Crops Analysis | February 22, 2024

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: March corn fell 5 cents to $4.06, a new contract low close.

Fundamental analysis: Corn futures extended to a fresh contract low as early strength in the wheat complex faded and soybeans faced follow-through selling. Outside markets were mostly supportive as the U.S. dollar remained mostly stagnant, while crude oil turned decidedly higher as attacks continued on shipping in the Red Sea near Yemen. However, a large build in U.S. crude inventories ultimately curbed crude gains. Meanwhile, USDA reported the first daily sorghum sale since Jan. 18, 2022, and at 126,000 MT, is the largest daily sale of U.S. sorghum to China in over six years.

The Ethanol Information Administration reported weekly ethanol production averaged 1.084 million barrels per day (bpd) during the week ended Feb. 16, which was up 1,000 bpd from the previous week and 55,000 bpd (5.3%) above the same week last year. Ethanol stocks declined 308,000 barrels to 25.502 million barrels.

USDA will release weekly export sales data, delayed a day due to Monday’s federal holiday. Traders are expecting net sales to range from 700,000 MT to 1.5 MMT during the week ended Feb. 15. Last week, net sales of 1.31 MMT were reported for the previous week, which were up 7% on the week and 13% from the four-week average.

Technical analysis: March corn ended the session below support at $4.07 1/2, carving a fresh contract low close. Initial support will now serve at $4.04, backed by $4.00 and $3.98. Meanwhile, heavily oversold conditions could spur some corrective gains, which will be limited by resistance at $4.17, then at the 10-, 20- and 40-day moving averages of $4.22, $4.33 and $4.45 1/4.

What to do: Get current with advised sales.

Hedgers: You should be 50% sold in the cash market on 2023-crop.

Cash-only marketers: You should be 35% sold on 2023-crop production.

 

 

Soybeans

Price action: March soybean futures fell 13 cents to $11.47 3/4, marking a fresh for-the-move low and settling near session lows. March soymeal futures dropped $7.10 to $334.90, closing near session lows. March bean oil futures slid 62 points to 44.21 cents.

Fundamental analysis: Soybeans continue to fall under heavy selling pressure despite seemingly supportive outside markets. The path of least resistance remains lower and funds are likely to remain heavy sellers until an outside force changes the status quo. Much uncertainty remains surrounding South American production, which seems to be the most likely source of a catalyst at this time. The effect of cuts in estimated production has done little to effect domestic soybean prices thus far as cheap Brazilian soybeans continue to hit the world market from last year, which has contributed to the sustained weakness seen in futures.

Rain fell on much of the region from central and eastern Parana to Minas Gerais, Bahia and eastern Goias Wednesday, while most other areas in Brazil were dry and saw favorable conditions for harvest, World Weather Inc says. The next two weeks are forecast to bring a good mix of rain and sunshine through much of Brazil, allowing for fieldwork and maintaining favorable conditions for summer crops, the forecaster says.

USDA is set to release its weekly export sales report in the morning, a day late due to the holiday on Monday. A Reuters survey anticipates net sales between 300,000 and 800,000 MT for the 2023-24 marketing year, following several weeks of lackluster sales, most recently evidenced by sales of 353,775 MT last week. Soymeal export sales are expected to fall between 150,000 and 400,000 MT and soyoil sales are expected between -5,000 and 10,000 MT.

Technical analysis: March soybean futures fell to fresh for-the-move lows and the lowest mark since December 2020 on the continuation chart as bears continue to hold full control of the technical advantage. Soybeans continue to lead weakness in ag markets, dragging both corn and wheat lower as today’s session went on. Bulls are seeking to overcome resistance at the psychological $11.50 mark, backed by $11.60 1/4, then the 10-day moving average at $11.73 1/4, which capped the upside earlier this week. Support stands at the contract low of $11.45 1/4,  $11.42 3/4, with little backing until $11.25.

March soymeal futures scored a fresh contract low as bears maintain full control of the technical advantage. Bulls are seeking to overcome resistance at $336.0, $339.5 then the 10-day moving average $344.7. The $335.0 mark acted as significant support in the fall of 2021, marking that area as an important pivot. Support comes in at $331.0, with backing from the $330.0 mark, then $325.0.

March bean oil fell to fresh for-the-move lows, closing lower for the sixth consecutive session. Bears retain full control of the technical advantage and are seeking to defend resistance at 44.67 cents, today’s high of 45.34 cents, then the 10-day moving average at 45.65 cents on corrective buying. Meanwhile, support stands at 44.22 cents, the psychological 44.00 cent mark, then 43.33 cents.

