Crops Analysis | October 26, 2023
Price action: December corn fell 3/4 cent to $4.79 1/4 and nearer the session low.
Fundamental analysis: The corn futures market saw buyer interest limited today by a “risk-off” trading atmosphere in the general marketplace. The U.S. stock indexes dropped to multi-month lows today, the U.S. dollar index is rallying again and crude oil prices posted solid losses today.
Seasonal commercial hedge pressure amid good harvest progress remains a bearish element for the corn market.
USDA this morning reported U.S. corn sales of 1.351 MMT during week ended Oct. 19. That’s up 53% from the previous week and 22% above the four-week average. Sales were above market expectations.
World Weather Inc. today said that wet weather in the Corn Belt will continue through Sunday and harvesting will be slowed. However, good harvest progress is expected after the precipitation when drier weather returns Monday through Nov. 9, “as the soil is dry enough in much of the region to soak up the moisture without becoming excessively muddy.”
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: November soybeans fell 8 3/4 cents to $12.79 1/2, closing near the session low and below the 20-day moving average. December meal rose 30 cents to $429.50, while December soyoil fell 86 points to 51.74 cents.
Fundamental analysis: A modest rally led by meal strength vaporized into mid-morning despite notable weekly export sales data and a report of a daily sale of 110,000 MT of U.S. soybeans to China during 2023-24. As the session progressed, increasing pressure in soyoil futures and mild profit-taking in soymeal hovered over the complex along with persisting strength in the U.S. dollar.
This morning USDA reported weekly U.S. soybean sales of 1.378 MMT during week ended Oct. 19, a marketing-year high and up 43% from the four-week average. China was the main purchaser for the week, with a total 1.167 MMT, including 776,000 MT switched from unknown destinations and decreases of 142,200 MT. Net sales were near the top-end of the pre-report range of 750,000 MT to 1.5 MMT. Meanwhile, soymeal exports totaled 507,500 MT, exceeding the pre-report range of 250,000 to 500,000 MT.
Earlier news that China may have “washed out” or canceled as many as 8 to 10 cargoes of Brazilian beans for November by major global firms could prove notable if confirmed. The rumor came as Brazilian beans for November shipment have been slightly less competitive than sales out of the U.S. Gulf.
After reducing rainfall in center-west Brazil, the European forecast model has increased chances again late in the coming seven-day period, especially during the second weekend of the two-week forecast, though World Weather Inc. believes the increase was overdone. Meanwhile, the GFS model continues to downplay rainfall in the region over the next ten days. Southern Brazil is expected to see flooding Friday night through the middle of next week, increasing the need for many crops to be replanted, while some property damage is likely, according to the forecaster.
Technical analysis: November soybeans extended Wednesday’s losses, with a close held below the 20-day moving average of $12.83 1/4, though support at $12.77 limited losses and will now serve as initial support. However, an extension below the area will find additional support at $12.65 3/4, then $12.60 and the Oct. 12 low of $12.50 1/2. Conversely, initial resistance will now serve at the 20-day moving average, then at the 10-day of $12.94 1/4 and again at $13.00. From there, stiff resistance will serve at the 40-, 200- and 100-day moving averages of $13.09 1/2, $13.15 1/2 and $13.24 1/4.
December meal ended the session stealing a back a bit of Wednesday’s losses after an earlier test of support at $422.90, where initial support will continue to serve. A push lower will face additional support at the 10-day moving average of $415.40, then at $408.30. From there support lies at the 200-, 100- and 40-day moving averages of $401.10, $395.90 and $395.50. An extension higher, however, will continue to face resistance at $437.50, then at Wednesday’s high of $439.40 and again at 445.70 and 452.10.
