Corn
Advice: We advise corn hedgers and cash-only marketers to sell another 10% of 2024-crop in the cash market to get to 30% priced.
Price action: March corn futures rose 7 1/4 cents to $4.49, near the session high and hit a nine-week high.
Fundamental analysis: The corn market got a friendly USDA monthly supply and demand report today. The agency made a much-larger-than-expected cut in U.S. corn ending stocks--by 200 million bu. from last month. USDA made no changes to supply. The agency increased projected ethanol use to 5.5 billion bu. and increased exports 150 million bu. to 2.475 billion bushels. Despite the sharp cut to ending stocks, USDA kept its average cash price at $4.10. The report prompted short covering and fresh buying interest in corn futures.
Corn traders brushed aside a stronger U.S. dollar index today, as the index has been trending lower the past couple weeks.
China has lowered its 2024 corn crop by 3.17 MMT, to 293.84 MMT, but that is still up 5 MMT from last year’s production.
Pro Farmer South America consultant Michael Cordonnier left his Brazilian and Argentine corn production forecasts at 125 MT and 48 MMT, respectively. He holds a neutral-higher bias toward Brazil’s crop.
Technical analysis: The corn futures bulls have the overall near-term technical advantage and gained fresh power today. Bulls have restarted a price uptrend on the daily bar chart. The next upside price objective for the bulls is to close March prices above solid chart resistance at the October high of $4.52 1/4. The next downside target for the bears is closing prices below chart support at $4.30. First resistance is seen at $4.50 and then at $4.52 1/4. First support is seen at today’s low of $4.40 3/4 and then at this week’s low of $4.37 1/2.
What to do: Get current with advised sales.
Hedgers: NEW ADVICE -- Sell another 10% of 2024-crop in the cash market to get to 30% priced.
Cash-only marketers: NEW ADVICE -- Sell another 10% of 2024-crop to get to 30% priced.
Soybeans
Price action: January soybeans rose 4 3/4 cents to $9.94 3/4. January soybean meal rose $2.40 to $292.00. January soybean oil fell 8 points to 42.72 cents. All three markets closed nearer their session highs.
Fundamental analysis: The soybean and meal markets today got some bullish traction from solid gains in corn futures and a rise in wheat prices.
Today’s monthly USDA supply and demand report saw the agency keep its U.S. soybean ending stocks forecast unchanged, making no changes to the 2024-25 balance sheet. USDA cut its 2024-25 average cash price projection by 60 cents to $10.20.
China imported 7.15 MMT of soybeans in November, down 940,000 MT (11.6%) from the previous month and 770,000 MT (9.7%) less than last year. China’s Ministry of Agriculture forecasts a 7.5% decline in soybean imports for 2024-25 amidst abundant supplies and an anticipated bump in domestic production.
Pro Farmer South America crop consultant Michael Cordonnier left his soybean production forecasts at 170 MMT and 57 MMT for Brazil and Argentina, respectively. World Weather Inc. today said flood water in interior southern Brazil will slowly recede this week with the next round of precipitation expected Friday into the weekend. “The rain will be a set back to the needed drying trend, but more drying is expected next week.” Argentina will experience a good mix of rain and sunshine during the next ten days, although pockets of dryness are expected and the situation will need to be closely monitored, said the forecaster.
Technical analysis: The soybean bears have the overall near-term technical advantage. However, there are strong chart support levels that lie just below current prices. The next near-term upside technical objective for the soybean bulls is closing January prices above solid resistance at the November high of $10.44. The next downside price objective for the bears is closing prices below solid technical support at the contract low of $9.73 1/2. First resistance is seen at this week’s high of $10.03 1/2 and then at $10.12 3/4. First support is seen at this week’s low of $9.85 3/4 and then at $9.73 1/2.
The next upside price objective for the soybean meal bulls is to produce a close in January futures above solid technical resistance at the November high of $304.50. The next downside price objective for the bears is closing prices below solid technical support at $275.00. First resistance comes in at this week’s high of $293.20 and then at $300.00. First support is seen at the contract low of $285.60 and then at $280.00.
