potential crop problems as it is becoming too wet, World Weather Inc says.
USDA reported corn export inspections of 947,418 MT (37.3 million bu.) for the week ended Dec. 14. That was up 222,088 MT from the previous week and near the top end of pre-report expectations ranging from 550,000 to 950,000 MT.
Technical analysis: March corn futures faced steady selling throughout the session. Prices continue to trade in a tight, downward sloping channel, with prices tagging both the upper and lower end of that range today. Support remains at $4.76 1/2, with further backing from $4.73 1/2, then the Nov. 29 for-the-move low of $4.70 1/2. Resistance stands at $4.79, with backing from $4.81, then downtrend resistance at $4.82. Further buying targets the 40-day moving average at $4.87 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.
Soybeans
Price action: January soybean futures led the complex higher, closing 11 1/4 cents higher to $13.27. January meal futures settled $7.2 higher to $412.8, near session highs. January bean oil futures rallied 65 points to 50.64 cents.
Fundamental analysis: Soybean futures continue to trend higher from the early December low, though uncertainty surrounding the Brazilian crop continues to leak volatility into the market. Today marked the first day in nine days that a daily soybean sale was not announced, ending the recent streak. Soybeans were also supported by a favorable risk attitude in the marketplace today that saw U.S. stock indices on yearly highs and crude oil futures continuing last week’s bounce from the lowest level in nearly six months.
Brazilian weather continues to be erratic, with weekend rains concentrated on Rio Grande do Sul and Santa Catarina, leaving all other areas dry- which is quite rare in the middle of the summer, World Weather Inc reports. High temperatures in the 90s and up to 104 degrees Fahrenheit led to rapid evaporation, further stressing the nation’s soybean crop. Rainfall is expected to increase throughout the week, with most rain falling from Wednesday and into the weekend and covering all areas to some degree, the forecaster says.
USDA reported soybean export inspections of 1.412 MMT (51.9 million bu.), up 411,777 MT from the previous week and near the top end of pre-report expectations ranging from 750,000 MT to 1.5 MMT.
Technical analysis: January soybean futures have trended higher from the Dec. 7 low, though still remain in a downward trend from the November high. Upward trendline support capped losses for the fourth straight session, which will remain support at $13.14 1/2, with additional support at $13.20 1/2 on the way. Bulls are targeting resistance at the 20-day moving average, currently at $13.25, with backing from $13.29 1/2, then downward trendline resistance at $13.34.
January meal futures surged on the session, closing above the downward trendline that has captured nearly all gains since the November peak. Prices close above the 10-day moving average, which will now be initial support at $410.2. That is backed by downward trendline resistance turned support at $403.0. Meanwhile, resistance lies at $415.5, backed by $421.9.
January soybean oil continues to struggle against downtrend line resistance, currently at 50.60 cents, which capped most gains today. Further resistance lies at 50.77 cents, with firmer backing from 51.61 cents. If prices reverse lower once again tomorrow, support can be expected at the psychological 50.00 cent mark, with backing from 49.34 cents, then 48.59 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.
Wheat
Fundamental analysis: “Rain in the Plains makes grain” was the winter wheat futures traders’ bearish mantra to start the trading week. Weather forecasters are calling for more beneficial rains across U.S. winter wheat areas. World Weather Inc. today said that in U.S. hard red winter wheat country a storm system is expected to “further increase soil moisture in the region Thursday through Sunday. Rain and some snow will be involved and the precipitation will likely be significant in some areas. This will be good for moisture availability in the spring; though, follow-up precipitation will be needed,” said the forecaster.
Meantime, in the Northern Plains, conditions will be dry through Saturday with temperatures trending warm enough to melt most or all of the snow that is currently on the ground. A storm system is then likely to impact part of the region Sunday, mainly southeastern and possibly central areas, with rain and snow. “No big surges of cold air are expected anytime soon. However, the need still remains for more snow cover in case of arctic air later in the winter,” said World Weather.
USDA this morning reported U.S. wheat export inspections of 284,792 MT, down 32,364 MT from the previous week. That was near the middle of pre-report expectations. Wheat inspections are still running behind USDA projections.
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, especially for SRW. A bull flag pattern has also formed on the daily bar chart for March SRW. 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 today’s high of $6.32 and then at $6.40. First support is seen at $6.10 and then at last week’s low of $6.02 1/2. 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 today’s high of $6.43 1/2 and then at $6.50. First support is seen at today’s low of $6.24 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.
Cotton
Price action: March cotton closed down 83 points at 79.10 cents and near the session low.
Fundamental analysis: Technical selling was featured in the cotton futures market today as the chart-based bears have gained momentum by producing three consecutive lower and low-range daily closes. Recent weaker China economic data and last week’s negative weekly sales of U.S. upland cotton to China also pressured the futures market today. There were also reports of slowing U.S. domestic mill demand for cotton.
World Weather Inc. today said recent rain in Texas was good for 2024 planting, but disrupt late-season harvesting. Heavy weekend rain in the southeastern U.S. and that expected in California and Arizona in the next couple of weeks “will also set the stage for a good start to 2024 planting in a few months if the weather pattern remains favorable as it should.” Any unharvested cotton in the southeastern states may have been negatively impacted by the rainy weekend weather, said the forecaster.
Technical analysis: The cotton futures bears have the overall near-term technical advantage and have momentum now. The next upside price objective for the cotton bulls is to produce a close in March futures above technical resistance at the December high of 83.13 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at the November low of 77.66 cents. First resistance is seen at today’s high of 80.12 cents and then at 81.00 cents. First support is seen at 79.00 cents and then at the December low of 78.59 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.
