Crops Analysis | February 14, 2024
Price action: March corn fell 6 1/2 cents to $4.24 1/4, a fresh contract low close.
Fundamental analysis: The grain complex featured notable selling, with SRW wheat leading futures lower. Easing global supplies concerns continue to hover over commodities amid mostly favorable weather throughout South America. World Weather Inc. reports Argentina will experience net drying for the next 8-9 days, firming the ground, but crop conditions should remain mostly good due to moisture that has recently fallen. However, the forecaster notes timely rainfall will be very important once again in the last days of this month and into March. Meanwhile, rain will fall more abundantly across central and northern crop areas in Brazil, while areas of northern Brazil will be drier biased for another day or two which will help to promote safrinha planting.
USDA’s Economic Outlook Forum will begin tomorrow, with initial 2024-25 production forecasts released at 6 a.m. CST. On average, traders are expecting corn acres of 91.6 million acres, which would be down 3.0 million from 2023-24, with expected total production of 15.085 billion bu. Analysts anticipate 2023-24 ending stocks projections of 2.493 billion bu.
Weekly export sales data will also be released tomorrow, with traders expecting net sales for the week ended Feb. 8 to have ranged from 800,000 MT to 1.5 MMT. Net sales for the previous week totaled 1.22 MMT, which rose 1% from the previous week and 25% from the four-week average.
Technical analysis: March corn futures edged to a fresh contract low close and notched the largest daily price decline since Jan. 12. Initial support at $4.28 and $4.25 1/4 were violated, with bears grasping a close below each. Initial support will now serve at $4.22, then at $4.20, $4.15 and $4.00. Conversely, corrective buying efforts will face resistance first at today’s failed support levels, then at $4.31 1/4, and again at the 10-day moving average of $4.35 1/4, and again at the 20- and 40-day moving averages of $4.41 and $4.52 1/2.
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 soybeans fell 15 3/4 cents to $11.70 1/2, near the session low and hit an 8.5-month low. March soybean meal lost $1.50 at $343.30, nearer the session low and closed at an 11-month low close. March bean oil closed down 95 points at 46.35 cents and nearer the session low.
Fundamental analysis: The soybean complex was hit by more chart-based selling pressure from the speculators today. Lower corn and wheat futures prices today, including corn notching a fresh contract low, also weighed on soybeans, meal and bean oil.
Traders continue to monitor weather patterns in South American soybean regions. World Weather Inc. today said Argentina will see drier weather over the next 10 days. The drier bias should have little impact because of recent rains, “although timely precipitation must resume at the end of the 10-day period to prevent crop moisture stress from evolving again.” Rain will fall more abundantly across central and northern crop areas in Brazil, resulting in the continuation of good long-term crop development. Parts of northern Brazil will still be drier-biased for another day or two which will help to promote early season crop maturation, said the forecaster.
At its Ag Outlook conference that begins Thursday, USDA is set to release its update to 2024-25 supply and demand expectations. Most analysts see little deviation from USDA’s previous long-range forecasts, which pegged U.S. soybean acres at 87.0 million, production at 4.475 billion bushels and ending stocks at 286 million bushels.
Thursday morning’s weekly USDA export sales report is expected to show U.S. soybean sales of 300,000 to 800,000 MT in the 2023-24 marketing year, and sales of zero to 50,000 MT in the 2024-25 marketing year.
Technical analysis: The soybean complex bears have the solid overall near-term technical advantage. A three-month-old downtrend is in place on the daily bar chart for soybeans. The next near-term upside technical objective for the soybean bulls is closing March prices above solid resistance at $12.25. The next downside price objective for the bears is closing prices below solid technical support at $11.00. First resistance is seen at today’s high of $11.90 and then at $12.00. First support is seen at today’s low of $11.70 and then at $11.50.
A three-month-old downtrend is in place on the daily bar chart for soybean meal. The next upside price objective for the meal bulls is to produce a close in March futures above solid technical resistance at $370.00. The next downside price objective for the bears is closing prices below solid technical support at $330.00. First resistance comes in at Tuesday’s high of $350.30 and then at this week’s high of $355.90. First support is seen at the February low of $341.00 and then at $335.00.
Soybean oil bears have the firm overall near-term technical advantage. The next upside price objective for the bean oil bulls is closing March prices above solid technical resistance at 50.00 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at the contract low of 44.49 cents. First resistance is seen at this week’s high of 47.70 cents and then at last week’s high of 48.45 cents. First support is seen at today’s low of 46.12 cents and then at 45.33 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.
