Crops Analysis | February 5, 2024
Price action: March corn was unchanged at $4.42 3/4, a near mid-range close.
Fundamental analysis: Corn futures continued to edge sideways in consolidative trade as U.S. dollar strength and pressure from SRW largely negated support from the soy complex. Meanwhile, a daily sale of 155,000 MT to Mexico during 2023-24 did little to excite the market, as did weak export inspection data for the week ended Feb. 1. USDA reported inspections of 624,295 MT (24.6 million bu.), which were down 302,054 MT from the previous week and below the expected pre-report range of 750,000 MT to 1.2 MMT.
Safrinha planting efforts in Brazil’s center-south region reached 27% completion rate as of last Thursday, AgRural’s fastest recorded pace. Fieldwork progressed 16 points on the week and were concentrated in the states of Mato Grosso, Parana and Sao Paulo. Conversely, summer corn harvest was 17% complete, up 12 percentage points from the previous week and 10% ahead of the same time last year.
Weather in Argentina continues to remain a concern, notes World Weather Inc. The forecaster reports some production cuts likely occurred due to drying and excessive heat. This week’s weather may trend good enough to slowly reduce crop stress, but production potentials may continue to decline until greater rain falls, which may not occur until later this week into next week and follow-up rain will be imperative for a more definitive improving trend.
Technical analysis: March corn spent the session trading mostly between initial support of $4.40 1/4 and the 10-day moving average of $4.46 1/4. Initial support was backed by Friday’s low of $4.39 1/2, with additional support serving at $4.37 3/4 and $4.33 1/2. Conversely, a push above the 10-day will face additional resistance at the 20-day moving average of $4.48 1/4, then at $4.51 1/4 and again at the 40- and 100-day moving averages of $4.61 1/2 and $4.65 3/4.
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.
Price action: March soybean futures rallied 7 3/4 cents to $11.96 1/4 and settled nearer session highs. March soymeal rose $4.30 to $361.10, closing on session highs. March soyoil surged 60 points to 45.33 cents.
Fundamental analysis: Soybean futures saw sustained weakness in early morning trade before reversing following this morning’s open and rallying throughout the remainder of the session. Prices made a fresh for-the-move low though buyers stepped in, underpinning prices, which is a hopeful sign for bulls as such buying interest has been rare in recent weeks. Export inspections for the month of January came in higher than expected at 197.7 million bushels, pointing to higher exports in January than in December, which is rare and a sign that export demand for soybeans could linger, contrary to the usual taper seen in the second half of the marketing year. USDA reported soybean export inspections of 1.43 MMT (52.4 million bu.) during the week ended Feb. 1, which were up 513,024 MT from the previous week and above the expected range of 450,000 to 900,000 MT.
Rainfall fell in Brazil over many areas this past weekend, though net drying occurred in the northeast and in many areas in the south, World Weather Inc says. Soil moisture is still rated favorably except in Mato Grosso do Sul, western Parana and portions of western Rio Grande do Sul where crop stress is rising, the forecaster says. Periodic showers are expected over the next two weeks, though areas in the south are expected to be drier.
Technical analysis: March soybean futures posted a fresh for-the-move low before reversing higher, ultimately closing nearer session highs. Bears still have firm control of the near-term technical advantage. Bulls are seeking to build on today’s momentum and close prices above resistance at $12.00, the 10-day moving average at $12.10, then last week’s high of $12.23. Support stands at $11.94 1/4, $11.88 1/2, then $11.79 1/2.
March soymeal futures continue to show relative strength, with today’s rally marking a higher low, the first potential sign a near-term low could be in place, though bears continue to maintain full control of the technical advantage. Bulls are seeking to overcome resistance at $362.00, which has acted as an important pivot since mid-January. Additional resistance lies at $364.40, then last week’s high at $370.40. Meanwhile, support stands at $360.00, $356.10, then the psychological $350.00 mark.
March soyoil futures surged after marking a fresh for-the-move low. Bears still maintain full control of the technical advantage and are seeking to defend resistance at 45.60 cents then 46.05 cents on further buying. Meanwhile, support stands at 45.00 cents, 44.73 cents, then 44.59 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.
Price action: March SRW wheat closed down 9 1/2 cents at $5.90 1/4. March HRW wheat fell 11 cents at $6.14. Both markets closed nearer their session lows. March spring wheat futures dropped 8 3/4 cents to $6.91.
