Crops Analysis | December 6, 2023
Price action: March corn fell 6 1/4 cents to $4.84 1/4 and closed near the session low after reaching the highest intraday level since Nov. 16 in early trade.
Fundamental analysis: Corn futures ended a five-day string of short-covering as extended pressure in soybeans and plummeting crude oil futures weighed on prices. Technical headwinds continue to dampen grains despite a recent uptick in export activity. While USDA’s December crop reports, due out
Friday, will not include production updates, traders will keep a watchful eye on use, which could include an increase in 2023-24 exports after a stretch of strong weekly export sales. Perhaps a bit more insight will be provided tomorrow morning in USDA’s Weekly Export Sales Report, with data from week ended Nov. 30. Pre-report estimates indicate analysts expect sales for the week to range from 725,000 MT to 1.5 MMT. Last week, the government reported net sales at a marketing-year high of 1.93 MMT for the previous week.
News from trade group Anec also hovered over corn and soybeans as Brazilian grain traders reaffirmed the country’s corn exports will reach a record volume of 55.95 MMT in 2023, up 25% from last year’s level, which was already a record, despite logistical issues in the wake of severe drought which slowed grain traffic through Brazil’s northern routes in the fourth quarter.
Ethanol production averaged during the week ended Dec. 1 averaged 1.076 million barrels per day (bpd), up 65,000 bpd from the previous week, but down 1,000 bpd from the same week last year. Ethanol stocks rose 60,000 barrels to 21.439 million barrels.
Technical analysis: After an earlier test of the 40-day moving average, currently at $4.92, March corn futures lost steam, turning below support at $4.88 1/4 and the 20-day moving average of $4.85 1/4. Initial support will now serve at the 10-day moving average of $4.82 1/4 and $4.81, then at $4.78 1/2 and the Nov. 29 low of $4.70 1/2. A move higher, however, will face initial resistance at today’s failed support levels, then at the 40-day moving average, and again at $4.95 1/2, $5.00 1/4, with notable resistance serving at the 100- and 200-day moving averages of $5.02 1/2 and $5.28 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 fell 10 cents to $12.95 1/2. Prices closed near the session low and closed at a seven-week low close. March soybean meal closed down $6.00 at $398.00, nearer the session low and hit a six-week low. March bean oil dropped 91 points to 49.30 cents, nearer the session low and hit a four-week low.
Fundamental analysis: Technical selling was featured in the soybean complex futures today, as the chart postures for all three markets have deteriorated recently. Prices were also pressured by Nymex crude oil prices dropping sharply today, below $70.00 a barrel and hitting a five-month low.
Traders brushed aside USDA this morning, who reported a daily U.S. soybean sale of 136,000 MT for delivery to China during 2023-24. Thursday’s weekly USDA export sales report is expected to show U.S. soybean sales of 1.0 to 1.8 MMT in the 2023-24 marketing year and sales of zero to 25,000 MT in the 2024-25 marketing year. Traders are also looking ahead to Friday morning’s monthly USDA supply and demand report.
Soybean traders continue to watch soybean crop development in South America. World Weather Inc. today reported Brazil rainfall may not be normal in center-west or northern parts of center-south, “but there will be enough rain that does fall to support crops. Soil moisture should improve as time moves along, though it will be a slow process.” Northeastern Brazil will remain too dry while southern Brazil continues wetter than desired in some areas. Argentina will continue to experience a good mix of weather, though the next ten days may be a little drier, said the forecaster.
Technical analysis: The soybean bears have the overall near-term technical advantage. A three-week-old downtrend is in place on the daily bar chart. The next near-term upside technical objective for the soybean bulls is closing January prices above solid resistance at $13.50. The next downside price objective for the bears is closing prices below solid technical support at the October low of $12.70 1/4. First resistance is seen at today’s high of $13.13 1/2 and then at this week’s high of $13.29 1/4. First support is seen at this week’s low of $12.94 and then at $12.80.
