Corn
Price action: December corn rose 3 1/2 cents to $4.00 3/4, nearer the session high.
Fundamental analysis: Corn futures gathered steam shortly after this morning’s open, in unison with soybean futures, which notched correctively higher along with soymeal futures following a six-day sell off. Short covering following a reach to contract lows was the obvious driver of today’s price action as outside markets supplied limited assistance as crude oil weakness overshadowed modest softening in the U.S. dollar. However, reports of dwindling corn production in Ukraine likely piqued bulls’ interest, as Reuters indicated the country’s corn production could fall to 20 to 21 MMT, down from 30 MMT in 2023 if drought persists, according to producer group Ukrainian Agrarian Council. Most of Ukraine endured a heatwave in July, which producers expect will decrease the yield of late crops by around 30%. World Weather Inc. noted today heat and dryness will continue to remain a concern form the Balkan Countries of southeastern Europe through Ukraine to Russia’s Southern Region during the coming week to ten days.
Ethanol production averaged 1.072 million barrels per day (bpd) during the week ended Aug. 9, up 5,000 bpd (0.5%) from the previous week and 0.3% above last year. Ethanol stocks declined 413,000 barrels to 23.354 million barrels.
Early Thursday morning USDA will report weekly export sales data for the week ended Aug. 8, with analysts expecting net old-crop sales to range from 300,000 to 550,000 MT and new-crop sales between 150,000 to 800,000 MT. Last week, net old crop sales totaled 485,447 MT, up noticeably from the previous week and four-week average, while new-crop sales were reported at 249,100 MT.
Technical analysis: December corn futures held an inside day but were able to end the session above the 10-day moving average of $4.00 1/2. Initial resistance will now serve at the 20-day moving average of $4.05 1/2 and is backed by the 40-day moving average of $4.15 3/4. Conversely, initial support will serve at $4.00, then at $3.98 1/2, $3.94 and Monday’s low of $3.90 1/2. Bears continue to hold the near-term technical advantage and are looking to edge below $3.75, while bulls need to achieve a close above the 40-day.
What to do: Get current with advised sales.
Hedgers: You should be 80% priced in the cash market on 2023-crop.
Cash-only marketers: You should be 80% priced on 2023-crop.
Soybeans
Price action: November soybeans rose 6 cents to $9.68 1/2 and nearer the session high. September soybean meal closed up $5.30 at $305.10 and nearer the daily high. September soybean oil closed down 28 points at 40.01 cents and nearer the session low.
Fundamental analysis: The soybean and soybean meal markets saw some short covering today after hitting contract lows today and Tuesday, respectively. A slightly firmer U.S. dollar index today and lower crude oil prices did work to limit buying interest in the soybean complex futures today.
U.S. soybean weather still leans bearish. World Weather Inc. today said a “timely period of wetter weather continuing into Friday will restore some of the soil moisture and improve conditions for crop development in the drier areas across the Midwest, while keeping soil moisture favorable and yield potentials high elsewhere.” Rain will be most important in the driest areas from southeastern South Dakota into northwestern Iowa as well as from central to eastern Ohio, where rain will fall Friday into Sunday. Rain will become less frequent and lighter this weekend through Aug. 28, and while much of the Midwest will dry down, soil moisture should be great enough to keep conditions for late crop development favorable in much of the region, said the forecaster.
The weekly USDA Export Sales Report on Thursday morning is expected to show U.S. soybean sales of 100,000 to 500,000 MT in the 2023-24 marketing year, and sales of 400,000 to 1.0 MMT in the 2024-25 marketing year.
Technical analysis: The soybean complex futures bears have the solid overall near-term technical advantage. November soybean prices are in a 2.5-month-old downtrend on the daily bar chart. The next near-term upside technical objective for the soybean bulls is closing November prices above solid resistance at the August high of $10.42. The next downside price objective for the bears is closing prices below solid technical support at $9.00. First resistance is seen at Tuesday’s high of $9.88 1/2 and then at this week’s high of $10.02 1/2. First support is seen at today’s contract low of $9.55 1/4 and then at $9.50.