Fundamental analysis: The wheat markets were pressured today by the risk-off sentiment seen in the general marketplace today, following more intense U.S. air strikes against Houthi rebels in Iraq and Syria, and by a weaker U.S. stock market. Solid gains in the U.S. dollar index that sent the index to a 2.5-month high today also worked against the wheat market bulls. The corn futures market languished today and provided little direction for wheat traders.
USDA reported U.S. wheat export inspections of 266,269 MT (9.8 million bu.) during the week ended Feb. 1, down 17,520 MT from the previous week and near the low end of market expectations.
Traders are starting to look ahead to Thursday morning’s monthly USDA supply and demand report for February. A Dow Jones Newswires survey shows analysts on average expect U.S. wheat stockpiles to come in at 649 million bushels, up just 1 million bushels from the January USDA reading.
Technical analysis: Winter wheat futures bears have the firm overall near-term technical advantage. SRW bulls' next upside price objective is closing March prices above solid chart resistance at $6.25. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.56 1/4. First resistance is seen at today’s high of $6.01 3/4 and then at last week’s high of $6.11 1/2. First support is seen at last week’s low of $5.84 1/2 and then at the January low of $5.73 1/4. The HRW bulls' next upside price objective is closing March prices above solid technical resistance at the December high of $6.77 1/2. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.86 3/4. First resistance is seen at last week’s high of $6.34 1/2 and then at $6.41. First support is seen at last week’s low of $6.07 1/4 and then at $6.00.
What to do: Get current with advised sales.
Hedgers: You should be 60% priced in the cash market for 2023-crop. You should also have 10% of expected 2024-crop production sold for harvest delivery next year.
Cash-only marketers: You should be 60% priced for 2023-crop. You should also have 10% of expected 2024-crop production sold for harvest delivery next year.
Advice: We advise cotton hedgers and cash-only marketers to sell another 10% of 2023-crop in the cash market to get to 70% priced. We also advise selling an initial 10% of expected 2024-crop production for harvest delivery.
Price action: March cotton fell 7 cents to 87.04 cents, a near mid-range close.
Fundamental analysis: Cotton futures were able to extend gains for the fifth straight session early on despite the dollar index reaching a near 12-week high and broad selling across equities. Traders seemingly have looming concerns over the potential size of the 2024-25 crop amid a stable U.S. economy, paired with solid demand regardless of higher interest rates. Further evidence of a robust economy was reflected in the Institute of Supply Management’s (ISM) report earlier today, which showed the Services Purchasing Managers’ Index (PMI) leapt from 50.6 in December to 53.4 in January, surpassing economist predictions. This marks the highest level since Sept. 2023 and continues a 13-month streak of expansion, highlighting the sector’s lasting strength.
World Weather Inc. indicates a lack of precip in West Texas has yet to prove to be a problem, though there is need for timely rain in the spring to support planting. Wet conditions remain in the Texas Blacklands as well as the Coastal Bend region, while the Delta and southeastern states are also plenty moist. Meanwhile, crops in Argentina have been notably stressed by excessive heat and dryness and relief is not likely for a few more days, but some is expected beginning this weekend and lasting through next week, which should improve conditions. Brazil cotton continues to experience a good mix of rain and sunshine coupled with seasonable temps to stimulate aggressive crop development, according to the forecaster.
Technical analysis: March cotton traded at the highest level since mid-October but struggled to test resistance at 87.69 cents. Meanwhile, initial support at 86.17 cents limited selling efforts. A push above initial resistance will face an additional battle at 88.26 cents, then at 89.21 cents and the Sept. 28 high of 90.29 cents. However, near-term overbought conditions could spur corrective selling, though the 10-day moving average of 85.48 cents would serve up additional support, then at the 20-, 100- and 40-day moving averages of 83.66, 83.36 and 82.06 cents, respectively.
What to do: Get current with advised sales.
Hedgers: NEW ADVICE -- Sell another 10% of 2023-crop in the cash market to get to 70% priced. Also sell an initial 10% of expected 2024-crop production for harvest delivery.
Cash-only marketers: NEW ADVICE -- Sell another 10% of 2023-crop to get to 70% priced. Also sell an initial 10% of expected 2024-crop production for harvest delivery.
