Crops Analysis | September 18, 2023
Price action: December corn fell 4 3/4 cents to $4.71 1/2, the lowest close since Sept. 24, 2021.
Fundamental analysis: Corn futures fell under increased pressure during today’s session, taking spillover weakness from SRW wheat and soybeans amid harvest pressure. December futures marked a fresh near-term low following a breach of the recent double bottom. However, crude oil strength and a lower U.S. dollar limited losses. Traders will continue to keep their ear to the ground as yield reports roll in as harvest progresses, while lackluster export demand is hovering over commodities. However, earlier today, USDA reported weekly export inspections of 642,095 MT (25.3 million bu.) in week ended Sept. 14, which were up 16,851 MT from the previous week and near the top-end of the pre-report range of 450,000 to 775,000 MT. Inspections for the 2023-24 marketing year are currently outpacing year-ago by 10.5%.
World Weather Inc. forecasts infrequent and mostly light rain will be most common during the next two weeks outside of a period of wet weather Friday through Tuesday of next week that will favor the western and especially the northwestern Corn Belt. Rain Friday into Tuesday of next week will interrupt fieldwork, but the soil is dry enough that delays to fieldwork should be brief.
USDA will update its weekly condition ratings and harvest progress following the close. A Reuters poll indicates traders expect corn conditions to decline one percentage point to 51% “good” to “excellent,” while harvest is expected to be 10% complete as of Sunday, up from 5% a week ago.
Technical analysis: December futures breached the recent double bottom of $4.73 1/2 and traded the lowest level since September 2021. Bears were able to pull off a close below support at the recent low as well as support at $4.73. Initial support will now serve at $4.69 3/4, again at $4.64 1/2, with psychological support serving at $4.50. However, corrective buying efforts will be met with resistance at today’s failed support levels, then at the 10- and 20-day moving averages of $4.81 1/4 and $4.83 1/4. From there, resistance will serve at $4.86 3/4, $4.90 and the 40- and 100-day moving averages of $4.95 1/2 and $5.16 3/4, respectively.
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 23 1/2 to $13.16 3/4, near the session low. December meal futures fell $4.20 to $387.90, settling two ticks above the session low. December soyoil fell 112 points to 60.94 cents.
Fundamental analysis: Soybeans faced selling pressure throughout the session as corn futures traded the lowest level in 23 months. The selling continues the downtrend from the August highs and indicates additional selling is likely to come. Brazil has begun planting its 2023-34 crop, with 0.2% of the crop planted, according to AgRural. The group currently projects production at 164 MMT, which would be up 8 MMT (5%) from 2022-23. Many producers are waiting for rainfall to plant soybeans, which is unlikely to come until the last days of September/early October outside of southern Brazil, World Weather Inc says.
Rainfall throughout the Midwest is likely to remain sparse over the coming week, though portions of the upper Midwest are likely to receive .5 to 1.5 inches of rain from Friday through Sunday, World Weather Inc says. The eastern Midwest will be mostly dry over the coming ten days with temps warmer than usual, which will help crop maturation and harvest.
Export inspections were lackluster this morning, with USDA reporting inspections of 393,004 MT (14.4 million bu.), which rose 19,385 MT from the previous week and were within the pre-report range of 250,000 to 600,000 MT. Inspections rise quickly throughout the month of September historically, if that does not pick up next week, further reductions to the USDA export forecast are likely.
The USDA releases their weekly Crop Progress report after the close, which is expected to show soybean conditions down one point to 51% “good” to “excellent.” USDA is also expected to show the soybean crop as 4% harvested, according to a Bloomberg poll.
Technical analysis: November soybeans saw a technical breakdown on the daily bar chart, failing below the downtrend support line that has capped all losses throughout the month of September. This failure led to accelerated selling pressure, with bears targeting the August lows around $13.00. Very little support remains until this area. Bulls are seeking to recapture prior support turned resistance at $13.30, which is backed by $13.45. Bears firmed their grasp on the technical advantage amidst today’s breakdown.
December meal futures saw selling pressure today as well, remaining in a downtrend on the daily bar chart. Bears retain the technical advantage, though some corrective buying is possible in the next couple of days. Bulls supported price near $387.50 support in today’s session, which will remain support into Tuesday. Firmer support comes in near $380.00. Bulls are seeking to take out $396.00. resistance, which is backed by the psychological $400.00 level.
December soyoil was not immune to selling pressure today as prices remain in a downtrend. Bears are seeking a daily close below the 60-cent level, which capped nearly all the downside since July. This is a key pivot, loss of which would likely trigger a longer-term downtrend. Bulls are seeking to take out resistance at 62.00 cents, backed by last week’s high of 62.49 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 13 cents to $5.91 1/4 and nearer the session low. December HRW wheat closed down 11 1/2 cents at $7.35 and near mid-range. December Spring wheat futures fell 15 cents on the session to $7.74.
Fundamental analysis: The wheat futures markets today saw technical selling pressure as the charts remain firmly bearish. Lower corn and soybean futures prices as harvest pressure and commercial hedge selling ramps up also weighed on the wheat futures markets today. Look for the wheat futures markets to continue to follow the lead of corn and soybeans in the coming weeks.
USDA this morning reported U.S. wheat export inspections of 367,371 MT, which were down 38,810 MT from the previous week but within the pre-report expectations. Wheat continues to fall behind on its past annual performance pace on exports.
This afternoon’s USDA weekly crop progress reports are expected to show U.S. spring wheat harvested at 94% versus 87% last week and 94% at this time last year. U.S. winter wheat planted is seen at 15% complete as of Sunday, compared to 7% last week and 21% at this time last year.
Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. Prices are in seven-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 $6.00 and then at last week’s high of $6.07 1/2. First support is seen at today’s low of $5.87 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 last week’s high of $7.48 1/2 and then at the September high of $7.54 1/4. First support is seen at today’s low of $7.25 and then at the September 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 56 points to 87.00 cents, marking a mid-range close.
Fundamental analysis: December cotton futures were able to notch gains amid supportive outside markets, though technical resistance limited gains in addition to persisting demand concerns. Meanwhile, production concerns continue to loom in the wake of hot, dry weather in Texas through much of the growing season. World Weather Inc. notes a drier weather outlook this week into next week in Texas will be welcome after recent rain. The forecaster indicates most U.S. crop areas will experience good weather, although the potential tropical system near the lower east coast could bring too much moisture into the Carolinas and Virginia.
USDA will release its weekly condition ratings and harvest progress estimates following the close. Last week, USDA rated the crop as 29% “good” to “excellent,” and 42% “poor” to “very poor,” while harvest progress was estimated at 8% complete, one-percentage point ahead of last year during the same period.
Technical analysis: December cotton futures traded a relatively narrow range throughout today’s session, remaining within Friday’s lower range. Bulls had a difficult time gaining momentum above the 10-day moving average of 87.17 cents and below the 20-day moving average of 86.92 cents, with both serving as initial resistance/support. A breach below the 20-day will find additional resistance at the 40-day moving average of 86.13 cents, then at 85.77, 85.09 and 83.83 cents. A turn above the 10-day, however, will continue to face notable resistance at 87.71 cents, then at 88.97 and 89.65 cents and at the Sept. 1 high of 90.00 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.
