Crops Analysis | December 19, 2024

Crops Analysis

Pro Farmer's Crops Analysis
Crops Analysis | December 19, 2024
(Pro Farmer)

Corn

Price action: March corn rose 3 1/2 cents to $4.40 3/4, closing near the session high and above the 20-day moving average.

Fundamental analysis: After spending most of the morning session chopping around unchanged, corn futures turned decidedly higher into the noon hour, in unison with the soy complex. However, extended weakness in wheat futures continued to curb buyer interest as outside markets proved a limiting factor for commodities as the U.S. dollar pressed higher and crude oil futures edged lower.

Earlier today, USDA reported weekly export sales data, which showed net corn sales of 1.175 MMT during the week ended Dec. 12, up 24% from the previous week but down 10% from the four-week average. Net sales landed within analysts’ pre-report range of estimates between 800,000 MT to 1.6 MMT. Meanwhile, exports during the week totaled 1.055 MMT, down 11% from the previous week but up a percent from the four-week average. Top destinations were Mexico, Japan and Spain. Export commitments continue to run 29.0% ahead of a year ago.

World Weather Inc. maintains Argentina is expected to dry down over the next ten days in some portions of the nation. The forecaster notes however, that there has been some suggestion in recent model runs for warmer temps after the 10 day, which may raise the importance of timely rainfall. Some extended modeling does suggest timely rainfall will return to portions of the country, although some rain may continue a little light at times. In Brazil, alternating periods of rain and sunshine are expected through the next two weeks.

Technical analysis: March corn futures held an inside day, but managed to extend back above the 20-day moving average as support at the 40-day moving average, currently trading at $4.36, curbed seller interest. The 10-day moving average of $4.43 will now serve as initial resistance, with backing from the 200-day moving average of $4.50 1/2 and the Dec. 11 high of $4.51 1/4, which is an area bulls will need to conquer in order to regain the near-term technical advantage. Meanwhile, bears will continue to seek a close below chart support at $4.25 1/2, with interim support serving at $4.35 and $4.30.

What to do: Get current with advised sales.

Hedgers: You should be 30% sold in the cash market on 2024-crop.

Cash-only marketers: You should be 30% sold on 2024-crop.

Soybeans

Price action: January soybean futures climbed 11 1/4 cents to $9.63 and settled nearer session highs. January meal futures surged $4.60 to $284.10, near session highs. January bean oil rallied 46 points to 40.01 cents.

Fundamental analysis: Soybeans surged on short profit-taking after marking a fresh contract low in the overnight session. Oversold conditions led to corrective strength today, bulls will look to build on strength before eventually challenging stiff resistance at $9.80. Bulls will ultimately continue to fight an uphill battle as woes over record South American production weigh heavily on the marketplace, but even anticipating record production, the downside seems overdone.

USDA reported weekly soybean sales of 1.42 MMT, up 21% from the previous week but down 27% from the four-week average. Net sales were within the pre-report range of expectations from 825,000 MT to 2.0 MMT. Exports during the week totaled 1.69 MMT. Sales rebounding from last week was encouraging, but sales still totaled the second lowest amount since the first week of October. Importers have slowed purchases of beans, which is common for this time of year, but sales quickly went from being generally above average to below average. Continued anticipation for a boomer South American crop has created stiff headwinds for soybean prices. Much of Brazil will see regular rounds of showers and thunderstorms, leading to favorable conditions for crop development through the next two weeks, says World Weather Inc. Some dryness is expected in parts of northeastern Brazil and far southern portions of the nation, the forecaster says.

USDA reported daily sales of 227,200 MT of soybeans for delivery to unknown destinations, with 152,200 MT for delivery during 2024-25 and the remaining 75,000 MT for shipment in 2025-26.

Technical analysis: January soybean futures surged on corrective strength today, though bears still hold full control of the technical advantage. Additional strength is possible given the oversold state of the market. Bulls are looking to tackle initial resistance at $9.75 before tackling stiff resistance at $9.80. Strength above that mark eyes uptrend resistance at $9.89 1/2, loss of which triggered this week’s selloff.

