Crops Analysis | November 7, 2023
Price action: December corn futures dropped 8 3/4 cents to $4.68 1/2 and near the session low. Prices closed at a 13-month-low close.
Fundamental analysis: Dour import and export data out of China today cast a pall over much of the raw commodity sector, including the grains. Exports from the world’s second-largest economy declined more than expected and imports rose less than expected. Crude oil prices dropped sharply today and hit a 2.5-month low. A higher U.S. dollar index today was also a bearish outside market factor for the grains.
USDA Monday afternoon said that as of last Sunday, corn harvest was 81% complete, four percentage points ahead of the five-year average. Farmer selling in the cash market and commercial hedge pressure are likely to wane in the coming weeks as harvesting winds down.
Traders are looking ahead to the latest monthly USDA supply and demand report, due out late Thursday morning.
Technical analysis: The corn futures bears have the solid overall near-term technical advantage and gained more power today. The next upside price objective for the bulls is to close December prices above solid chart resistance at $4.85. The next downside target for the bears is closing prices below chart support at the September low of $4.67 3/4. First resistance is seen at $4.75 and then at this week’s high of $4.80 3/4. First support is at $4.67 3/4 and then at $4.60.
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 2 cents to $13.62, near the session low, after trading at the highest intraday level since Sept. 15. December meal rose $9.90, a mid-range close after marking a fresh contract high early on. December soyoil fell 131 points to 49.49 cents, closing near the session low.
Fundamental analysis: Soybean futures started the morning out with solid gains, in step with meal futures which touched a fresh high in the nearby December contract. Persisting weather issues throughout Brazil combined with a daily U.S. export sale of 110,000 MT of soybeans for delivery to China during 2023-24 were able to bolster gains for the sixth straight session. However, as the morning progressed corrective gains in the U.S. dollar, following last week’s sharp losses, combined with soyoil weakness seemingly prevailed in the proverbial tug-of-war with meal futures as soybeans turned from early morning highs. Moreover, easing global supply concerns likely spurred profit-taking from earlier highs as South American analysts, including Safras & Mercado and AgRural noted that while weather concerns continue to exist in Brazil, “it’s still early to talk about soy output and yield losses.” However, analysts did contend that if weather problems persist through December, they would need to start lowering projections. Planting efforts in Brazil were estimated to be 48.4% complete as of Nov. 4, according to Conab, which is behind last year’s pace of 57.5% for the same period.
Soybean imports slowed notably in October, due to loading delays at Brazilian ports. Late Monday, customs data showed the country’s October soybean imports fell 27.9% from September to 5.16 MMT, a one-year low and below analysts’ expectations of 6.5 o 7 MMT. However, through the first 10 months of this year, China imported 82.42 MMT of soybeans, up 14.6% from the same period last year. Despite October’s drop in imports, China is on course to import an all-time record amount of around 105 MMT. Traders reported around 26 MMT will by imported during the last three months of the year, with around 45% likely to be sourced from Brazil. Conversely, China’s exports declined for the sixth straight month, reflecting persistent weak demand from abroad.
Technical analysis: January soybeans ended the session slightly lower following a failed test of resistance at $13.71 3/4 and $13.79 1/2. A push above these areas will face additional resistance at $13.89 1/2, $14.00 and $14.20. Extended selling efforts, however, will continue to face initial support at $13.54, then at the 100-day moving average of $13.43 3/4 and again at the 10-, 200-, 20- and 40-day moving averages of $13.26 3/4, $13.23, $13.18 1/2 and $13.17 1/2.
December meal bulls increased their technical posture with a close above resistance at $444.70. Initial resistance will now serve at $451.80, then $457.70. Meanwhile, initial support will now serve at today’s failed resistance level, then at $438.80, the 10-day moving average of $434.20, $431.70, $425.80 and the 20-, 40-, 200- and 100-day moving averages of $420.40, $402.60, $402.40 and $401.00.
December soyoil spent the session consolidating mostly between the 10-day moving average of 51.03 cents and initial support at 49.36 cents, which will both continue to serve as initial resistance/support. An extension lower will find additional support at 47.93 and 46.59 cents, while a move higher will battle resistance at the 20-day moving average of 52.33 cents, again at 53.47 cents and again at the 40- and 200-day moving averages of 55.13 and 56.14 cents.