Soybean oil bears have the overall near-term technical advantage. A bear flag pattern has formed on the daily bar chart. The next upside price objective for the bean oil bulls is closing January prices above solid technical resistance at 45.00 cents. Bean oil bears’ next downside technical price objective is closing prices below solid technical support at the November low of 40.64 cents. First resistance is seen at last week’s high of 43.50 cents and then at 44.00 cents. First support is seen at today’s low of 41.96 cents and then at 41.00 cents.
What to do: Get current with advised sales.
Hedgers: You should be 20% sold in the cash market on 2024-crop.
Cash-only marketers: You should be 20% sold on 2024-crop.
Wheat
Price action: March SRW futures climbed 3 cents to $5.61 3/4 and closed nearer session highs. March HRW futures rallied 7 cents to $5.65 3/4.
Fundamental analysis: Wheat futures saw modest strength today, supported by a tighter-than-expected balance sheet in today’s supply and demand update from USDA. The agency unexpectedly increased their export forecast by 25 million bushels, spurred by increased buying from East Asia countries. That tightened the balance sheet by 20 million bushels to 795 million bushels after a five-million-bushel increase to imports. Strength in corn futures was supportive for wheat as well today. Despite fundamentally supportive news, wheat futures still struggled garnering much bullish momentum. The world balance sheet actually expanding, despite decreased production, played a role in that. USDA increased their world ending stocks by 310,000 MT due to declining use.
Australia’s wheat harvest will continue in the southeast portion of the country this week. Recent rains have delayed fieldwork and have raised concerns over crop quality, says World Weather Inc. Australia exports the vast majority of their wheat and is a competitor to U.S. origin supplies, particularly in Asia.
Technical analysis: March SRW futures traded modestly higher today as prices continue to face subdued price action. Bears continue to hold the technical advantage, though their grasp has weakened in recent days. Resistance stems from the 20-day moving average at $5.61 1/2 with further strength targeting resistance at $5.72 1/4. Bulls are looking to hold support at $5.56 3/4 then the psychological $5.50 mark on a reversal lower.
March HRW futures saw relative strength today and have put together six consecutive higher closes, weakening bears’ hold of the technical edge. Resistance stands at $5.69, the 40-day moving average, then $5.72 3/4. Support stands at $5.59 then $5.50 on a reversal lower.
What to Do: Get current with advised sales.
Hedgers: You should be 70% sold in the cash market for 2024 crop. You should have 20% forward sold for harvest delivery in 2025.
Cash-only marketers: You should be 70% sold for the 2024 crop. You should also be 20% sold for harvest delivery for expected 2025-crop.
Cotton
Price action: March cotton futures sunk 47 points to 69.48 cents and settled nearer session lows.
Fundamental analysis: Cotton futures favored the downside today as technicals continue to drive trade. USDA made a modest increase in 2024 production to 14.255 billion bales but made minimal changes to the demand side of the balance sheet, decreasing unaccounted use by 40,000 bales. That left carry-out at 4.4 million bales, above expectations of 4.23 million bales. The world balance sheet unexpectedly rose to 76.02 million bales, above expectation of 75.65 million, led by an increase in production in India. A wavering stock market and relatively flat crude oil market did little to support cotton futures today either. The bulk of the attention remains on exports. Reports of continued slowing of imports in China has traders concerned over how much cotton the country will take. USDA lowered China’s cotton import estimate by half a million bales today.
Technical analysis: March cotton futures closed lower for the seventh consecutive session as bears continue to hold the technical advantage. Bears’ initial target is the Nov. 15 for-the-move low close at 68.91 cents, which is quickly backed by Nov. 19 low at 68.40 cents. Resurgent strength has bulls eyeing initial resistance at 70.00 cents, which is backed by the 10-day moving average at 70.59 cents.
What to do: Get current with advised sales and hedges.
Hedgers: You should be 35% sold in the cash market on 2024-crop.
Cash-only marketers: You should be 35% sold on 2024-crop.