Crops Analysis | October 7, 2024

Crops Analysis

Pro Farmer's Crops Analysis
Crops Analysis | October 7, 2024
(Pro Farmer)

Corn

Price action: December corn rose 1 1/4 cents to $4.26, closing near the session high.

Fundamental analysis: Corn futures favored the upside through most of the session but remained limited by technical resistance at the 100-day moving average despite surging crude oil futures and corrective gains in wheat. A daily sale, totaling 155,000 MT of corn to Mexico during 2024-25 didn’t harm today’s price action, though USDA’s export inspection data showed a notable decline in corn inspections at 933,274 MT during the week ended Oct. 3. The figure was down 216,250 MT from the previous week and near the low-end of analysts’ pre-report range of 800,000 MT to 1.3 MMT.

Harvest should advance quite rapidly over the next couple of weeks throughout the Midwest as dry weather will be most common, with hedge pressure a likely result. Meanwhile, in South America, an important increase in rain will begin today in Argentina, with regular rounds of showers and thunderstorms forecast for the next two weeks beginning in the north and spreading into central areas by this weekend. This should lean most areas with notable improvements in soil moisture. However, southern Argentina will miss much of the rain through next Monday.’

USDA will release its Weekly Crop Progress Report this afternoon, with analysts expecting corn conditions to remain unchanged at 64% “good” to “excellent,” and harvest to be 34% complete, according to a Bloomberg poll.

Technical Analysis: December corn futures were able to notch a high-range close, though resistance at the 100-day moving average of $4.26 3/4 curbed buying interest. Support at the 10-day moving average of $4.22 1/2 continues to limit the downside. Bulls are now looking at $4.50 as their next price objective, with resistance beginning at the 100-day moving average, then at Friday’s high of $4.27 1/2 and again at $4.34 1/4. Conversely, bears are looking to secure a close below $4.10, with first support at $4.21 3/4, then at last week’s low of $4.15 1/2.

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.

Soybeans

Price action: November soybean futures fell 3 3/4 cents to $10.34, though settled nearer session highs. December meal futures sunk $6.50 to $324.00. December bean oil futures saw relative strength, rallying 60 points to 44.57 cents.

Fundamental analysis: Soybean futures continue to undergo relative weakness but managed to close well off intraday lows today. Despite corn and wheat posting for-the-move highs last week, soybeans continue to fall under selling pressure and are threatening the uptrend stemming from the August low. Weakness in meal continues to weigh heavily on bean prices as December meal futures have fallen for four-consecutive sessions. Strength in crude oil futures did little to support beans today as front-month crude oil futures surged to a near-two-month high.

Brazil’s soybean planting for the 2024-25 season as of last Thursday reached 4.5% of the total expected area, well behind last year’s pace of 10% for the same period, according to AgRural. Planting in key producing Mato Grosso is seen at the slowest pace since 2015-16 amid hot, dry conditions. Meanwhile, the utter lack of rainfall in the U.S. has analysts expecting harvest to continue at a rapid clip, expecting USDA to report the harvest as 45% completed in this afternoon’s Crop Progress Report. Soy conditions are expected to fall a point to 63% “good” to “excellent,” according to a Bloomberg poll.

USDA reported daily soybean sales of 172,500 MT to unknown destinations for 2024-25. USDA also reported soybean export inspections of 1.431 MMT (52.6 million bu.), up 748,493 MT from the previous week and above analysts’ pre-report range of 450,000 MT to 1.125 MMT. Soybean inspections have been slow to rise this marketing year, but this week’s large figure was a push in the right direction. Bulls will look to the export market to help thin the balance sheet, which is still expected to expand significantly year-on-year.

Technical Analysis: November soybean futures underwent modest selling pressure today, though posted a reversal candle on the daily bar chart, which leaves the door open for resurgent strength tomorrow. Bulls continue to hold a modest technical advantage. Initial resistance stems from the 10-day moving average at $10.42, which is reinforced by the psychological $10.50 mark. Bulls are ultimately seeking to close prices above the 100-day moving average, currently at $10.62 3/4, which capped the recent rally. Support comes in at $10.29 1/4, the 40-day moving average, which capped most of the downside today. Further selling finds support at $10.25.

