Crops Analysis | January 3, 2024
Price action: March corn rose 1 1/2 cents to $4.65 1/4 and closed near the session high.
Fundamental analysis: Corn futures made a weak attempt to end the recent losing streak, led by corrective gains in the soy complex. Meanwhile, resurgent strength in crude oil futures was largely offset by followthrough gains in the U.S. dollar. Traders have largely been anticipating this afternoon’s release of FOMC minutes from its last meeting, to gain insight on the central bank’s thinking around monetary easing, though the minutes contained no new surprises and the markets showed little reaction.
Weather in South America continues to be a focus. World Weather Inc. reports a couple more days of little rain and mostly favorable conditions for fieldwork will occur in Argentina before regular rounds of showers and thunderstorms occur Friday through Jan. 16, with enough rain expected to maintain or improve soil moisture in nearly all the country. South-central Brazil will receive lighter-than-normal rainfall during the next 10 days. Mostly favorable conditions are expected in southern Brazil.
Technical analysis: March corn futures notched a fresh contract low in early trade but were able to rebound mildly to end near the session high. Initial support will lie at today’s low of $4.61 3/4, then at $4.60 1/2, $4.57 1/4 and $4.52 1/4. Meanwhile initial resistance will serve at Tuesday’s close of $4.71 1/4, then $4.68 3/4 and again at the 10-, 20-, 40- and 100-day moving averages of $4.71 3/4, $4.77 1/2, $4.81 1/4 and $4.91 3/4.
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: March soybeans rose 3 1/2 cents to $12.77 after hitting a six-month low early on and closed nearer the session high. March soybean meal gained 90 cents at $380.40 and nearer the session high. Prices hit a 2.5-month low early on. March bean oil closed up 31 points at 48.60 cents and nearer the session high.
Fundamental analysis: The soybean complex futures markets today saw short covering and corrective rebounds following recent selling pressure. A solid rally in crude oil prices today was a bullish “outside market” element for soy futures. However, price gains in soybeans, meal and bean oil were limited by a rallying U.S. dollar index this week and a “risk-off” trading mentality in the general marketplace.
Weather in South American soybean regions still leans a bit near-term bearish. World Weather Inc. today said recent rain in the northern half of Brazil and more in the forecast “will prove beneficial in raising soil moisture and ensuring a more favorable crop development environment through the first half of this month.” Southern Brazil and Argentina will have lighter and less frequent rain, “but it will still be timely and should translate into very good summer crop conditions,” said the forecaster.
Traders will have to wait an extra day for the weekly USDA export sales report, due out Friday morning because of the new-year holiday on Monday.
Technical analysis: The soybean, soybean meal and bean oil bears all have the firm overall near-term technical advantage. Soybeans see a six-week-old downtrend 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 last week’s high of $13.27 1/2. The next downside price objective for the bears is closing prices below solid technical support at $12.00. First resistance is seen at this week’s high of $12.90 3/4 and then at $13.00. First support is seen at today’s low of $12.65 3/4 and then at $12.50.
The meal market sees a seven-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 $400.00. The next downside price objective for the bears is closing prices below solid technical support at the October low of $365.30. First resistance comes in at this week’s high of $385.60 and then at $390.00. First support is seen at today’s low of $375.30 and then at $370.00.
Soybean oil bulls’ next upside price objective 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 49.22 cents and then at 50.00 cents. First support is seen at today’s low of 47.66 cents and then at this week’s low of 47.03 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 fell 6 1/2 cents to $6.00 1/4, a low-range close, while March HRW fell 7 1/2 cents to $6.21 1/2. March spring wheat closed 6 1/2 cents lower at $7.08 1/2.
Fundamental analysis: SRW wheat posted losses for the third straight session as U.S. dollar strength and improving state-level winter wheat crop ratings from USDA hovered over the complex. When the state crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 10.5 points from the end of November to 333.8.
Earlier news of sufficient wheat inventories in India also cast a shadow over wheat futures, amid reports from senior government officials which indicated supplies are likely to remain above the buffer norm on April 1 despite ongoing sales from state grain reserves, which has brought stocks down to the lowest level in seven years.
World Weather reports a more active weather pattern is still expected to begin this week in HRW wheat country as big changes start to occur. A leading weather disturbance will cause a meaningful rain and snow event in the region Thursday into Friday and will likely be followed by a more significant storm system Monday as the weather pattern transitions to being colder. Meanwhile the northern Plains is expected to receive some snow in the next seven days, though it may not be enough to fully protect crops from the significant cold next week, notes the forecaster. A close monitoring of snow cover will be warranted.
Technical analysis: March SRW wheat extended Tuesday’s losses, though initial support at $5.98 limited selling efforts. However, a push below the area will face additional support at $5.89 1/4, again at $5.74 and then at the Nov. 27 low of $5.56 1/4. Conversely, the 40-day moving average, currently trading at $6.06 limited upside today and will continue to serve as initial resistance. Additional resistance serves at the 100-, 10-, and 20-day moving averages of $6.13, $6.18 1/4 and $6.21 1/4.
March HRW technicals turned increasingly bearish, with a close held below support at $6.22 3/4 as overhead resistance at the 10-, 40-, and 20-day moving averages of $6.33, $6.39 1/4 and $6.40 1/4 limited buying activity. Initial support will now serve at $6.16 1/2, then at $6.07 and again at the Nov. 28 low of $5.95.
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 99 points at 80.93 cents and nearer the session high.
Fundamental analysis: The cotton futures market today saw short covering and some support from a solid rally in the crude oil futures market. However, gains were capped by this week’s solid gains in the U.S. dollar index and keener risk aversion in the marketplace that saw another sell off in the U.S. stock market.
World Weather Inc. today said West and South Texas precipitation is still expected to be restricted. Eastern Texas crop areas, including the Blacklands and Coastal Bend, will all receive moisture in the next couple of weeks “that will be of use in the spring.” Rain is also expected in abundance in the Delta and southeastern states which may help to ease long term dryness in the Delta and Tennessee River Basin, said the forecaster.
Weekly USDA export sales are delayed until Friday morning due to the new-year holiday on Monday. Cotton market bulls are hoping the report will show continued better demand for U.S. cotton from China.
Technical analysis: The cotton futures bears have the overall near-term technical advantage amid recent choppy and sideways trading. 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 last week’s high of 81.75 cents and then at 82.00 cents. First support is seen at this week’s low of 79.69 cents and then at 79.00 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.
