Crops Analysis | February 21, 2024
Price action: March corn fell 7 3/4 cents to $4.11 and a fresh contract low close.
Fundamental analysis: As has been the trend, corn forged a fresh contract low during today’s session, finishing lower for the 10th session during the month of February out of 14 trading days. Selling across the grain and soy complexes pressured corn amid musings of higher-than-expected soybean production acres in Brazil and corrective selling in the wheat complex in the wake of Tuesday’s gains. Outside markets lent little support as the U.S. dollar narrowly favored the upside in anticipation of the release of FOMC minutes from the Fed’s last meeting, while crude oil worked to regain a portion of losses from the previous and overnight sessions.
In South America, Argentina will see a good mix of rain and sunshine during the next two weeks and the few rounds of rain expected will maintain favorable crop conditions in much of the country while the rain will be timely in the drier pockets in the north and west, notes World Weather Inc. Meanwhile, rain advertised for March 3-6 will be important for safrinha corn areas in Brazil and additional rain later in the month will be needed to ensure the crop, notably the late planted portion, has enough moisture to develop favorably during the dry season.
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: May soybeans fell 18 1/2 cents to $11.65. May soybean meal lost $5.00 at $336.70. May bean oil closed down 50 points at 45.42 cents. All three markets closed nearer their session lows.
Fundamental analysis: The soybean complex futures saw another down day amid price weakness across the grain markets. Corn futures prices continue to slump, today hitting another contract low and a more-than-three-year low, basis nearby futures.
It appears the soybean bulls are just standing on the sidelines despite friendly fundamental news. Brazilian firm Agroconsult lowered its Brazil soybean crop estimate by 1.6 MMT, to 152.2 MMT, due to adverse weather during the growing season.
World Weather Inc. today said weather conditions in South American soybean regions “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.”
Soybean traders will have to wait an extra day this week for the weekly USDA export sales report, normally out on Thursday morning but will be released Friday morning due to the U.S. holiday Monday.
Technical analysis: The soybean complex bears have the solid overall near-term technical advantage. Soybeans see a three-month-old downtrend in place on the daily bar chart. The next near-term upside technical objective for the soybean bulls is closing May prices above solid resistance at $12.30. 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 $11.84 and then at this week’s high of $11.92. First support is seen at last week’s low of $11.64 1/4 and then at the contract low of $11.50 3/4.
The soybean meal bears have a 3.5-month-old downtrend in place on the daily bar chart. The next upside price objective for the meal bulls is to produce a close in May futures above solid technical resistance at $370.00. The next downside price objective for the bears is closing prices below solid technical support at $325.00. First resistance comes in at today’s high of $342.20 and then at this week’s high of $345.20. First support is seen at the February low of $332.70 and then at $330.00.
In soybean oil, the next upside price objective for the bean oil bulls is closing May 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 45.78 cents. First resistance is seen at this week’s high of 46.59 cents and then at 47.00 cents. First support is seen at the February low of 45.02 cents and then at 44.00 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 fell 1 1/4 cents to $5.78, marking a high-range close, while May HRW fell 6 1/2 cents to $5.74 1/2. May spring wheat fell 4 cents to $6.61 1/2.
Fundamental analysis: Wheat futures relented to mild profit-taking following Tuesday’s solid short-covering action. Moreover, a general risk-off sentiment across commodities kept bears in the driver seat as market participants waited for FOMC minutes from the last Federal Reserve meeting. The U.S. dollar remained subdued ahead of the minutes, which will provide deeper insight into the Fed’s interest rate decision at its next meeting in March and ultimately market direction.
Meanwhile, World Weather Inc. reports net drying is expected in HRW wheat growing regions over the next week, though some light shower activity will occur Tuesday. Temps through Monday will be particularly warm and above average, which will likely lead to more greening of winter wheat, especially in southeastern production areas. A cold surge is expected late Tuesday through Wednesday, though it is unlikely to last long before unusual warmth moves back in. In the northern Plains, what little snow is on the ground is expected to melt between today and Monday due to unusual warmth. However, the forecaster indicates a snow event is still expected late Monday through Tuesday, though there is some uncertainty with how much snow will occur and if it will affect the entire region or leave some areas with no snow. A close monitoring of the forecast will be warranted due to the possibility of winterkill Feb. 28-29 if there are snow free areas.
Technical analysis: May SRW wheat futures held together relatively well despite selling across the grain and soy complexes, though resistance at Tuesday’s high of $5.81 3/4 and the 10-day moving average of $5.86 1/4 minimized buying efforts. However, a move above the area could see increased short-covering momentum towards the 20-, 40- and 100-day moving averages of $5.98, $6.08 and $6.13 1/4. Conversely, initial support will continue to serve at $5.74 1/4, then at $5.63 1/2 and Tuesday’s low of $5.55 1/4. From there, additional support lies at $5.44 1/2 and $5.33 3/4.
Similar to SRW, May HRW was limited by the previous session high of $5.83 1/4 and the 10-day moving average of $5.87 1/4, backed by the 20- and 40-day moving averages of $6.05 and $6.14 3/4. Meanwhile, initial support will continue to serve at $5.65 1/4, then at last week’s low of $5.56 3/4, then at $5.49 3/4, and $5.40 3/4.
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: May cotton gained 154 points at 93.23 cents and nearer the session high.
Fundamental analysis: The cotton futures bulls hit the accelerator again today, which is especially impressive given the losses seen in the grain futures complex and a weaker U.S. stock market.
The cotton market bulls are still touting the weekend National Cotton Council (NCC) release of its planting Intentions survey, which showed U.S. producers intending to plant 9.8 million acres this spring. That is a 3.7% decline from 2023. The NCC projected U.S. harvested area at 8.1 million acres, a 17.9% abandonment rate.
News this week that China has further eased its monetary policies is also friendly for the cotton market, implying better demand for cotton from the world’s second-largest economy.
World Weather Inc. today said 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. There is a need for more moisture in West and South Texas. California and Arizona have benefited from recent rain and more is expected today and next week.”
Cotton traders will have to wait an extra day this week for the weekly USDA export sales report, normally out on Thursday morning but will be released Friday morning due to the U.S. holiday Monday.
Technical analysis: The cotton futures bulls have the solid overall near-term advantage and regained power today. Prices are in a two-month-old uptrend on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in May futures above technical resistance at contract high of 96.42 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 94.13 cents and then at 95.00 cents. First support is seen at 92.00 cents and then at this week’s low of 90.84 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.