What to do: Get current with advised sales.
Hedgers: You should be 45% sold in the cash market on 2023-crop production.
Cash-only marketers: You should be 40% sold on 2023-crop production.
Price action: December SRW wheat fell 5 1/2 cents to $5.70 1/4. December HRW wheat dropped 13 1/4 cents to $6.32 1/2. December spring wheat fell 4 1/2 cents to $7.24 1/4.
Fundamental analysis: Downbeat economic data out of China today had the raw commodity bears out in force, including in the grains. Weaker-than-expected imports and exports were reported out of the world’s second-largest economy and a voracious raw commodity consumer. A stronger U.S. dollar and sharply lower crude oil prices that hit a 2.5-month low today were also bearish outside market elements for wheat.
Improving U.S. crop conditions also favored the wheat market bears today. USDA Monday afternoon rated 50% of the U.S. winter wheat crop as “good” to “excellent.” When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect) the HRW crop improved 2.3 points to 321,0, while the SRW crop rose 1.6 points to 371.5. Both crops are rated well above year-ago levels at this time.
World Weather Inc. today said U.S. hard red winter wheat areas in the west-central and southwestern Plains need moisture for better emergence and establishment. Warming in the northwestern U.S. Plains and both warmer weather and some precipitation in the Pacific Northwest will lead to better winter wheat establishment. Most of the U.S. Midwest wheat crop is being planting and establishing relatively well.
Wheat traders will get the latest monthly USDA supply and demand report Thursday morning.
Technical analysis: Winter wheat futures bears have the firm overall near-term technical advantage. However, the sideways price grind at lower levels in SRW futures the past five weeks begins to suggest a market bottom is in place. SRW bulls' next upside price objective is closing December prices above solid chart resistance at the October high of $6.04 1/2. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.40 1/2. First resistance is seen at today’s high of $5.82 1/4 and then at $6.00. First support is seen at the November low of $5.54 3/4 and then at $5.40 1/2.
For December HRW, a 2.5-month-old downtrend is in place on the daily bar chart. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at $6.87 3/4. The bears' next downside objective is closing prices below solid technical support at $6.00. First resistance is seen at this week’s high of $6.51 3/4 and then at $6.67 3/4. First support is seen at the October low of $6.25 1/2 and then at $6.15.
What to do: Get current with advised sales.
Hedgers: You should be 50% sold in the cash market on 2023-crop production.
Cash-only marketers: You should be 50% sold on 2023-crop production.
Price action: December cotton fell 152 points to 76.48 cents, the lowest close since November 28, 2022.
Fundamental analysis: December cotton bears took full advantage of their near-term technical posture to achieve a push to an eleven-month low close. Returned strength in the U.S. dollar following last week’s selloff and plunging crude oil futures weighed on the natural fiber, with traders awaiting USDA’s fresh production, supply and demand data on Thursday. Meanwhile, U.S. harvest progress continues to advance in earnest, with the government estimating 57% to be complete as of Sunday, up eight percentage-points from the previous week and two points ahead of the five-year average.
Mostly favorable weather conditions across the globe are keeping cotton bulls at bay along with lingering demand woes from top importer, China. World Weather Inc. indicates a mostly good harvest environment is expected in west Texas this week and the same is likely in the lower delta and southeastern states, despite some potential for brief rain late this week. Moderate to locally heavy rain in Coastal Bend areas of Texas will be good for planting in 2024. The forecaster notes harvest weather in China and west-central Africa remains good, as it is in India and Pakistan, while cotton in Argentina will benefit from some rain in the next couple of weeks.
Technical analysis: December cotton ended the session below support at 77.25 and 76.50 cents, giving bears an increased technical advantage. Initial support will now serve at 75.14 cents However, near-term oversold conditions could find corrective buying efforts in the coming days, though a battle will stand at today’s failed support levels, then at 79.36 and 80.72 cents, then at the 10-day moving average of 81.01 cents, again at 81.47 cents and the 20-, 100- and 40-day moving averages of 82.61, 84.30 and 84.89 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.