January meal futures saw impressive strength today as well, though gains can be chalked up to corrective buying. Bears continue to maintain the near-term technical advantage. Bulls’ initial objective is overcoming 10-day moving average resistance at $286.6, which is backed by resistance at $291.0. Support stems from yesterday’s low of $279.3 then the contract low of $278.5.

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 wheat fell 8 1/4 cents to $5.33, nearer the daily low and hit a contract low. March HRW wheat fell 5 1/2 cents to $5.43 1/4 and nearer the session low.

Fundamental analysis: More technical selling pressure and a “risk-off” tone in the marketplace today sunk the wheat futures markets. The surprising hawkish pivot from the Federal Reserve that pushed the U.S. dollar index to a two-year high and worries about a U.S. government shutdown had wheat market bulls pulling in their horns today.
Also negative for wheat futures prices today was news European Union soft wheat production could rise 11% in 2025-26, Strategie Grains said. In its first production forecast for next season, the firm forecast soft wheat production at 126.6 MMT, up from 114.2 MMT this year. The firm projected EU wheat exports in 2025-26 at 29.3 MMT, up from 23.8 MMT expected in the current marketing year.

Some better U.S. wheat sales abroad did somewhat limit selling interest in wheat futures. USDA reported U.S. wheat export sales of 457,900 MT for the week ended Dec. 12, up 58% from the previous week and up 16% from the four-week average. Net sales were near the upper end of the pre-report range of expectations.

World Weather Inc. today said that in U.S. HRW wheat country “unusual warmth will continue to dominate the weather in the next two weeks. This will lessen winter hardiness in crops. However, winter crops should remain at least semi-dormant.” Not much precipitation is expected in the first week of the outlook but greater precipitation will occur in the second week, especially in eastern areas. In the northern Plains, the recent Alberta Clipper system that has been impacting the region since Wednesday will gradually exit the region today and promote more snow in eastern production areas. “Recent snow has been good to protect crops from this week’s cold weather. However, a notable stretch of unusual warmth will begin Sunday and last through most of the second week of the outlook. This will cause snow to melt.” There will be a need for more snow in early January due to expected colder weather that month.

Technical analysis: Winter wheat market bears have the solid overall near-term technical advantage. Prices are in nearly three-month-old downtrends on the daily bar charts. SRW bulls’ next upside price objective is closing March prices above solid chart resistance at the December high of $5.69 1/4. The bears’ next downside objective is closing prices below solid technical support at $5.00. First resistance is seen at today’s high of $5.41 3/4 and then at $5.50. First support is seen at today’s contract low of $5.30 1/2 and then at $5.25.

HRW bulls’ next upside price objective is closing March prices above solid chart resistance at the December high of $5.71 1/2. The bears next downside objective is closing prices below solid technical support at the contract low of $5.35. First resistance is seen at $5.50 and then at $5.60. First support is seen at $5.35 and then at $5.25.

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 fell 17 points to 67.91 cents.

Fundamental analysis: Cotton futures forged a fresh contract low early in the session before seeing some corrective strength into the close. USDA reported export sales of 195,400 bales this morning, which is up 22% from last week’s disappointing figure but down 22% from the four-week average. While export demand picked up from a week ago, sales continue to be disappointing, as export sales have topped the five-year average just five times this marketing year, which began on Aug. 1. Shipments have been even more disappointing, just once topping the five-year average so far this year. Considering exports make up the vast majority of U.S. cotton demand, slow exports have led to persistent selling pressure in an effort to stir up business. The slowing Chinese economy has also led to heightened selling efforts in cotton as anticipation of future demand out of China, the world’s top cotton importer, is waning.

Technical analysis: March cotton futures saw profit-taking as prices bounced off a fresh contract low. Bears retain the technical advantage but additional corrective strength is possible given heavily oversold conditions. Bulls are looking to overcome initial resistance at 68.40 cents before tackling the 10-day moving average at 69.23 cents. Tentative support lies at the psychological 68.00 cent mark, while additional selling finds support at the contract low of 67.56 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.