Crops Analysis | January 24, 2024
Price action: March corn rose 5 3/4 cents to $4.52 1/4, marking the highest close since Jan. 11.
Fundamental analysis: Corn futures extended corrective buying for the fifth straight session, which ended in the largest daily gain since Dec. 26. Heavier gains in SRW wheat helped strengthen short-covering across the grain complex. Meanwhile, outside market support underpinned gains as the U.S. dollar faded and crude oil futures rose amid a larger-than-expected U.S. crude storage withdrawal, a drop in output and a Chinese economic stimulus. However, news that ethanol production during the week ended Jan. 19 plunged to 818,000 barrels, down 236,000 barrels per day (bpd) (22.4%) from the previous week and 217,000 barrels (21%) from last year had little effect on the market. The total was the lowest weekly production figure since the week ended Feb. 19, 2021. Ethanol output was slowed by cold weather that caused some plants to cut production and hefty stocks. Ethanol stocks rose 120,000 barrels to 25.815 million barrels.
USDA will release weekly export sales data prior to Thursday’s open. Traders are expecting sales to range from 725,000 MT to 1.4 MMT. Last week net sales of 1.25 MMT were reported, which was more than double the previous week and was up 61% from the four-week average.
Technical analysis: March corn futures ended the session above the 10-day moving average, currently trading at $4.48 1/4, for the first time since Dec. 26. Initial resistance will now serve at $4.53 1/2, then at the 20-, 40-, and 100-day moving averages of $4.57 3/4, $4.68 3/4 and $4.85 1/4. Conversely, initial support will now serve at the 10-day moving average, then at $4.43 1/2, $4.40 1/2 and last week’s low of $4.36 3/4, then at $4.25 and $4.00.
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: March soybeans rose 3/4 cent to $12.40 1/4 and near mid-range. March soybean meal gained $2.20 at $363.30 and near mid-range. March bean oil closed down 89 points at 47.32 cents and near the session low.
Fundamental analysis: The soybean and soybean meal futures markets today saw mild short covering after recently hitting multi-month lows. Bullish “outside markets” today that included a lower U.S. dollar index, higher crude oil prices and the recent solid rallies in the U.S. stock indexes all supported some light buying interest in soybeans and meal.
World Weather Inc. today said Brazil soybean-region weather “continues to look favorable for its summer crops, despite a few pockets of drying. Most crop areas will get rain at one time or another to support development. There will be need for greater rain from Sao Paulo and southern Goias to southwestern Mato Grosso in time.” A better distribution of rain may be needed in a few center-south and far southern parts of Brazil in late January and early February. Meantime, Argentina weather will be drying down over the next ten days. There will be need for widespread rain soon as both the far northern and southern parts of the nation experience moisture stress, said the forecaster.
Thursday morning’s weekly USDA export sales report is expected to show U.S. soybean sales of 700,000 MTto 1.2 million MMT in the 2023-24 marketing year and sales of zero to 50,000 MT in the 2024-25 marketing year.
Technical analysis: The soybean, meal and bean oil bears have the firm overall near-term technical advantage. For March soybeans, a nine-week-old downtrend is in place on the daily bar chart. The next near-term upside technical objective for the soybean bulls is closing March prices above solid resistance at $13.00. The next downside price objective for the bears is closing prices below solid technical support at $12.00. First resistance is seen at $12.50 and then at $12.65. First support is seen at Tuesday’s low of $12.21 1/2 and then at this week’s low of $12.09 1/2.
March soybean meal sees a nine-week-old downtrend 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 $390.00. The next downside price objective for the bears is closing prices below solid technical support at $350.00. First resistance comes in at today’s high of $366.10 and then at $370.00. First support is seen at today’s low of $360.40 and then at $355.20.
Soybean oil prices are in a two-month-old downtrend on the daily bar chart. 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 the contract low of 44.49 cents. First resistance is seen at this week’s high of 48.65 cents and then at the January high of 49.65 cents. First support is seen at this week’s low of 46.77 cents and then at the January low of 46.30 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 wheat rose 14 1/4 cents to $6.10 3/4, marking the highest close since Jan. 10, while March HRW closed 8 1/4 cents higher at $6.25 3/4. March HRS rose 5 1/2 cents to $7.04 1/2.
Fundamental analysis: SRW wheat futures were able to extend recent gains on increased corrective buying as a fading U.S. dollar helped prop up commodities. The nearby contract was able to notch above overhead resistance, which has limited gains since the first of the year, despite news Russian wheat exports have become more diversified through the first half of 2023-24 compared to the year prior. Agricensus reported Russia has ended the first six months of the current season with a new record for wheat exports, building on last year’s biggest-ever export figures, retaking its status as the cheapest origin globally. Meanwhile, Black Sea consulting firm, SovEcon raised its 2024 Russian wheat production forecast 900,000 MT to 92.2 MMT, citing favorable weather conditions. At that level, production would be down 600,000 MT (0.6%) from last year’s crop.
World Weather Inc. notes a beneficial precipitation event is expected in HRW wheat growing areas of Kansas, Oklahoma and eastern Colorado. This will help to further raise topsoil moisture before several days of dryness occurs, though a large storm system could then potentially affect the region Feb. 3-5 with more beneficial precip.
Technical analysis: March SRW ended the session above the 20- and 100-day moving averages, currently trading around $6.05 3/4, as well as the 40-day moving average of $6.09. Initial resistance will now serve at $6.12, then at $6.17 1/4 and again at the Dec. 6 high of $6.49 1/2. Conversely, the 40-, 20- and 100-day moving averages will now serve as initial support, with additional support serving at the 10-day moving average of $5.95 3/4, then at $5.91 1/4, $5.86, $5.78 1/4 and the Nov. 27 low of $5.56 1/4.
March HRW ended the session above the 20-day moving average for the first time since Dec. 28. Initial resistance will now serve at the 40-day moving average of $6.30 1/4, then at $6.35 3/4, $6.46 3/4 and the 100-day moving average of $6.62 3/4. Initial support will now serve at the 20-day moving average, then at the 10-day, currently trading at $6.11 1/4. From there, support lies at $6.06 1/4, $5.95 1/4 and last week’s low of $5.86 3/4.
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 rose 80 points at 85.40 cents and near the session high. Prices hit a 2.5-month high today.
Fundamental analysis: The cotton market rallied again today on increased speculator buying interest as the near-term technical posture for the fiber has turned bullish. A drop in the U.S. dollar index today was also supportive for cotton. More importantly, the cotton futures market appears to be closely tracking price movements in the U.S. stock indexes, which hit record highs again today. As long as the stock indexes are trending up, the cotton market is likely to do the same. A lack of farmer selling in the cash market is also keeping cotton prices elevated.
Traders are awaiting Thursday morning’s weekly USDA export sales report, with bulls hoping for more good news on U.S. sales abroad, following last week’s robust U.S. export numbers.
World Weather Inc. today said West Texas is not expecting “a big soaking of rain, and dryness remains a concern in the long term.” Some light precipitation is expected today, but the best period for rain may come in the second week of the forecast. South Texas will get some timely rain next week. Most of the Texas Coastal Bend and Blacklands have reported rain in the past two days and more will occur next week. The Delta will become a little too wet in this coming week while the U.S. southeastern states see a more favorable mix of rain and sunshine.
Technical analysis: The cotton futures bulls have the overall near-term advantage. Prices are in a four-week-old uptrend on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in March futures above technical resistance at 88.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 82.00 cents. First resistance is seen at 86.00 cents and then at 87.00 cents. First support is seen at today’s low of 84.29 cents and then at this week’s low of 83.54 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.
