Crops Analysis | September 21, 2023
Price action: December corn futures fell 7 cents, before settling at $4.75 1/4, nearer the session low.
Fundamental analysis: Corn futures faced selling pressure after the past two days of corrective gains, sending futures back to technical support. Front-month crude oil futures saw a bounce back above $90 this morning, but that was not enough to sway corn futures higher. Export sales were at the low end of expectations, as the USDA reported net sales of 566,900 MT for the 2023-24 marketing year. This morning, the USDA also announced daily sales of 137,160 MT for delivery to Mexico, with 121,920 for deliver for the 2023-24 marketing year and the remaining 15,240 MT for delivery during the 2024-25 marketing year. While today’s daily sale was supportive that countries are buying the recent break in prices, the sustained rally in the U.S. dollar index alongside record Brazilian exports has clearly taken a toll on U.S. exports, as outstanding sales remain at the lowest level since 2019 for this date.
The eastern Midwest is likely to remain mostly dry throughout the weekend, though some precipitation is likely to roll through the beginning of next week, World Weather Inc says. The western portion of the Corn Belt is expected to receive waves of rain over the weekend, disrupting crop maturation and harvest progress, though helping restore soil moisture. The rain is unlikely to help raise river levels though, as the dry soil is going to soak up the majority of the moisture, leaving barge weight restrictions in place and further dampening the export situation.
Technical analysis: December corn futures quickly gave up Wednesday’s gains and returned just shy of the recent double bottom low at $4.73 1/2. Bears retain full control of the technical advantage. Bulls are seeking to keep price above $4.73 1/2, additional support comes in at Tuesday’s low at $4.67 3/4. The bearish seasonal trend is likely to continue with a test of the psychological $4.50 level. Bears are seeking to defend initial resistance of $4.77 1/4, backed by $4.82 1/4, then $4.91 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 fell 25 1/2 cents to $12.93 3/4, ending near the session low and below the 100-day moving average for the first time since June 29. December meal futures fell $7.00 to $388.10. December soyoil fell 89 points to 58.40 cents, the lowest close since July 7.
Fundamental analysis: Soybean futures spent the overnight sliding lower, with increased selling transpiring amid USDA’s weekly export sales data that showed persisting lackluster demand. Increasing Fed hawkishness which led the greenback to a six-month high, cast a further shadow over the complex, along with advancing harvest pressure throughout the Midwest. While the Federal Reserve left its key interest rate unchanged on Wednesday, tempering the the fight against inflation, Fed officials also signaled they expect to raise rates once more this year, forcing market participants to take a risk-off stance.
Earlier today, USDA reported weekly export sales of 434,100 MT, which were down 38% from the previous week and missed the expected pre-report range of 550,000 MT to 1.2 MMT. Primary purchasers during the week were China, Japan and the Netherlands. Export commitments are currently running 33.6% behind a year-ago.
Technical analysis: November soybean bears gained technical traction today, with a close held below support at $13.12 1/2, the 100-day moving average of $13.05 1/4 and $13.00. An extension lower will find additional support at $12.82 1/4, $12.56 and the May 31 low of $11.30 1/2. Meanwhile, resistance will serve at today’s failed support levels, then at $13.25, the 200-day moving average of $13.29, then at the 10-, 40- and 20-day moving averages of $13.37 1/2, $13.46 and $13.57 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 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 $5.75 3/4 and near the session low. Prices closed at a contract low close. December HRW wheat dropped 18 1/2 cents to $7.10 1/2. Prices closed near the session low and closed at a two-year low close. December spring wheat fell 16 cents to $7.67 1/2.
Fundamental analysis: An FOMC statement and Fed Chair Powell press conference Wednesday afternoon that were even more hawkish on U.S. monetary policy than expected prompted a broad sell off in the raw commodity futures sector today, including wheat. The still-hawkish Fed pushed the U.S. dollar index higher today, which was also a negative for U.S. wheat that is already mostly uncompetitive on the world trade market. USDA this morning reported U.S. wheat export sales for 2023-24 totaled 307,700 MT in week ended Sept. 14. That’s down 30% from the previous week and down 20% from the four-week average. Sales were near the low end of market expectations.
Technical selling from the shorter-term speculative traders was also featured today, amid still fully bearish near-term charts.
World Weather Inc. today reported that in U.S. HRW country the need for greater rainfall will increase in the first week of the outlook in western production areas due to dryness and unusual warmth. “Greater rain will be needed for favorable what planting, germination, and emergence conditions,” said the forecaster. Rainfall will be significant in Nebraska today and far eastern production areas of Oklahoma today through Saturday. In the northern Plains, World Weather said a significant rain event will impact the region today into Sunday. “The rain will delay fieldwork advancement and crop maturation and will cause flooding in some areas. The rain will still be beneficial, though, for wheat planting and establishment in the western part of the region.”
Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage and gained fresh power today. 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 $6.20. The bears' next downside objective is closing prices below solid technical support at $5.50. First resistance is seen at today’s high of $5.90 1/4 and then at $6.00. First support is seen at the contract low of $5.70 and then at $5.60. The HRW bulls' next upside price objective is closing December prices above solid technical resistance at the September high of $7.54 1/4. The bears' next downside objective is closing prices below solid technical support at $7.00. First resistance is seen at today’s high of $7.29 1/2 and then at this week’s high of $7.44 1/2. First support is seen at the September low of $7.09 and then at $7.00.
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 fell 39 points to 86.47 cents, closing in the upper trading range after marking the lowest intraday level since Sept. 8.
Fundamental analysis: Cotton futures extended to a near two-week low as the U.S. dollar pushed to a six-month high following an increasingly hawkish tone from the Fed. On Wednesday, the Fed signaled an additional 25 basis point rate hike before the end of the year along with less easing next year, with the median forecast for the federal funds rate at 5.1% by the end of 2024, up from a projection of 4.6% in June. The comments ultimately expanded the risk-off tone across equities and commodities, with a combined focus on a looming government shutdown at the end of the month.
Meanwhile, traders will continue to focus on weather as harvest progresses in key growing areas. World Weather Inc. notes scattered showers are expected to return to Texas during the coming week to ten days, which may slow cotton maturation, though most of the rain will not be great enough to create much of an issue. Most of the crop will experience good weather, although the potential tropical system near the lower east coast could bring too much moisture into eastern North Carolina and Virginia this weekend.
Technical analysis: December cotton gapped lower overnight, with bears ultimately able to secure a close below support at 86.57 cents and with a test of support at the 40-day moving average ultimately proving futile. The level will now serve as initial support. From there, additional support will serve at 85.73 and 83.40 cents. Conversely, a turn higher will face resistance at the 20- and 10-day moving averages of 87.10 and 87.25 cents, respectively, then at 87.41, 87.95 and 88.25 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.