December meal futures continue to undergo heavy selling pressure, adding pressure to soybeans. Further selling targets support at $321.4, the $320.0 mark, then the Sept. 20 low of $315.7. Bulls are looking to reclaim resistance at $325.6, the 40-day moving average, which is reinforced by the 10-day moving average at $331.9.

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: December SRW wheat rose 2 3/4 cents to $5.92 1/2. December HRW wheat gained 5 1/4 cents to $6.03 1/4. Both markets closed nearer their session highs. December spring wheat futures rose 4 cents to $6.42 1/2.

Fundamental analysis: The winter wheat futures markets saw some corrective buying to start the trading week, following the losses posted late last week. A surge in crude oil prices to a six-week high was a supportive outside-market element, as was a slightly lower U.S. dollar index.

USDA this morning reported U.S. wheat export inspections of 363,460 MT, down 187,475 MT from the previous week but within the expected range of trader expectations.

World Weather Inc. today said U.S. wheat regions are expected to remain “quite dry in the Great Plains while recent drier conditions in the lower Midwest, Delta and southeastern States will be good for future planting.” Rain is needed soon in the Great Plains, Pacific Northwest and northern and western parts of the Midwest, where crop moisture stress “is expected for a while in early planted areas while emergence and establishment are delayed until significant rain falls,” said the forecaster.

This afternoon’s weekly USDA crop progress reports are expected to show U.S. winter wheat planted at 55% complete as of Sunday, compared to 39% last week and 57% at the same time last year.

Technical Analysis: Winter wheat futures prices are in five-week-old uptrends on the daily bar charts. SRW bulls’ next upside price objective is closing December prices above solid chart resistance at last week’s high of $6.17 1/4. The bears’ next downside objective is closing prices below solid technical support at $5.50. First resistance is seen at $6.00 and then at $6.10. First support is seen at today’s low of $5.84 and then at $5.75. The HRW bulls’ next upside price objective is closing December prices above solid technical resistance at the September high of $6.50. The bears’ next downside objective is closing prices below solid technical support at $5.61 1/4. First resistance is seen at $6.15 and then at last week’s high of $6.23 1/2. First support is seen at today’s low of $5.92 and then at $5.78.

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: December cotton rose 26 points to 73.53 cents but closed nearer the session low.

Fundamental analysis: Cotton futures extended their recent sideways pattern, with outside market support mixed amid fading equities and U.S. dollar combined with strong crude oil gains. Risk aversion continues to loom across the marketplace as Middle East tensions continue to flare. Nearby crude oil futures surged to the highest level since mid-August as traders remain concerned of a possible Israeli attack on Iran’s crude oil infrastructure.

Weather in the U.S. should remain mostly favorable for crop maturation and harvesting over the next two weeks, with Hurricane Milton not expected to impact cotton areas in the southeastern states.

USDA will update crop conditions in its Weekly Crop Progress Report following the close. Last week, the cotton crop was rated as 31% “good” to “excellent,” while harvest was estimated to be 20% complete.

Technical Analysis: December cotton forged a close above the 10-day moving average of 73.27 cents, but well off the session high. Initial resistance will now serve at 73.70 cents, then at 74.14 cents and again at the Sept. 24 high of 74.55 cents, which is backed by resistance at 74.92 and the 200-day moving average of 76.26 cents. Conversely, support will now serve at the 10-day moving average, then at the 20-, 100- and 40-day moving averages of 72.35 cents, 71.63 cents and 70.70 cents.

What to do: Get current with advised sales.

Hedgers: You should also have 25% of expected 2024-crop production forward sold for harvest delivery.

Cash-only marketers: You should also have 25% of expected 2024-crop production forward sold for harvest delivery.