Grain and Commodity Updates
David Reinbott
January 29, 2023 Commentary.
Corn
Corn exports and sales picked up last week but need to get even bigger. The potential of a big corn crop in South America especially out of Brazil have all contributed to price weakness in the new crop. It will be important from now through summer for our export sales and shipments to pick up or USDA may need to cut exports again in future reports. This is the time when the world comes to the U.S. for corn as Brazil’s second crop corn will not be available until summer.
From the March futures chart, futures did hold the $6.70 to $6.60 price support level and is rallying back to the $6.90 price resistance. The next price target at $7.05. With futures prices above $6.80, making some old crop sales may be a good marketing plan.
December futures are trading in a down trending channel and must hold price support at $5.85. The next price support is at $5.80. Price resistance is at $5.95 and then at $6.00.
Soybeans.
Soybeans have benefited from strong exports. However, without a negative weather development to cut production in South America, soybean prices will also be under pressure just as in corn. Brazil is having some trouble getting their soybeans harvested due to too much rain. Once harvest starts rolling and they can get their soybeans to the ports it will probably cut into our exports.
From the March futures chart, futures continue to trade in an up trending price channel with price support at $14.95 and price resistance at $15.40. With soybean futures over $15.00, this would be a good price level to scale in some old crop sales.
November futures need to hold price support at $13.30 with price resistance at $13.70.
Wheat.
With the big wheat crop coming out of Russia and U.S. wheat presently not being price competitive, wheat prices will continue to be under pressure. July wheat futures need to hold the $7.40 price level. Futures have rallied back to the down trend line from November at $7.60. The next price target would be $8.00. With the uncertainty in the Ukraine and with our own U.S. winter wheat crop, you still cannot rule out a rally back to $8.00 or higher. Therefore, if you have not made many new crop sales, scaling in a few sales around $8.00 would be a marketing strategy to consider.
Cotton
The uncertainty of world economic growth and especially in China has pressured cotton prices. Also, the number of acres that will be planted in the U.S. this year will be watched closely. Many are forecasting a 2.0 million acre cut in acres.
The March cotton futures chart has found price support at 80 cents with price resistance at 87 cents. Prices the past month have formed a bullish price wedge pattern and if prices can break above 87 cents then 95 cents would be the next price target. It is important for a cotton producer to be in close contact with their cotton buyer on sales decisions.
December futures have closed above the price resistance at 84 cents and next price target 91 cents.
Rice.
March rice futures continue to rally higher and need to hold price support at the uptrend line at $18.20. Price resistance is at the highs at $18.50. It is important for a rice producer to be in close contact with their rice buyer on sales decisions.
Technical Analysis – January 29, 2023 for Corn, Soybeans, Wheat, Cotton and Rice.
Corn –
March 2023 futures tested the $6.60 support level and up trend line on Monday but prices rebounded back the rest of the week. The next price resistance is at $6.90 followed by $7.05. If exports continue to rebound and weather turns dryer in Argentina, prices may challenge $6.90 or higher. If you still have corn in storage, you make want to make some sales at this price level.
December 2023 futures have been in a down trending channel since October. Futures are attempting to find and build support around $5.85. If this price level can hold, then a rebound back to the $5.95 price resistance is possible. The next resistance is at the 50-day MA at $6.00. The top of the price channel is at $6.05. Weekly future’s price support is at $5.40.
Soybeans –
March 2023 soybean futures tested the bottom of the price channel and the 50 day MA at $14.80 and now is rallying back to test the top of the trend channel at $15.40. The contract high is $15.72 from last summer. The price direction will be based on exports and production from South America. If you still have old crop soybeans, making sales above $15.20 maybe a good strategy.
November 2023 Soybean futures are trying to find price support in the $13.30 to $13.40 price range. First resistance is at the 8 Day EMA at $13.56 followed by several moving averages merging at the old price support level at $13.70. The potential of a record soybean production from South American and concerns about exports to China have all put pressure on future prices. I would not make any panic new crop sales but wait and let prices stabilize and then start developing a strategy to make new crop sales.
Wheat-
July 2023 wheat futures need to hold the price support at $7.40 with the next support level at $7.00. Prices on Thursday and Friday rallied up to the down trend line from last November at $7.60. The next price resistance is at the 50 day moving average at $7.80 and then at $8.00. At this time, there is not a lot of positive fundamentals to push prices significantly higher unless there are problems in the wheat exports coming out of the Baltic region. Seasonally prices have a tendency to rally into February and then make a second rally in May before harvest. I would focus sales during these two time frames and/or if futures rally back into the $7.80 to $8.00 price range.
Cotton-
March 2023 Cotton futures have settled into a trading range between 80 and 87 cents since fall. Since the first of the year, futures have been in an up trend and is forming a bullish price wedge. A close above 87 cents and the next price target is at 95 cents followed by 97 cents at the 200 day MA. Price support is at 85 cents followed by 80 cents.
December 2023 Cotton Futures have closed above the 84 cent price resistance with 90 to 91 cents as the next price targets. Price support is back at 84 cents followed by the uptrend line since November at 82 cents. Many are expecting cotton acres to be down 2.0 million acres for 2023. Prices need to rally to buy back some acres.
Rice-
March 2023 Rice futures have been on a roller coaster ride the past three months. Price support is at the up trend line at $18.20 with resistance at $18.50. The next resistance is at $19.00 and then every 50 cents higher. Stay in close contact with your rice buyer and consider making sales in rallies approach $18.50. ∆
David Reinbott: Agriculture Business Specialist, University of Missouri