What to do: Get current with advised sales.

Hedgers: You should be 55% priced in the cash market on 2023-crop production. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.

Cash-only marketers: You should be 50% priced on 2023-crop production. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.

 

 

Wheat

Price action: May SRW wheat closed up 1 1/4 cents at $5.79 1/4. May HRW wheat lost 3 cents at $5.71 1/2. Both markets’ prices closed nearer their session lows. May spring wheat futures dropped 6 cents to $6.55 1/2, settling near session lows.

Fundamental analysis: The wheat futures today saw more chart-based selling pressure from the speculators as both SRW and HRW markets remain fully bearish from a near-term technical perspective. However, some tepid short covering did lift SRW futures above unchanged in late trading. Corn futures continue to dive and today dropped to another contract low, which also had many of the wheat market bulls standing on the sidelines. To highlight the bearish tone in the grain markets at present, grain prices across the board could get no lift from a keener risk-on day in the general marketplace today, as the U.S. stock indexes posted strong gains, including the S&P 500 and DJIA hitting record highs.

World Weather Inc. today said that in HRW wheat country net drying will occur through Monday followed by some rain and snow shower activity Tuesday through Wednesday. “This shower activity is unlikely to raise soil moisture, but any moisture will be beneficial. Unusual warmth into Tuesday will further raise soil temperatures before a strong but brief surge of cold air arrives.” Strong winds will accompany a strong cooling trend early to mid-week next week, said the forecaster. Meantime, in the northern Plains, temperatures are expected to drop well below average late Monday through Wednesday. Some snow is expected before the coldest air arrives. “However, there may be some pockets that are left susceptible to winterkill,” said the forecaster.

The weekly USDA export sales report was delayed one day by the federal holiday Monday and will be released Friday morning. Traders expect weekly U.S. wheat export sales of 300,000 to 550,000 MT in the 2023-24 marketing year, and sales of zero to 75,000 MT for the 2024-25 marketing year.

Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. SRW prices are in a 2.5-month-old downtrend on the daily bar chart. SRW bulls' next upside price objective is closing May prices above solid chart resistance at $6.50. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.25. First resistance is seen at today’s high of $5.94 1/4 and then at $6.00. First support is seen at $5.65 and then at the contract low of $5.53 1/2. The HRW bulls' next upside price objective is closing March prices above solid technical resistance at the January high of $6.38 1/2. The bears' next downside objective is closing prices below solid technical support at $5.50. First resistance is seen at today’s high of $5.90 and then at $6.00. First support is seen at the contract low of $5.56 3/4 and then at $5.50.

What to do: Get current with advised sales.

Hedgers: You should be 70% priced in the cash market on 2023-crop. You should be 20% forward priced for harvest delivery on expected 2024-crop production.

Cash-only marketers: You should be 70% priced on 2023-crop. You should be 20% forward priced for harvest delivery on expected 2024-crop production.

 

 

Cotton 

Price action: May cotton futures surged 123 points before settling at 94.46 cents, nearer session highs. Nearby March futures rose 160 points to 94.20 cents.

Fundamental analysis: Cotton futures continue to show remarkable strength, surging near the recent high close, piggybacking an equity market that is trading on record highs. A classis “risk-on” day helped support cotton futures today as managed money continue to add to their net long position, which has proved quite profitable as funds have been active buyers the last couple of months. A surging crude oil market has helped drive buyers to the cotton market as well on anticipation of increased physical demand for the natural fiber. The U.S. dollar index sinking from recent highs also proved supportive as cotton is relatively cheaper on the world market, a stark contrast to a week ago when the index was trading on multi-month highs.

Traders will look to tomorrow morning’s USDA weekly export sales report. Cotton export sales have fallen from their impressive figures earlier this year as prices have surged higher, though weekly exports have remained robust, showing impressive physical demand for the crop.

Technical analysis: May cotton futures showed strong gains, continuing Wednesday’s bounce. Bulls continue to hold full control of the technical advantage as softs as a whole continue to outperform grains. Resistance stands at 94.90 cents, quickly backed by psychological 95.00 cent resistance, then 95.31 cents, then last Friday’s for-the-move high at 96.42 cents. Meanwhile, support stands at 94.00 cents, 93.52 cents, then the 10-day moving average at 92.54 cents, which capped most of the selling this week.

What to do: Get current with advised sales.

Hedgers: You should be 80% priced in the cash market for 2023-crop production. You should have 10% of expected 2024-crop production sold for harvest delivery.

Cash-only marketers: You should be 80% priced on 2023-crop production. You should have 10% of expected 2024-crop production sold for harvest delivery.

 

 

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