Corn
Price action: March corn futures fell 2 cents to $4.74 1/2 and nearer the session low. Prices hit a nearly seven-month high early on.
Fundamental analysis: The corn futures market today saw some routine profit taking from the shorter-term speculators following recent solid gains. Weaker soybean and crude oil futures prices today also kept corn market bulls timid. A rise in the U.S. dollar index to a more-than-two-year high this week may also be giving the corn market bulls some pause.
Some increased farmer selling in the cash market, following the recent futures price gains, also likely pressured the corn futures market today.
Weather in South American corn regions is still leaning bullish for corn prices. World Weather Inc. today said rain prospects “are still looking good for Argentina, southern Brazil, Uruguay and Paraguay.” However, any rainfall will not be enough to seriously relieve the nation’s crops from recent hot and dry conditions. Only partial relief to recent drying is expected. “Much more rain will be needed to induce a more definitive break from the heat and dryness and to stop an inevitable decline in yield for at least some crops.” Rain in center-west, northeast and center-south Brazil will maintain favorable moisture for most crops, although there may be some need for drier conditions to promote early soybean maturation and harvest progress, said the forecaster. Pro Farmer South American crop consultant Michael Cordonnier left his Brazilian corn-production estimate unchanged at 125 MMT but cut his Argentine estimate by 1 MMT, to 49 MMT, due to hot, dry conditions.
Technical analysis: The corn futures bulls have the firm overall near-term technical advantage. A six-week-old price uptrend is in place on the daily bar chart. The next upside price objective for the bulls is to close March prices above solid chart resistance at $5.00. The next downside target for the bears is closing prices below chart support at $4.50. First resistance is seen at today’s high of $4.79 3/4 and then at $4.85. First support is seen at this week’s low of $4.69 1/4 and then at $4.65.
What to do: Get current with advised sales.
Hedgers: You should be 50% sold in the cash market on 2024-crop in the cash market. You should also have 10% of expected 2025-crop production sold for harvest delivery.
Cash-only marketers: You should be 50% sold in the cash market on 2024-crop. You should also have 10% of expected 2025-crop production sold for harvest delivery.
Soybeans
Price action: March soybeans fell 5 1/2 cents to $10.47 1/2, closing nearer the session low. March soymeal closed $2.00 lower at $305.80. March soyoil rose 23 points to 46.22 cents, marking a near two-month high close.
Fundamental analysis: Soybeans were able to extend to a for-the-move high, though looming technical resistance at the 200-day moving average spurred a corrective pullback as the session progressed, despite general support from a weaker U.S. dollar. Moreover, lending additional support was a daily soybean sale of 198,000 MT to China.
Meanwhile, South American crop consultant Dr. Michael Cordonnier lowered both his Brazilian and Argentine soybean crop estimates by 1 MMT to 170 MMT and 52 MMT, respectively. He noted rainfall last week once again favored northern and east-central Brazil, with heavy amounts in Mato Grosso, Goias and Toncantins. In contrast, far southern Brazil had another dry week last week, while the forecast is calling for rain to be mainly in northern Brazil for most of this week with increasing chances of rainfall late this week and next week in southern Brazil, which will be beneficial for Parana, Mato Grosso do Sul and Sao Paulo. Yields in central Brazil have reportedly not been quite as strong as expected amid overcast conditions. Dryness will continue across Rio Grande do Sul, he noted. Meanwhile, the forecast for this week is for limited showers across Argentina and declining soil moisture.
By contrast, Conab raised its 2024-25 Brazilian soybean crop estimate by 110,000 MT from last month to 166.32 MMT, which is still below most private estimates of around 170 MMT. The agency kept its 2024-25 Brazilian soybean export forecast at 105.5 MMT.
