Crops Analysis | September 19, 2023
Price action: December corn futures rose 4 3/4 cents to $4.76 1/4 and near the session high. Prices hit a two-year low early on.
Fundamental analysis: The corn futures market saw mild support and short covering following a weekly USDA crop progress report Monday afternoon that leaned slightly bullish. As of Sunday, the agency rated the corn crop as 51% “good” to “excellent,” down one percent from the previous week. Harvest progress was estimated at 9%, compared to the average of 7%. When USDA’s ratings are plugged into the Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect) the crop fell 3.2 points to 332.9, which was 4.0 points (1.2%) below year-ago at this time. Still, the U.S. corn harvesting is looking to be bountiful, overall, which will likely limit the upside in futures prices in the coming weeks. Weaker soybean and wheat futures prices today also limited buying interest in corn futures.
A rallying crude oil futures market that today reached another 10-month high is a bullish “outside market” factor that is friendly for the grain markets. However, the recent strong U.S. dollar index that last week hit a six-month high has somewhat offset the bullish impact of the up-trending crude oil market.
Technical analysis: The corn futures bears have the solid overall near-term technical advantage. The next upside price objective for the bulls is to close December prices above solid chart resistance at $5.00. The next downside target for the bears is closing prices below chart support at $4.50. First resistance is seen at this week’s high of $4.78 3/4 and then at the September high of $4.90 1/4. First support is at today’s low of $4.67 3/4 and then at $4.60.
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 1 1/4 cents to $13.15 1/2, marking a mid-range close, while December meal rose $1.30 to $389.20. December soyoil fell 65 points to 60.29 cents.
Fundamental analysis: Soybean futures marched lower for the third straight session, though losses across the grain and soy complex were limited by a weaker U.S. dollar and crude oil strength. Looming harvest pressure, lackluster demand and concerns of a government shutdown at the end of the month have weighed on commodities.
As of Sunday, USDA estimated the soybean crop as 52% “good” to “excellent,” unchanged from the previous week, while harvest was estimated at 5% complete, slightly ahead of the five-year average of 4%. When the weekly ratings are plugged into our Crop Condition Index, the crop declined 2.1 points to 331.3, down 7.6 points (2.3%) from last year in mid-September. Illinois accounted for the bulk of the decline over the past week. Meanwhile, Dr. Michael Cordonnier continues to project a national yield of 49.5 bu. per acre, unchanged from his previous estimates, but indicated a neutral to lower bias going forward. Cordonnier adopted USDA’s harvested acreage forecast of 82.79 million acres, which now results in total production of 4.09 billion bu.
Planting in Brazil has begun, which is slightly ahead of average due to the planting pace in Parana, where adequate soil moisture has allowed farmers to start planting. A few farmers in Mato Grosso, who intend to plant a second cotton crop, were given permission to start planting soybeans on Sept. 1 instead of the traditional Sept. 16. Temps this week in Brazil are expected to be very hot. Meteorologists are warning producers in central Brazil to not plant soybeans in dry conditions. Any soybeans that manage to germinate under high temps will likely die and must be replanted. The forecast for southern Brazil continues to be wet.
Technical analysis: November soybeans extended Monday’s losses, though solid support at the 100-day moving average $13.04 1/4 limited losses. However, a breach of that level finds additional support at $12.96 1/2 and $12.77 1/. Near-term oversold conditions could likely ignite some corrective buying toward the 200-day moving average of $13.29 1/2, then at $13.35 1/2. From there resistance will serve at the 10- and 40- and 20-day moving averages of $13.49 1/2 and $13.51 1/2 and $13.62 1/2.
December soymeal tested initial support at $386.00 early in the session but was able to end the session positive. However, a consecutive test of the area could find increased momentum towards $384.10 and $380.50. An extension higher, however, will continue to face resistance at $391.50, then at the 100-, 10-, 40- and 20-day moving averages of $393.70, $396.20, $398.70 and $401.40.
December soyoil ended the session at initial support of 60.29 cents, with additional support serving at 59.64 cents and 58.65 cents. Meanwhile, the 10-day moving average of 61.10 cents is providing initial resistance, with solid resistance around the 40- and 20-day moving averages of 61.81 and 61.96 cents. A turn above the area would likely find bulls working toward the July 24 high of 65.58 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 futures fell 7 1/4 cents to $5.84 and nearer the session low. December HRW wheat closed down 4 cents at $7. 31 and near mid-range. December spring wheat futures rose 2 1/4 cents to $7.79 3/4.
Fundamental analysis: The wheat futures markets were pressured today by more technical selling and as beneficial rains have fallen and are in the forecast for much of U.S. wheat country. World Weather Inc. today reported that in HRW wheat country conditions in the next seven days will be a little drier than preferred in western production areas. “Rainfall in the last ten days has been helpful for improving topsoil moisture and the environment is more favorable now for wheat planting, germination, and emergence. However, follow-up rain is important and needed.” In the northern Plains, “a significant rain event is still likely to impact the region late Wednesday through Saturday. The rain will be good in western areas for winter wheat planting. However, the rain will also disrupt harvest progress,” said the forecaster.
Look for the wheat futures markets to continue to be influenced by price direction in corn and soybeans markets, as the U.S. harvest for both is getting into full swing.
USDA on Monday afternoon estimated U.S. spring wheat harvest was 93% complete as of Sunday, while winter wheat plantings were estimated at 15%, compared to the average of 16%.
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 $5.81 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 $7.22 3/4 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 52 points to 87.52 cents, notching a close above the 10- and 20-day moving averages.
Fundamental analysis: December cotton futures were able to extend Monday’s gains amid spillover strength from crude oil futures, which notched a 10-month high, and a weaker U.S. dollar. Optimism around demand from China has recently increased amid a slight recovery with the country’s released import quota showing an influx of buying activity from mills. Heightened demand confidence and U.S. production curbs will keep the natural fiber supported amid global supply concerns.
Following Monday’s close, USDA reported as of Sunday, the cotton crop was rated 29% “good” to “excellent,” unchanged from the previous week, while the portion of the crop rated “poor” to “very poor” was estimated at 43%, up two percentage points from the previous week. The Texas crop was rated 10% “good” to “excellent” and 65% “poor” to “very poor.” Meanwhile harvest progress was estimated at 9% complete, slightly behind the five-year average of 10% for mid-September.
Technical analysis: December cotton found solid support at the near convergence of the 10- and 20-day moving averages of 87.00 and 87.09 cents, respectively. While resistance at 87.61 and 88.23 cents were each tested, they will continue to serve as resistance, along with 88.80 cents and the recent high of 90.00 cents. Support will continue to serve at the 10- and 20-day moving averages, then at 86.42 cents, again at the 40-day moving average of 86.18 cents, 85.85 and 85.23 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.
