Crops Analysis | October 25, 2023
Price action: December corn fell 4 cents to $4.80, the lowest close this month.
Fundamental analysis: December corn futures faced selling for the fourth consecutive session, pressured by weakness in SRW wheat and selling in meal and soybean futures. As the session progressed, however, losses in meal futures eased, with corn and soybeans following suit. Even so, overhead resistance at the 40-day moving average could prove a tough obstacle for a decisive bull move.
World Weather Inc. reports Mississippi River water levels will slowly increase following rains over the next week to ten days, allowing a slight improvement for barge logistics, though the forecaster notes much more rainfall will be needed to make a bigger difference in the river flows and barge restrictions. Meanwhile, weather in Argentina is expected to include erratic rainfall over the next ten days. Though the moisture that occurred this past weekend and expected rains will help maintain status quo conditions after the recent increase in soil moisture. Recent rains have also improved conditions for corn planting, though follow-up rains will be very important.
Ethanol production in week ended Oct. 20 rose 5,000 barrels per day (bpd) to 1.040 million bpd, an increase of 0.7% from last year. Ethanol stocks increased 286,000 barrels to 21.398 million barrels.
With Thursday morning comes USDA’s weekly export sales data. Traders expect net sales to have ranged from 600,000 MT to 1.2 MMT during the week ended Oct. 19. Last week net sales totaled 881,345 MT, which were down 3% from the previous week and 15% from the four-week average.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold in the cash market on 2022-crop. You should be 50% forward priced for harvest delivery on expected 2023-crop.
Cash-only marketers: You should be 100% sold on 2022-crop. You should be 35% forward priced for harvest delivery on expected 2023-crop production.
Price action: January soybeans fell 6 cents to $13.08 1/2 and near mid-range. December soybean meal lost $5.00 at $429.20 and nearer the session low. Prices hit a contract high early on. December bean oil rose 128 points at 52.60 cents and near the session high.
Fundamental analysis: The soybean market saw selling pressure today as the meal futures market backed well down from its early contract high. Lower corn and wheat futures prices today also spilled over into selling in the soybean complex. Soybean traders brushed aside a USDA daily sale of 126,000 MT of soybeans for delivery to China during 2023-24.
Meal bulls got some early traction on news that Argentina’s soybean crush totaled just 1.8 MMT in September, down 1 MMT from the 2.8 MMT processed in September of last year. The latest crush figure is the lowest for the month of September dating back to 2015, according to Argentina’s ag ministry.
World Weather Inc. today reported Argentina has had recent rains, and slowly improving rainfall potential in center-west Brazil. “However, recent hot temperatures and a general lack of rain that will continue for a few more days may result in permanent crop damage. Replanting may be necessary,” said the forecaster. Meantime, U.S. harvest weather will deteriorate over the coming week in the western Corn Belt.
Traders are awaiting Thursday morning’s weekly USDA export sales report, which is expected to show U.S. soybean sales of 750,000 to 1.5 million MT in the 2023-24 marketing year. Meal sales are expected to come in at 250,000 to 500,000 MT.
The soybean meal bulls have the solid overall near-term technical advantage. Prices are in a steep uptrend on the daily bar chart. The next upside price objective for the meal bulls is to produce a close in December futures above solid psychological resistance at $450.00. The next downside price objective for the bears is closing prices below solid technical support at $400.00. First resistance comes in at today’s contract high of $439.40 and then at $445.00. First support is seen at today’s low of $424.80 and then at $420.00.
The soybean oil bears have the firm overall near-term technical advantage. A six-week-old downtrend is in place on the daily bar chart. The next upside price objective for the bean oil bulls is closing December prices above solid technical resistance at the October high of 58.07 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at 50.00 cents. First resistance is seen at 53.00 cents and then at this week’s high of 54.00 cents. First support is seen at this week’s low of 50.82 cents and then at 50.00 cents.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold in the cash market on 2022-crop. You should be 45% forward sold for harvest delivery on expected 2023-crop production.
Cash-only marketers: You should be 100% sold on 2022-crop. You should be 40% forward sold for harvest delivery on expected 2023-crop production.
Price action: December SRW wheat fell 2 cents to $5.68 1/2, a two-week low close, while HRW lost 14 cents, closing at $6.49, a fresh near-term low. December spring wheat fell 7 1/2 cents to $7.20 3/4.
Fundamental analysis: The wheat complex slipped lower as weather in many key growing regions across the globe has led to notable improvements. Earlier today, APK-Inform said rains across almost all of Ukraine have significantly improved conditions for the development of winter crops, which previously suffered from widespread drought.
World Weather Inc. also reports rain and snow in the U.S. Plains, Europe and southern and western parts of Russia is boosting soil moisture as well, while weather in India and China is mostly good with little change lately. Meanwhile, recent rains in Argentina are expected to improve the country’s wheat conditions in the south where reproduction is getting underway. However, western Australia will continue to dry out and southern Brazil will remain too wet to support winter crops ideally.
Cold temperatures in the U.S. Northwestern Plains this week will stop wheat emergence and establishment, though the snow that precedes the coldest conditions will insulate the crops until warmer air returns.
USDA will release its Weekly Export Sales Report for the week ended Oct. 20 early tomorrow morning. Traders expect net sales to have ranged between 300,000 MT and 600,000 MT during the week. Last week, the government reported net sales of 632,759 MT, which were down 3% from the previous week but up 42% from the four-week average.
Technical analysis: Last week’s gains in December SRW wheat futures have been squandered away over the past two sessions, with bears gaining additional technical control as evidenced by a close below the 40-, 10- and 20-day moving averages of $5.82 1/4, $5.79 1/4 and $5.72. Initial support will now serve at $5.65 1/4, then $5.57 1/2 and at the Sept. 29 low of $5.40. Meanwhile, resistance will stand at today’s failed support levels, then at $5.88, $5.95 1/2 and $6.03 1/4.
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 rose 88 points at 83.81 cents and nearer the session high.
Fundamental analysis: Short covering was featured in the cotton futures market today. Trading in the cotton market has been choppy this week. Cotton bulls were impressed today that prices posted gains despite a selloff in the U.S. stock market and a firmer U.S. dollar index. Gains in crude oil prices today did support buying interest in the natural fiber.
World Weather Inc. today said rain that fell in Texas overnight and more expected will stall harvesting “and induce a little fiber quality decline.” Harvest weather in the U.S. Delta and southeastern states will be mostly good over the next 10 days, although some rain is expected in the Delta during the weekend into early next week, said the forecaster.
Cotton traders are awaiting Thursday morning’s weekly USDA export sales report, with a keener eye on U.S. cotton sales to major importer China.
Technical analysis: The cotton futures bears have the overall near-term technical advantage. A four-week-old downtrend is in place on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in December futures above technical resistance at 87.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 80.00 cents. First resistance is seen at 85.00 cents and then at 86.00 cents. First support is seen at today’s low of 82.73 cents and then at 82.00 cents.
What to do: Get current with advised sales.
Hedgers: You should be 100% priced on 2022-crop in the cash market. You should have 60% of expected 2023-crop production forward sold for harvest delivery.
Cash-only marketers: You should be 100% priced on 2022-crop. You should have 60% of expected 2023-crop production forward sold for harvest delivery.