December soyoil futures edged lower, ending the session just above initial support at 51.62 cents after a test of resistance at 53.12 cents and the 10-day moving average of 53.46 cents. A move lower will face additional support at 50.63 cents, then at Tuesday’s low of 50.82 cents and again at 50.12 cents. Meanwhile, buying efforts will face initial resistance at 53.12 cents and the 10-day moving average, again at the 20-day moving average of 54.24 cents, then 54.62 cents and the 200-, 40- and 100-day moving averages of 56.53, 57.30 and 58.55 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 rose 11 cents to $5.79 1/2 and near the session high. December HRW wheat gained 5 3/4 cents at $6.54 3/4, nearer the session high and hit a more-than-two-year low early on. December spring wheat futures rose 3 1/2 cents to $7.24 1/4.
Fundamental analysis: The wheat futures markets today saw short covering following recent losses. Buyer interest was limited by a “risk-off” day in the general marketplace. The U.S. stock indexes sold off, crude oil dropped and the U.S. dollar index rallied.
Supportive for wheat prices is news Ukraine suspended use of its new Black Sea grain corridor due to what it called a threat from Russian warplanes, according to the Kyiv-based Barva Invest consultancy.
Weekly U.S. wheat export sales totaled 363,700 MT during the week ended Oct. 19. That’s down 43% from the previous week and off 31% from the four-week average. Sales were in line with trader expectations.
World Weather Inc. today said that in the northern Plains, a snowstorm will continue today, with the greatest new snow occurring from southeastern Montana through northwestern Minnesota and northeastern North Dakota. Temperatures will be significantly cold in the next seven days, but snow cover will help protect any newly emerged winter crops from subzero conditions. In HRW wheat country, the forecaster said one round of precipitation in the first week of the outlook will help to further improve topsoil moisture, which will occur Saturday through Sunday. Some wintry precipitation will be involved with this event. That may also protect wheat seedlings despite temperatures trending significantly colder. Widespread hard freezes Sunday through Wednesday will end the growing season. Meantime, World Weather said the overnight frost in southeastern Australia should have a low impact on crops.
Technical analysis: Winter wheat futures bears have the firm overall near-term technical advantage. 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 Wednesday’s high of $5.86 1/4 and then at this week’s high of $5.95 1/4. First support is seen at today’s low of $5.63 1/4 and then at $5.50. December HRW futures have seen a 2.5-month-old downtrend on the daily bar chart restarted. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at $7.00. The bears' next downside objective is closing prices below solid technical support at $6.25. First resistance is seen at Wednesday’s high of $6.67 3/4 and then at this week’s high of $6.80 1/4. First support is seen at today’s low of $6.44 and then at $6.30.
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 78 points to 84.59 cents and closed above 100-day moving average for the first time since Oct. 19.
Fundamental analysis: December cotton futures were able to post followthrough gains, with USDA’s weekly export sales giving a boost to the natural fiber. The move came despite persisting U.S. dollar strength and weaker equites and crude oil futures as traders await new developments from the conflict in the Middle East. Outside markets are also facing pressure from ongoing global economic concerns.
Earlier today, USDA reported weekly U.S. cotton sales of 186,100 RB during the week ended Oct. 19, which were up over double the previous week and up 82% from the four-week average. Top purchasers for the week included China (98,500 RB), Bangladesh (44,900 RB) and Vietnam (22,900 RB). However, shipments during the week totaled 98,000 RB, which were a marketing-year low. Shipments were down 11 % from the previous week and 25% from the four-week average. Top destinations were Vietnam, Mexico and China.
World Weather Inc. reports rain that fell in Texas the past two days and that which is expected in the coming week will slow or stall harvest efforts and induce a little fiber quality decline. However, weather in the Delta and southeastern states will be mostly good over the next ten days, though some ran is expected in the Delta during the weekend into early next week.
Technical analysis: December cotton bulls increased their technical posture with a close held above the 10- and 100-day moving averages of 84.04 and 84.36 cents. Initial resistance will now serve at 85.00 cents, then at the 20-day moving average of 85.29 cents, again at 85.83 cents and the 40-day moving average of 86.37 cents. Conversely, initial support will now serve at today’s failed resistance levels, then at 83.57 cents, 82.97 cents, 82.14 and 81.54 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.
