Crops Analysis | October 5, 2023
Price action: December corn futures rallied 11 1/2 cents to $4.97 1/2, the highest close in nearly two months.
Fundamental analysis: Corn futures powered higher throughout the session after a break of technical resistance that capped gains the prior five sessions. This rally came despite continued volatility in outside markets, including volatility in the U.S. stock market, selling pressure in the crude oil market and rising long term treasury yields. This morning’s USDA export data showed net sales at 1.816 MMT, which was in the upper end of expectations that ranged from 1.4 and 2.0 MMT. While outstanding sales remain historically low, the recent uptick in sales has given bulls confidence that prices are in value territory. Also fueling the intraday rally was reports of a cargo ship reportedly contacting a sea mine this morning while waiting outside the entrance to the Sulina Canal while in route to Ukrainian ports.
Weather remains favorable for crop maturation and harvesting as conditions remain dry, though some rain occurred in some southern, central and northwestern portions of the Midwest, World Weather Inc says. The Ohio, Illinois, Mississippi and lower Missouri rivers remain below flood stage and are likely to decline over the next week, further restricting barge traffic and barge rates. Rain during the middle to late part of next week should, at least temporarily, raise water levels along most of the rivers, the forecaster says.
Technical analysis: December corn futures saw sustained buying throughout Thursday’s session, indicating a technical bullish breakout on the daily bar chart. Prices closed above 40-day resistance, now support, for the first time since late July. Initial support lies just under today’s close at $4.96. Firmer support stands at the 40-day moving average, currently at $4.89, which is backed by $4.84 1/2. Bulls are targeting initial resistance at the psychological $5.00 level, which is backed by $5.06 1/4.
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 rose 7 3/4 cents to $12.80 3/4, the highest close since Sept. 28. December meal rallied $5.20 to $377.20 after marking the lowest intraday level since June 12. December soyoil fell 71 points to 55.28 cents, the lowest close since June 29.
Fundamental analysis: Soybean futures recovered from overnight losses amid a meal rally following reaching the lowest level since mid-June. USDA’s Weekly Export Sales Report released early this morning showed net sales of 808,500 MT during the week ended Sept. 28, which rose 20% from the previous week and were near the top-end of the pre-report range of 400,000 to 900,000 MT. While exports have risen slightly, commitments continue to trail year-ago by 32%, which continues to weigh on the complex.
Meanwhile, in Argentina, soybean processing plants are running out of soybeans in the wake of a historic drought which cut the crop in half, according to the head of the country’s grain export chamber, which will leave well over two-thirds of factory capacity idle. According to Argentina’s ag ministry, soybean crush volume plummeted 27% from year-ago to 19.6 MMT through the first eight months of the year, despite record imports from neighboring countries.
South America continues to face varying weather conditions, with World Weather Inc. maintaining conditions will remain tenuous in western and northern Argentina, but rain will fall in most summer crop areas of Brazil during the next ten days, increasing soil moisture for improved planting conditions. However, Brazil’s rainfall will be erratic in center west, leaving some need for greater rain, while too much rain is expected from northern Rio Grande do Sul to Parana, where delays to fieldwork are expected over the next ten days.
Technical analysis: While November soybeans notched higher, initial resistance at $12.82 1/4 continued to serve up resistance for bulls. A consecutive run at the level will likely find increased momentum towards the 10-day moving average of $12.87 3/4, with additional resistance serving at $12.91 3/4 and $12.98 1/2, and again at the 100-, 20- and 200-day moving averages of $13.08, $13.12 1/2 and $13.23 3/4. Meanwhile support continues to lie at $12.66 1/4, $12.59 1/4, then at this week’s low of $12.65 3/4.
After reaching the lowest intraday level since June 12, December meal futures rallied, ending a four-day losing streak. However, resistance at $377.20 limited today’s efforts and will continue to prove a barrier in an upside move. Though a push through the area will find additional resistance at the 10-day moving average of $382.50, then at $386.70 and again at the 20-, 100-, 40- and 200-day moving averages of $388.80, $392.00, $393.50 and $401.50, respectively. Meanwhile, support will continue to serve at $367.70, $363.50 and $358.20.