Soybean meal prices scored a bearish “outside day” down today. The meal bears have the overall near-term technical advantage. A three-week old downtrend is in place on the daily bar chart. The next upside price objective for the meal bulls is to produce a close in March futures above solid technical resistance at $420.00. The next downside price objective for the bears is closing prices below solid technical support at $380.00. First resistance comes in at this week’s high of $408.70 and then at $414.20. First support is seen at today’s low of $396.50 and then at $390.00.
Soybean oil futures bears have the solid overall near-term technical advantage. The next upside price objective for the bean oil bulls is closing March prices above solid technical resistance at the November high of 53.32 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at 45.00 cents. First resistance is seen at today’s high of 50.56 cents and then at this week’s high of 51.95 cents. First support is seen at the November low of 48.56 cents and then at 47.50 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.
Price action: March SRW futures rose 2 1/4 cents to $6.33 1/2, though fell 16 cents from session high. March HRW futures fell 6 3/4 cents to $6.56, near the session low. March spring wheat futures fell 8 1/2 cents to $7.30 1/2.
Fundamental analysis: Wheat futures surged overnight on followthrough buying into this morning, though profit taking stifled gains as the session went on, with prices eventually trading lower on the session. USDA reported a daily sale for the third straight day, buying 372,000 MT of SRW wheat for delivery during the 2023-24 marketing year. That brings this week’s total up to 1.01 MMT and more than doubles the outstanding sales on the book to China. USDA has been pessimistic about the outlook for wheat exports; the buying this week will likely at least partially shift that viewpoint, though whether or not buying came in time to update this week’s Supply and Demand report is still up for question.
Winter wheat conditions remain largely steady in the U.S., as HRW acres remain in need of precipitation along with winter wheat acres in the Pacific northwest, World Weather Inc says. HRW acres are expected to warm today and into Friday, causing some new wheat development or at least some loss in winter hardiness, especially in the south, the forecaster says.
USDA is set to release its weekly export sales report in the morning, with traders expecting net sales between 250,000 and 800,000 MT for the week ended Nov. 30. Last week, net sales came in at 622,803 for 2023-24.
Technical analysis: March SRW futures made a fresh for-the-move high before giving up most of today’s gains in steady selling throughout today’s session. While the near-term technical advantage has shifted to the bulls, longer term charts are still bearish and some profit taking is likely to persist past today. Resistance lies at the $6.40 mark, backed by psychological $6.50 resistance which capped gains today. Meanwhile, support lies at the 100-day moving average, currently at $6.26 1/4, $6.19 3/4, then $6.10.
March HRW futures continue to show relative weakness compared to SRW. Prices pulled back today from a six-week high early on. Bulls are seeking to hold support at the psychological $6.50 mark, with backing from converged 10 and 20-day moving averages at $6.43 1/2. Further selling targets firmer support at $6.29. Meanwhile, resistance lies at the 40-day moving average, currently at $6.56 1/2, with backing from $6.70, then today’s high of $6.77 1/2.
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 futures rose 7 points to 79.75 cents and nearer the session low.
Fundamental analysis: A sharp drop in Nymex crude oil futures today, to below $70 a barrel, limited buying interest in the cotton futures market. Some technical selling was also featured in cotton futures today.
Traders are awaiting the weekly USDA export sales report on Thursday. Recent weekly reports have shown decent foreign demand for U.S. cotton. The USDA monthly supply and demand report Friday will provide fresh updates from the agency on the size of the U.S. cotton crop as well as U.S. export prospects. Some short covering was also featured in cotton futures today, ahead of Friday’s updates from USDA.
World Weather Inc. today said late-season cotton harvesting in the U.S. should advance relatively well, although there will be some brief bouts of rain in the southeastern states. Cotton conditions in India remain favorable. Australia’s cotton has benefited greatly from rain recently and some dryland crop planting likely advanced, said the forecaster. Argentina has also seen some welcome rain recently and the odds are good that Brazil will have a larger planted area to cotton this year.
Technical analysis: The cotton futures bears have the firm overall near-term technical advantage. The next upside price objective for the cotton bulls is to produce a close in March futures above technical resistance at 84.00 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 80.78 cents and then at 81.50 cents. First support is seen at this week’s low of 78.59 cents and then at 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.