Technical analysis: November soybeans extended to a more than three month intraday high, though resistance at $10.62 3/4, which is backed by the 200-day moving average of $10.80 1/2 served up resistance. Meanwhile, initial support served at $10.43 1/2, with backing from support at $10.33 1/2 as well as the 100-, 10- 40- and 20-day moving averages, layered from $10.19 3/4 to $9.96 1/2. Bulls continue to hold the near-term technical advantage and look to work towards securing a close above resistance at $11.00, while bears seek to edge back below $10.00.
What to do: Get current with advised sales.
Hedgers: You should be 30% sold in the cash market on 2024-crop production.
Cash-only marketers: You should be 30% sold on 2024-crop production.
Wheat
Price action: March SRW futures climbed 1 1/4 cents to $5.46 1/4 and closed near mid-range. March HRW futures slipped 1/4 cent to $5.60 3/4. March spring wheat futures sunk 4 cents to $5.89 1/2.
Fundamental analysis: Wheat futures struggled to build on recent bullish momentum as stiff overhead resistance continues to loom over prices. Weaker corn and soybean prices did little to help wheat bulls today. Prices continue to trend lower on the daily bar chart with the path of least resistance pointing lower. Meanwhile, the spread between SRW wheat and corn futures continues to tighten. A large portion of that tightening relationship can be explained via the fundamentals. Corn demand has been robust over the last quarter, with exports and ethanol both topping expectations and proving that prices reached value levels during and after harvest. Wheat demand on the other hand continues to be rather disappointing. While exports look to grow from year-ago, weekly sales and inspections continue to be fairly disappointing and the balance sheet remains abundant. While last week’s stocks report showed an increase in feed and residual use in the second quarter of the marketing year, use for that category has been abysmal the past couple of years and it would take a significant shift to have a meaningful impact on the domestic balance sheet.
On the other hand, the world balance sheet remains quite supportive. Russia is poised to limit exports in the latter half of the marketing year significantly. While that has done little to spur preemptive buying, price action has done little to encourage importers to get sales on the book. Australia’s harvest is also nearing completion, which has allowed them to take hold of the export market as they have a logistical advantage versus the U.S.
Technical analysis: March SRW futures struggled to overcome downtrend resistance today as bears retain the technical advantage. Bulls are looking to push prices above said resistance at $5.47 before tackling the psychological $5.50 mark and 40-day moving average at $5.51 1/4. Resistance lies at $5.63 1/4 above there. Support comes in at $5.43, the 20-day moving average, then $5.30 3/4 on resurgent selling pressure.
March HRW futures have shown relative strength recently but were unable to detach from stagnating SRW futures today. Bulls are eyeing resistance at $5.68 1/2 before tackling the 100-day moving average at $5.75 1/2. Support comes in at $5.58 then the 20-day moving average at $5.54 on continued selling pressure.
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 fell 14 points to 67.50 cents, ending near the session low.
Fundamental analysis: March cotton spent the session trading narrowly within Monday’s upper range, limited by technical resistance despite a wavering U.S. dollar. However, corrective selling in crude oil futures likely curbed buyer interest. The marketplace could also be preparing for Wednesday’s Consumer Price Index Report, which will provide insight into monetary policy in the coming months. CPI is expected to be up 2.9%, year-on-year, vs. up 2.7% in the November report. Meanwhile, the core CPI is forecast to have risen 3.3%, year-on-year, unchanged from reading from the previous three months.
Weather in South America continues to prove variable, with areas of northern Argentina expected to dry down for a while outside of Formosa and northern Chaco, according to World Weather Inc. Subsoil moisture should support most crop needs for a while, but rain will be needed soon in most areas. The forecaster notes rain potentials will rise for Jan. 17-25.
Technical analysis: March cotton continues to face technical resistance at the 10- and 20-day moving averages of 68.09 cents and 68.35 cents, while initial support served at 67.40 cents. Bears firmly grasp the near-term technical advantage and will look to secure a close below 65.00 cents, with interim support serving at Friday’s low of 66.76 cents, which is backed by 66.35 cents and 65.95 cents. Conversely, bulls will need to edge above 69.50 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.