December soyoil lost technical traction, with bears notching a low-range close below support at 55.45 cents. Initial resistance will now serve at 54.92 cents, and again at 53.90 cents. A move higher, will be stifled by resistance at the 200- and 10-day moving averages of 57.08 and 57.15 cents, and again at the 100-day moving average of 57.674 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 18 1/4 cents to $5.78 1/4. December HRW wheat gained 24 cents at $6.90 1/2. Prices closed near their session highs. December spring wheat rose 19 3/4 cents to $7.31 1/2.
Fundamental analysis: The wheat futures markets rallied today on reports a cargo ship is suspected of hitting a sea mine outside the entrance to the Sulina Canal, according to a Lloyd’s List Intelligence casualty report. The Turkey-flagged ship reportedly sustained minor damage. Britain has accused Russia of plotting to sabotage civilian cargo ships loaded with Ukrainian grain by planting sea mines on the approaches to the country’s Black Sea ports. Short covering was featured in today’s solid gains in wheat. Wheat traders will continue to closely monitor this situation.
Weather leans slightly friendly for the wheat markets. World Weather Inc. today reported dryness will continue through the weekend in southern Russia, Ukraine and parts of southern and central Europe where moisture is needed to support germination and emergence. U.S. hard red winter wheat areas will experience net drying for a while, but rain Oklahoma and north-central Texas overnight was welcome. Argentina wheat areas still need significant rain. Greater rain is now needed in western Australia and parts of south Australia, where the ground is becoming too dry, said the forecaster.
USDA today reported U.S. wheat sales of 273,100 MT for week ended Sept. 28--down 50% from the previous week and down 34% from the four-week average. Net sales were at the lower end of market expectations.
Technical analysis: Winter wheat futures prices are still in nine-week-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing December prices above solid chart resistance at $6.10. The bears' next downside objective is closing prices below solid technical support at $5.25. First resistance is seen at $5.90 and then at $6.00. First support is seen at today’s low of $5.59 and then at $5.50. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at $7.25. The bears' next downside objective is closing prices below solid technical support at $6.25. First resistance is seen at $7.00 and then at $7.10. First support is seen at $6.75 and then at last week’s low of $6.62.
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 closed 47 points lower at 86.54 cents, and closed below the 40-day moving average for the first time since Sept. 22.
Fundamental analysis: December cotton futures extended lower for the third straight day amid extended selling in equites and crude oil futures, though additional weakness in the U.S. dollar limited losses. USDA’s weekly export data released prior to this morning’s open showed total net sales of 240,000 RB during week ended Sept. 28, which were up noticeably from the previous week and the four-week average. China was the top purchaser during the week, along with Vietnam and Macau.
With Friday comes the Labor Department’s September non-farm payroll data, which is expected to be up 170,000 compared an increase of 187,000 in last month’s report. However, Wednesday’s ADP job report which showed the addition of 89,000 new jobs to the private sector, largely missing expectations of 150,000, has traders thinking tomorrow’s job report will also be a miss. Additional proof the economy is weakening could prove positive for the marketplace, in that it would cool the surge in bond yields.
World Weather Inc. reports drier weather will return to western Texas and southwestern Oklahoma today and will continue through much of the next two weeks and conditions for cotton maturation and harvesting should quickly improve with some showers Wednesday into next Thursday that should cause more than brief interruptions to harvesting.
Technical analysis: December cotton bears gained a bit more technical traction with a close held below the 40-day moving average of 86.79 cents for the first time since Sept. 22. Initial support will now serve at 86.46 cents, with additional support at 85.90 and 85.17 cents, as well as the 100-day moving average of 83.92 cents. Conversely, attempts to move higher will now be limited by the 40-day moving average, then the 20- and 10-day moving averages of 87.31 and 87.52 cents, respectively and again at 87.75, 88.48 and 89.04 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.