The soybean meal bears’ next upside price objective for the meal bulls is to produce a close in September futures above solid technical resistance at $325.00. The next downside price objective for the bears is closing prices below solid technical support at $285.00. First resistance comes in at today’s high of $306.10 and then at $310.00. First support is seen at the contract low of $299.40 and then at $295.00. Wyckoff’s Market Rating: 6.0
Soybean oil prices are in a five-week-old downtrend on the daily bar chart. The next upside price objective for the bean oil bulls is closing September prices above solid technical resistance at last week’s high of 42.61 cents. Bean oil bears’ next downside technical price objective is closing prices below solid technical support at 38.00 cents. First resistance is seen at today’s high of 40.98 cents and then at Tuesday’s high of 41.62 cents. First support is seen at the contract low of 39.67 cents and then at 39.00 cents.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold in the cash market on 2023-crop with 25% reowned in October $10.50 short-dated serial call options at 18 1/2 cents. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Cash-only marketers: You should be 80% priced on 2023-crop. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Wheat
Price action: December SRW wheat rose 4 1/2 cents to $5.56 1/4, nearer the session high, while December HRW fell 1 1/4 to $5.61 1/4, forging a mid-range close. September HRS futures fell a penny to $5.92.
Fundamental analysis: Wheat futures continued to face technical hurdles at midweek combined with limited outside market support. Black Sea competition continued to overshadow looming supply concerns from a rain-soaked French soft wheat crop, which will be the smallest since the 1980’s. The country’s ag ministry reported the crop is showing mixed milling quality, with erratic test weights, though protein levels are satisfactory and close to last year. Meanwhile, Egypt’s recent tender for a whopping 3.8 MMT of wheat backfired when the country pushed for delayed payment terms, only purchasing 380,000 MT earlier this week. GASC, Egypt’s state wheat buyer required 270-day letters of credit, which led to higher-than-expected offers and limited purchase volume.
World Weather reports Australia’s crops are looking good for the start of spring development, while South Africa and Argentina crops are semi-dormant with rain needed in Argentina before spring arrives. Crops in the southwest of Russia need some rain, according to the forecaster, while winter crop harvesting will advance in the Pacific Northwest and around showers in Ontario and Quebec as well as parts of the U.S. Midwest. Some heavy rain in Quebec during the weekend stalled wheat harvesting and may have raised some concern over grain quality especially with more rain coming this weekend and into next week.
Thursday morning USDA will release weekly export sales data, with analysts expecting net sales to have ranged from 200,000 to 500,000 MT during the week ended Aug. 8. Last week, net sales totaled 273,980 MT, down 4% from the previous week and 23% from the four-week average.
Technical analysis: SRW wheat spent the session consolidating between the 10- and 20-day moving averages, each trading around $5.60 1/2 and support at $5.46 1/2. An extension above initial resistance will face an additional battle at $5.67, $5.72 1/2 and the 40-day moving average of $5.76 1/4, while a move below support will encounter additional support at $5.41, then at the July 29 low of $5.39 1/2 and again at $5.33 1/2.
December HRW futures edged lower for a third straight session as the 10- and 20-day moving averages of $5.70 and $5.73 1/4 continue to pressure prices, though initial support at $5.56 1/2, which is backed by the July 30 low of $5.51 1/4 limited selling efforts. An extension lower will face additional support at $5.45 1/2, while a move above the 10- and 20-day moving averages will find additional resistance at $5.78 1/2 and then at the 40-day moving average of $5.86.
What to do: You should have claimed profits on the 2024-crop hedges in July SRW futures. Wait on a corrective rebound to increase sales.
Hedgers: You should be 60% sold on 2024-crop in the cash market. You should also have 10% of anticipated 2025-crop production forward sold for harvest delivery next year.
Cash-only marketers: You should be 60% sold on 2024-crop. You should also have 10% of anticipated 2025-crop production forward sold for harvest delivery next year.
Cotton
Price action: December cotton fell 94 points to 67.05 cents, near the daily low and closed at a contract low close.
Fundamental analysis: The cotton futures market faced more technical selling pressure today, as the chart posture remains bearish. Fundamentally, the inability of the cotton futures market to sustain price gains after Monday’s bullish USDA monthly supply and demand report has also emboldened cotton market bears. Lower crude oil prices today and a slightly firmer U.S. dollar index were also bearish outside-market forces for the cotton market.
Many cotton traders this week also likely took note of a report from the International Energy Agency that crude oil demand in China is declining, which is a negative omen for the Chinese economy, which is the second largest in the world and a voracious consumer of raw commodities, including cotton.
Weekly U.S. export sales data from USDA Thursday morning will be closely examined by cotton traders. Historically, there is lower export demand for U.S. cotton over the next couple months.
Technical analysis: The cotton futures bears have the solid overall near-term technical advantage. Prices are in a 2.5-month-old downtrend on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in December futures above technical resistance at this week’s high of 70.80 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 63.00 cents. First resistance is seen at today’s high of 68.25 cents and then at 69.00 cents. First support is seen at the contract low of 66.55 cents and then at 66.00 cents.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.
Cash-only marketers: You should be 100% sold on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.