Crops Analysis | February 20, 2024
Price action: March corn futures closed up 2 1/4 cents at $4.18 3/4, nearer the session high.
Fundamental analysis: The corn futures market saw short covering after hitting contract lows last week. Solid gains in winter wheat futures markets today and a weaker U.S. dollar index were bullish “outside-market” forces working in favor of the corn market bulls.
USDA today reported a daily U.S. corn sale of 155,000 MT to Japan during 2023-24. Meantime, USDA reported weekly U.S. corn export inspections of 918,610 MT during the week ended Feb. 15, up 26,275 MT from the previous week and within pre-report expectations. Seasonals would expect the corn export inspections pace to pick up soon.
Safrinha corn planting in center-south Brazil is reported at the fastest pace on record going back to 2013, with 59% of the projected area seeded as of last Thursday. Pro Farmer’s South American crop consultant, Dr. Michael Cordonnier, left his Brazilian and Argentine corn production estimates unchanged at 112 MMT and 54 MMT, respectively. Cordonnier noted a lower bias toward the Brazilian crop and neutral to lower bias for the Argentine crop.
World Weather Inc. today said weather conditions in South American corn regions and most areas around the world have not changed enough to warrant much change in direction for market mentality. “Brazil and Argentina crop conditions are mostly good with little change likely. The same can be said for Northern Hemisphere crop areas in China and Europe, although Spain needs moisture. India also needs precipitation to support its reproducing and filling winter crops,” said the forecaster.
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 rose 6 3/4 cents to $11.79, while March soymeal rose $2.00 to $347.60, both closed near the session low. March soyoil fell 18 points to 45.41 cents.
Fundamental analysis: March soybean futures gapped higher overnight but faced pressure from extended selling in soyoil and looming technical headwinds. Meanwhile, a push to a 27-month low in soymeal lured a daily sale of 228,000 MT of soymeal the Philippines for delivery during 2023-24 and lent support along with another day of U.S. dollar weakness. USDA’s weekly export inspections data for the week ended Feb. 15, showed U.S. soybean inspections totaled 1.19 MMT (43.6 million bu.), which were down 156,201 MT from the previous week but near the upper end of the pre-report range from 600,000 MT to 1.45 MMT. Soybean inspections continue to trail last year’s inspection pace for the same period by 23%.
South American crop consultant Dr. Michael Cordonnier lowered his Brazilian soybean estimate by 2 MMT to 145 MMT, noting a neutral to lower bias going forward. Cordonnier stated final soybean yields in several areas of Mato Grosso and Parana will soon be available, and it appears the later maturing soybeans will not be able to fully compensate for lower yields in early maturing varieties. He left his Argentine crop estimate unchanged at 50 MMT and maintained a neutral to lower bias for the crop.
Technical analysis: March soybeans tested the 10-day moving average, currently trading at $11.82 3/4 but fell short of holding a close above the level. However, an extended move above the area on Wednesday could increase buying efforts toward the 20-day moving average of $11.98 1/4, which is backed by psychological resistance at $12.00. Additional resistance stands at the 40-, 100- and 200-day moving averages of $12.29 1/4, $12.95 and $13.05. Conversely, initial support will serve at today’s low of $11.74, then at $11.69 1/4 and $11.65, then at Friday’s low of $11.60 1/4 and again at $11.53 1/2.
March soymeal futures ended the session just above the 10-day moving average of $347.40. Initial resistance will now serve at the 20-day moving average of $353.50, then at $357.70 and the 40-day moving average, currently trading at $363.70. The 10-day moving average will now serve as initial support, backed by $344.20, $340.70, Friday’s low of $339.00 and $335.70.
March soyoil closed lower for the fourth straight session but held above initial support at 45.23 cents into the close. An extension lower will continue to face additional support at 44.87 cents, then at the Feb. 5 low of 44.51 cents and again at 44.31. Overhead resistance stands at the 20-, 10- and 40-day moving averages of 46.38 cents, 46.54 cents and 47.28 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: May SRW wheat closed up 20 1/4 cents at $5.79 1/4 and nearer the session high. Prices hit a contract low early on today. May HRW wheat rose 19 1/2 cents at $5.81, nearer the session high. Prices hit a contract low last Friday. May spring wheat rose 10 cents to $6.65 1/2.
Fundamental analysis: The winter wheat futures markets today saw solid short-covering rebounds from recent selling pressure. Key for the bulls will be showing important follow-through buying strength on Wednesday or Thursday, which would then begin to suggest market bottoms are in place. A weaker U.S. dollar index today also worked in favor of the wheat market bulls.
World Weather Inc today reported that in U.S. HRW country, there will continue to be a lack of precipitation through at least Sunday. “Persistent unusual warmth could lead to more greening of winter wheat as the soil warms more, especially in southeastern production areas,” said the forecaster. By next Monday, a storm system may be approaching the region and could lead to thunderstorm activity in eastern production areas and windy conditions in the west. The need for more moisture is rising in the west as spring approaches. Meantime, in the northern Plains, unusually warm temperatures in the next seven days will likely melt what little snow cover is left in the region. A snow event is then expected Feb. 27–28 that will give some beneficial, needed moisture. However, more will be needed for use in spring, said the forecaster.
USDA this morning reported U.S. wheat export inspections of 380,774 MT, down 26,750 MT from the previous week and near the low-end of pre-report expectations. That’s almost on pace with USDA’s annual forecast.
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.
Price action: March cotton fell 268 points to 91.19 cents, forging the lowest close in over a week.
Fundamental analysis: Cotton futures extended Friday’s corrective selling, with pressure stemming from weakness across equities and crude oil futures, though extended weakness in the U.S. dollar likely limited the downside.
The National Cotton Council (NCC) released results from its 43rd Annual Early Season Planting Intentions Survey, which showed U.S. producer intend to plant 9.8 million cotton acres this spring, a 3.7% decline from 2023. Upland cotton intentions of 9.6 million acres, are down 4.3% from 2023, while extra-long staple (ELS) intentions of 202,000 acres would be a 37.7% increase. Using 10-year average abandonment rates along with a few state-level adjustments to account for current moisture conditions, NCC projects harvested area at 8.1 million acres, a 17.9% abandonment rate. NCC projects total cotton production at roughly 14.6 million bales, with the upland crop at 14.0 million bales and an ELS crop of 538,000 bales.
World Weather Inc. reports weather conditions in U.S. cotton areas will improve this week with some welcome drying and warming expected in the southern Plains, Delta and southeastern states, while there is need for more moisture in West and South Texas.
Technical analysis: March cotton ended in back-to-back losses for the first time in nearly a month, though support at the 10-day moving average of 91.02 cents limited losses. Additional support serves at 89.61 cents, then at the 20-, 40- and 100-day moving averages of 88.26 cents, 84.65 cents and 83.69 cents. Conversely, initial resistance will continue to lie at 92.58 cents, again at 92.58 cents and Friday’s high of 95.93 cents, backed by 97.22 cents and98.52 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.
