Crops Analysis | September 14, 2023
Price action: December corn futures closed 1 3/4 cents lower on the session to $4.80 1/2.
Fundamental analysis: Though corn futures broke lower after Tuesday’s report, prices have stabilized as traders await a fresh catalyst. The bearish seasonal tendency throughout September has yet to play out, with prices hovering right where the month started. The first objective yield look of the crop sent prices modestly lower, though support at the October low capped selling pressure. Traders were seeking a greater cut to yield, which the data does not point to, but test weights are now in focus for bulls, which are generally lower when the corn plant faces early maturation as the grain fill is cut short.
The Corn Belt is expected to remain mostly dry over the next few weeks. Some precipitation is expected from September 22-28, which will slow maturation and hinder harvest efforts, World Weather Inc reports.
This morning, USDA reported net sales of 753,300 MT for the 2023-24 marketing year were down 21% from the prior week and 8% from the four-week average. Increases came primarily from China, Colombia and Mexico. Traders expected net sales between 500,000 MT and 1.1 MMT.
Technical analysis: While prices were supported by the August low of $4.73 1/2, prices continue to put in a series of lower highs on the daily bar chart. Bulls have shown resilience, but time is running out to reverse the downward trend and seasonality favors the bears. Bulls are seeking to keep price above $4.73 1/2, a daily close below which likely leads to a test of $4.50 support. Bears are defending $4.83 resistance, with buying likely to accelerate after a daily close above that level. Additional resistance stands at $4.86 then $4.96.
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 10 3/4 cents to $13.60 1/2, closing near the session high and above the 40-day moving average. December soymeal rose $4.60 to $399.40, while December remained unchanged at 61.72 cents.
Fundamental analysis: Soybean futures were able to extend Wednesday’s gains on additional corrective buying following Tuesday’s losses. Meal gains led the complex higher despite weak export sales data released earlier by USDA. For the week ended Sept. 7, the government reported weekly soybeans sales of 703,900 MT, which were down notably from the previous week and near the low-end of the pre-report range of 600,000 MT to 1.45 MMT. Top purchasers for the week included China and “unknown destinations.” Meanwhile, the data showed net soymeal sales of 454,700 MT, topping the pre-report range of 100,000 to 400,000 MT.
World Weather Inc. reports dryness in many areas in recent weeks and that which is still expected to continue through the weekend will pressure yields a little lower in late season soybeans, though most of the impact of dryness should be easing due to the lateness of the season and rain is expected to evolve in the western Corn Belt and Plains next week, slowing fieldwork and crop maturation rates.
The National Oilseed Processors Association (NOPA) NOPA will release August crush data on Friday, with a Reuters poll indicating analysts anticipate NOPA members crushed 167.802 million bushels last month. If realized, the August crush would be down 3.2% from the 173.03 million bushels processed in July, but up 1.4% from August 2022 crush of 165.538 million bushels. The estimate implies a daily crush of 5.593 million bushels, which would be up slightly from 5.590 million bu. per day in July. The crush is typically near its lowest point of the year in August as processors idle plants for seasonal maintenance ahead of harvest.
Technical analysis: November soybeans gained a slight technical advantage, with a close held above resistance of $13.56 as well as the 40-day moving average of $13.58. Initial resistance will now stand at the 10-day moving average of $13.62 1/2, then at the 20-day of $13.66, again at $13.73 and the Aug. 28 high of $14.09 1/2. Meanwhile, support will now lie at today’s failed resistance levels, then at $13.44 3/4, $13.38 1/2, and the 200-day moving average of $13.31 1/2.
December meal futures were able to test the 10-, 40- and 20-day moving averages of $399.40, $400.20 and $401.20, respectively, but were ultimately limited by the area into the close but ended the session right on the 10-day. A consecutive run at the overhead resistance will likely find increased momentum towards the 200-day moving average of $403.30, then $405.30, with limited resistance serving from there to the Aug. 28 high of $421.00.
December soyoil attempted to squeeze a bit further above the 10-day moving average but was ultimately limited by the 40-day moving average of 61.99 cents, which will continue to serve as initial resistance., a turn above the area will then find resistance at the 20-day moving average of 62.39 cents, again at 62.99 and 64.17 cents. Conversely, a turn lower will continue to find support at the 10-day moving average of 61.64 cents, with support layered to the 100-day moving average of 56.54 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 3 1/2 cents to $5.93 3/4, ending nearer the session high. December HRW wheat was down 8 1/4 cents at $7.36 1/2, a mid-range close. December spring wheat futures fell 4 cents to $7.83 1/2.
Fundamental analysis: The wheat futures markets were pressured today by chart-based selling from the speculators and by solid gains in the U.S. dollar index that hit a six-month high today. Price-bearish weather in the Plains states also helped wheat market bears today.
World Weather Inc. said recent rains in U.S. HRW wheat areas are expected in the coming week that will improve topsoil moisture for better planting, germination and crop emergence.
USDA this morning reported weekly U.S. wheat export sales of 437,900 MT for 2023-24, which were up 18% from the previous week and up 20% from the four-week average. The numbers were within market expectations.
Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. Prices are in six-week-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing December prices above solid chart resistance at $6.40. The bears' next downside objective is closing prices below solid technical support at $5.50. First resistance is seen at this week’s high of $6.01 1/2 and then at the September high of $6.15 1/2. First support is seen at today’s low of $5.83 1/2 and then at the contract low of $5.70. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at $7.70. The bears' next downside objective is closing prices below solid technical support at $7.00. First resistance is seen at this week’s high of $7.46 1/4 and then at the September high of $7.54 1/4. First support is seen at $7.25 and then at this week’s low of $7.09.
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 93 points to 87.82 cents, ending near the session high and above the 10-day moving average.
Fundamental analysis: December cotton futures shook off a portion of Wednesday’s losses but were limited by technical resistance at the 10-day moving average. Notable strength in crude oil futures led the natural fiber higher, though a surging U.S. dollar dampened upside momentum. Traders continue to weigh U.S. supply concerns along with reduced demand from top importer, China. In USDA’s Weekly Export Sales Report, USDA reported net sales of 67,400 RB during week ended Sept. 7, which were down 21% from the previous week and 27% from the four-week average. Primary purchasers included Vietnam, Mexico and China. Meanwhile, shipments of 118,200 RB were down 33% from the previous week and 41% from the four-week average.
World Weather Inc. reports Daily showers and thunderstorms through Friday along with mild temps in western Texas and southwestern Oklahoma will induce improvements in conditions for irrigated cotton while some dryland cotton should benefit from the rain as well with the rain coming too late to improve yields for most of the dryland crop. The forecaster notes some cotton should be discolored by the rain and the drier weather advertised for Saturday through Sept. 28 will be important in bleaching cotton white and reducing the risk of boll rot.
Technical analysis: December cotton was able to capture a close above the 10-day moving average of $87.56, but was limited by resistance at 87.88, which will now serve as initial resistance. From there resistance stands at 88.88 cents, 89.52 cents and the Sept. 1 high of 90.00 cents. Conversely, initial support will now serve at the 10-day moving average, then at the 20-day moving average of 86.59 cents, 86.24 cents, then at the 40-day moving average of 86.00 cents and again at 85.60 and 84.60 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.
