Crops Analysis | August 5, 2024

Crops Analysis

Pro Farmer's Crops Analysis
Pro Farmer’s Crops Analysis
(Pro Farmer)

Corn

Price action: December corn rose 3 3/4 cents to $4.07, marking a one-week high close.

Fundamental analysis: Corn futures were able to rebound modestly from overnight lows, though a general risk-off tone across the global marketplace limited buying in the grain complex as recessionary and geopolitical concerns heightened cautionary sentiments. However, a near seven-month low in the U.S. dollar Index increased injected some confidence around U.S. exports, while USDA’s weekly export inspection data earlier today supplied additional optimism. Net Inspections for the week ended Aug. 1 totaled 1.2 MMT (47.8 million bu.), which rose 143,102 MT from the previous week and exceeded analysts’ pre-report expectations ranging from 700,000 MT to 1.2 MMT.

U.S. weather continues to prove mostly favorable, though a large part of the Midwest will dry down during the next two weeks, according to World Weather Inc., but most crops will not see serious stress outside of some heat in the west. Temps through the next ten days will often be mild while subsoil moisture is still adequate to support the needs of most crops. The forecaster indicates some crop stress is likely in drier areas of the west, as topsoil moisture has become short in some areas as the subsoil dries down, which should eventually become dry enough that crop stress increases and yield potentials decline. The greatest impacts will occur in eastern Nebraska and western Iowa to eastern Kansas and into central Missouri.

Crop conditions will be updated this afternoon in USDA’s weekly Crop Progress Report. Analysts are expecting corn conditions to decline a point from last week to 67% “good” to “excellent,” according to a Reuters poll.

Technical analysis: December corn managed to forge a high range close after suffering in overnight trade. A close was held above resistance at $4.05 3/4 for the first time since July 29, though resistance at the 10- and 20-day moving averages, each trading around $4.09 curbed momentum. Initial support will now serve at today’s failed resistance level, then at $4.00, which is backed by the Aug. 1 low of $3.95. Bulls will need to hold a close above resistance at $4.16 1/2 in order to regain the technical advantage, while bears continue to eye $3.85.

What to do: Get current with advised sales.

Hedgers: You should be 70% sold on 2023-crop in the cash market.

Cash-only marketers: You should be 70% sold on 2023-crop.

Soybeans

Price action: November soybean futures rose 13 1/2 cents to $10.40 3/4 and closed on session highs. September meal futures rallied $5.00 to $338.70, closing on session highs. September bean oil futures slid 59 points to 41.09 cents and closed near the session’s mid-point.

Fundamental analysis: Soybeans rebounded from sharply lower trade overnight and closed higher on the day and nearer session highs, showing strength despite a risk-off attitude in outside markets. Outside markets were sharply lower overnight and also made up for losses during daytime trading, though still closed largely lower on the day. Weakness in the U.S. dollar was supportive today as volatility surrounding the Forex markets led to unwinding of large, leveraged trades, hemorrhaging volatility into asset markets worldwide.

Southeastern states are facing a serious flood event this week due to Tropical Cyclone Debby which is expected to drop several inches of rain from northern Florida to eastern North Carolina, says World Weather Inc. The lower Midwest and Delta will experience net drying over the next week to ten days which could lead to moisture stress as the crops dry out, says the forecaster.

USDA is set to release their weekly Crop Progress Report this afternoon. Traders anticipate USDA rating the soybean crop at 66% “good” to “excellent,” which would be down one point from a week ago but still up from 54% a year ago.

USDA reported soybean export inspections of 261,203 MT (9.6 million bu.) for the week ended Aug. 1, down 147,379 MT from the previous week and near the lower end of the pre-report expectations from 200,000 to 475,000 MT.

Technical analysis: November soybean futures continue to build from last Thursday’s for-the-move low, though bears continue to hold the technical edge. Bulls are ultimately seeking to overcome downtrend line resistance at $10.54, though additional resistance lies at $10.50 on the way. Bulls are seeking to keep prices above support at $10.31 3/4, else a trip to firm support at $10.13 1/2 is likely.

September meal futures continue to work higher, rendering the technical advantage to the bulls. Resistance lies at $340.00 with further strength seeking to overcome the 100-day moving average at $343.80. Support stems from $334.30, the 40-day moving average, which coincides with last week’s highs. Further selling finds support at $330.0.

September bean oil futures saw relative weakness today and forged a fresh contract low. Initial resistance stems from the prior contract low at 41.44 cents, which is reinforced by 10-day moving average resistance at 43.06 cents. Support comes in at today’s contract low of 40.30 cents then at the psychological 40.00 cent mark.