Price action: March SRW wheat closed 12 cents lower at $5.85 1/2, the lowest close since Jan. 18. March HRW fell 8 1/4 cents to $5.84, a mid-range close. March spring wheat fell 9 1/4 cents to $6.62 1/2.
Fundamental analysis: SRW wheat led the grain complex lower today amid fading global supply concerns. Earlier today, Sovecon raised its 2024 Russian wheat crop estimate by 1.4 MMT, to 93.6 MMT, while FranceAgriMer raised its forecast for French soft wheat stocks at the end of the season to a 19-year high of 3.5 MMT. Meanwhile, winter weather conditions were reported to have been mostly favorable for Ukrainian winter crops, with fields in most of the country’s growing region containing sufficient soil moisture, according to APK-Inform.
World Weather Inc. reports moisture will continue to lack in HRW wheat areas through the next seven days, though some greater moisture remains a possibility in the second week of the outlook. A surge of cold air later this week will help limit early season growth, but unusually warm spring temps in the second week could lead to some increase of greening again. In the northern Plains, threateningly cold temps below zero Fahrenheit should occur mostly where there is snow on the ground in the first week of the outlook, though some subzero temps may occur where there is no snow.
Prior to tomorrow’s open, USDA will release its initial projections prior to the start of its Annual Economic Outlook Forum. On average, analysts expect USDA to forecast planted acres of 47.5 million, which would be down 2.1 million acres from year-ago. Production is expected at 1.892 billion bu. and ending stocks at 720 million bu.
USDA will also release weekly export sales data, with traders expecting net sales to have ranged from 300,000 to 550,000 MT during the week ended Feb. 8. Last week, net sales of 378,400 MT were reported for the previous week, which were up 17% from the week prior but down 6% from the four-week average.
Technical analysis: March SRW spent the session pressured by the 20- and 10-day moving averages of $5.97 and $5.95 1/4 and ended the session below both levels as well as support at $5.92 and $5.86 1/2. Initial support will now serve at $5.80 3/4, then at the Nov. 27 low of $5.56 1/4. Resistance will now serve at today’s failed support levels, then at the 10- and 20-day moving average and again at the 100- and 40-day moving averages of $6.02 1/4 and $6.03 3/4.
March HRW rebounded from a contract low traded early on, but still ended the session below initial support at $5.90 3/4. Initial support will now serve at $5.87, then at $5.82 3/4 and today’s low of $5.79 1/4. Conversely, resistance will serve first at today’s failed support level, then at $5.98 3/4 an again at the 10-, 20- and 40-day moving averages of $6.08, $6.13 3/4 an $6.19 1/2.
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.
Price action: March cotton rose 196 points to 93.44 cents, near mid-range and hit a 1.5-year high.
Fundamental analysis: The cotton futures market continued its strong bull run today, fueled by technical buying interest from the speculators. Bullish fundamentals are also fueling price gains in the fiber. U.S. stock indexes are not far below their record highs set earlier this week. The U.S. economy is still solid despite a slight uptick in inflation reported this week.
World Weather Inc. today said U.S. cotton-planting moisture in March “is looking good for most areas.” Rain later this week in south Texas will bolster topsoil moisture for better planting and early season cotton development in March, although follow up rain will still be needed. Portions of the Delta and southeastern states are too wet, but seasonal warming in March will likely help the moisture profile improve for planting. West Texas still needs more moisture, but planting there does not begin until May, said the forecaster.
The USDA Ag Outlook forum begins Thursday. The agency’s U.S. cotton acreage forecast at the confab has been higher than its prospective plantings estimate 11 times by an average of 354,000 acres. USDA has been lower than prospective plantings 12 times and by an average of -272,000 acres. The trade average forecast is 10.7 million acres and the Pro Farmer forecast is 10.6 million, both up from 10.2 million acres in 2023.
Traders Thursday morning will closely scrutinize the weekly USDA export sales report. Recent weekly reports have shown better U.S. cotton sales abroad.
Technical analysis: The cotton futures bulls have the solid overall near-term advantage. Prices are in a steep seven-week-old uptrend on the daily bar chart. However, the market is well short-term overbought and due for a corrective pullback soon. The next upside price objective for the cotton bulls is to produce a close in March futures above technical resistance at 97.50 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 90.00 cents. First resistance is seen at today’s high of 94.49 cents and then at 96.00 cents. First support is seen at 92.50 cents and then at today’s low of 90.91 cents.
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.