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 70% sold 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 1 cent to $5.63 1/4 and nearer the session high. December HRW wheat rose 1/2 cent to $5.76 3/4 and nearer the session high. September spring wheat futures sunk 7 1/2 cents to $5.87 1/2.

Fundamental analysis: The winter wheat futures markets today did not fare too badly given the rout in global stock markets and high trader and investor anxiety in the general marketplace. Today’s high-range daily closes in winter wheat futures hint that some of the money flowing out of the stock market may be entering the grain futures markets on the long side, on some speculative bargain hunting. Still, U.S. and/or global recession fears have quickly accelerated which are likely to limit the upside in the grains, especially if the general marketplace remains overly anxious. A drop in the U.S. dollar index today somewhat mitigated for wheat futures the heightened geopolitical concerns.

World Weather Inc. today said “there is still not much incentive for weather to be a bullish factor” for wheat. There is still some concern over spring wheat in the Russia New Lands because of too much rain east of the Ural Mountains and not enough in some southwestern production areas. Europe spring cereals are rated favorable and winter crop harvest conditions may improve a little this week. Australia’s winter crop outlook “is still quite favorable and rain in Argentina this week will be welcome in the south and east leaving the west still dry.” Canada’s Prairies rainfall this week may be helpful for some late filling wheat, but the moisture comes too late for most areas, said the forecaster.

USDA this morning reported U.S. wheat export inspections of 440,888 MT, down 13,904 MT from the previous week but near the upper end of pre-report expectations.

This afternoon’s USDA weekly crop progress reports are expected to show the U.S. spring wheat condition at 73% in “good” to “excellent,” compared to 74% last week and 41% one year ago at this time. U.S. spring wheat harvested as of Sunday is forecast at 9% complete versus 1% complete last week and 11% one year ago at this time. U.S. winter wheat harvested is seen at 89% complete versus 82% last week and 87% one year ago at this time.

Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. Nine-week-old downtrends are in place on the daily bar charts. SRW bulls’ next upside price objective is closing December prices above solid chart resistance at $6.00. The bears’ next downside objective is closing prices below solid technical support at $5.00. First resistance is seen at $5.66 and then at $5.75. First support is seen at the contract low of $5.39 1/2 and then at $5.25. HRW bulls’ next upside price objective is closing December prices above solid technical resistance at $6.00. The bears’ next downside objective is closing prices below solid technical support at $5.25. First resistance is seen at $5.82 and then at $5.95 1/2. First support is seen at today’s low of $5.61 1/2 and then at the contract low of $5.51 1/4.

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 47 points to 67.78 cents, a new-for-the-move low.

Fundamental analysis: December cotton futures rebounded from fresh contract lows carved in overnight trade, though technical pressure and looming cautionary sentiments curbed buying momentum. The marketplace was riddled with selling today amid rising recessionary concerns, coupled with heightened geopolitical concerns as tensions continue to flare in the Middle East. Last week’s downbeat U.S. Jobs Report catalyzed widespread selling, which led the marketplace to price in a 60% chance of an emergency Federal Reserve rate cut of 75 basis points over the next week. Meanwhile, concerns of a broader Middle East war are also hovering over the marketplace as Israel is bracing for a major attack from Iran after Israel assassinated key military officials from Hamas and Hezbollah last week.

Lending some support to the natural fiber are forecasts for too much rain and flooding in the U.S. southeastern states, which may hurt cotton development especially if flood water develops in many fields and prevails for a while. World Weather Inc. notes far southwestern Georgia and western Florida Panhandle as well as Alabama should not be included in the wettest problem areas. Concerns will remain over growing regions of the Carolinas, eastern Georgia and northeastern cotton areas in Florida will be high until Tropical Cyclone Debby passes.

USDA will release its weekly Crop Progress Report this afternoon. Last week, the cotton crop was rated 49% “good” to “excellent” and 22% “poor” to “very poor,” while 87% of the crop was reported to be squaring and 54% was setting bolls.

Technical analysis: December cotton extended to a fresh for-the-move close as the 10-day moving average of 68.68 cents continued to curb buying efforts. Initial support will now serve at 67.47 cents, then at 66.99 cents, which is backed by today’s low of 66.90 cents, with bears likely eyeing 66.00 cents. Meanwhile, a move above the 10-day moving average will then face resistance at 69.21 and 69.60 cents, which are backed by the 40-day moving average of 71.32 cents, with bulls looking for a close above 70.00 cents in their journey to regaining the near-term technical advantage.

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.