Crops Analysis | February 26, 2024

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: May corn rose 8 cents to $4.21 1/2, near the session high after forging a fresh contract low early on.

Fundamental analysis: Not surprisingly, corn futures forged new contract lows overnight and again following the open but were able to extend from earlier lows as the session progressed amid corrective buying efforts. Solid weekly export inspection data for the week ended Feb. 22 lent optimism to prices as USDA reported inspections totaling 1.242 MMT (48.9 million bu.), the largest corn inspection volume for the current marketing-year and up 189,447 MT from the previous week. Inspections topped the pre-report range of 550,000 MT to 1.15 MMT and marketing-year to date, are above the required seasonal pace to hit USDA’s target by 27 million bushels, up from 15 million bushels the previous week.

Meanwhile, weather in South America continues to influence price direction as safrinha crop planting efforts in Brazil continue at a notable clip of 73% completed as of last Thursday, compared to 56% for the same time a year ago, according to AgRural. World Weather Inc. reports the need for rainfall in Mato Grosso do Sul, western Sao Paulo and a few areas in northwestern Parana as these areas will remain mostly dry over the next ten days. The forecaster indicates most of Argentina will get at least some rain in the next ten days, though some southern areas will have need for greater amounts to prevent the region from becoming too dry in the first part of March.

Technical analysis: May corn ironically made its largest daily gain since Jan. 30, ending the session above initial resistance at $4.19 1/2 after forging fresh contract lows in early trade. Increased volume and today’s reversal higher will need followthrough action tomorrow to catch bulls’ attention. A move higher will now face initial resistance at $4.25 1/2, then at the 10-day moving average of $4.29 1/4 and again at the 20-, 40- and 100-day moving averages of $4.40 1/4, $4.53 1/4 and $4.81 1/2. Conversely, initial support will serve at today’s failed resistance level, then at $4.15 1/2, $4.09 1/2, $4.05 1/2 and $3.99 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.

 

 

Soybeans

Price action: May soybeans rallied 3 1/2 cents to $11.45 1/4. May soybean meal rallied 60 cents to $328.6, settling near the mid-point of today’s session. May bean oil rose 42 points to 45.02 cents.

Fundamental analysis: Soybeans saw action on both sides of unchanged, though settled nearer session highs after marking a fresh contract low in May futures. A surging corn market helped lift soybean prices this afternoon, though beans did not see the impressive volume that corn did, indicating much of today’s buying was due to spillover strength. Inspections released this morning totaled 974,977 MT (35.8 million bu.) and last week’s inspections were adjusted moderately higher. Inspections historically trend lower for late winter and into spring, though inspections have largely stagnated in the past several weeks, staying above where they would historically be, given the current USDA export estimate. While shipments have been slow throughout much of the crop year, continued focus on exporting soybeans has given bulls hope that exports might surpass the current USDA estimate.

AgRural cut its Brazilian soybean crop forecast by 2.4 MMT to 147.7 MMT, with reductions mainly in Paraná and Mato Grosso Do Sul due to heat in irregular rains in January and part of February. The agency also noted that harvest in Brazil was 40% complete as of last Thursday, ahead of 33% on the same date last year. Over the weekend, rain fell in a part of Mato Grosso do Sul, southwestern Sao Paulo and Parana, erasing some of the drier bias that was present in those areas late last week, says World Weather Inc. That is contrary to the forecast for the coming ten days, which runs drier for the regions, leaving Mato Grosso do Sul, western Sao Paulo and a few areas in northwestern Parana in need of greater rain.

Technical analysis: May soybean futures continue to face heavy selling pressure, though buyers have taken advantage of cheap prices under the $11.50 mark. Bears continue to maintain full control of the technical advantage. Initial resistance stands at the psychological $11.50 mark, $11.52 1/2, then the 10-day moving average at $11.67. Bulls are seeking to hold support at $11.41 3/4, the contract low of $11.33 1/2, then the psychological $11.25 mark on additional selling.

May soymeal saw modest corrective gains alongside soybeans Monday, as bears continue to hold full control of the technical advantage. Resistance stands at $333.40 with backing from the 10-day moving average at $335.80 then $341.70. Meanwhile, support comes in around $328.00, $325.50, which is quickly backed by the psychological $325.00 mark.

May bean oil posted the first green candle on the daily bar chart in nearly two weeks. Bears continue to have full control of the near-term technical advantage. Bulls are eyeing resistance at the 45.00 cent mark, backed by the 10-day moving average at 45.72 cents, then 46.56 cents. Support stands at 44.60 cents, 44.41 cents, then the contract low of 44.18 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 5 3/4 cents at $5.74 3/4 and nearer the session high. May HRW wheat rose 11 cents to $5.76 1/2 and nearer the session high. May spring wheat rose 6 cents to $6.52 3/4.

Fundamental analysis: The winter wheat futures markets today saw short covering after hitting contract lows last week. Good gains in the corn futures market today also supported some buyer interest in wheat, as did friendly “outside markets” that saw a weaker U.S. dollar index and firmer crude oil prices. Look for the wheat markets to continue to take daily direction from the price action in corn futures.

World Weather Inc. today said that in U.S. hard red winter wheat country, warmth in the region today “will be extreme for this time of year,” with some southern areas reaching the 90s. This will cause soil temperatures to rise fast. However, a dramatic change in temperatures will occur Tuesday, with temperatures falling to the teens in much of the region by Wednesday morning. “This will temporarily offset the warming of the soil, but more unusual warmth will then move in during the weekend. Some welcome precipitation is likely Sunday,” said World Weather. Meantime, in the northern Plains, some snow will be helpful for providing some protection to crops from winterkill this week. Temperatures will drop below zero in many areas Wednesday morning. However, much of this will likely be limited to where there is snow on the ground. General concern of winterkill from this is low. Another surge of unusually cold air will occur in the first half of next week, said the forecaster.

USDA this morning reported decent U.S. wheat export inspections of 481,999 MT, up 62,221 MT from the previous week and within pre-report expectations.

Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. Prices are in 2.5-month-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing May prices above solid chart resistance at $6.25. The bears' next downside objective is closing prices below solid technical support at $5.25. First resistance is seen at last week’s high of $5.94 1/4 and then at $6.00. First support is seen at the contract low of $5.53 1/2 and then at $5.50. The HRW bulls' next upside price objective is closing May 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 last week’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 surged 131 points to 94.80, the highest close in more than a week.

Fundamental analysis: May cotton futures regained Friday’s losses but are edging sideways in consolidative trade above technical support, seemingly pausing before the next major move. Meanwhile, strong follow-through gains in cocoa along with supportive outside markets also aided the natural fiber as crude oil rose to an over one-month high amid concerns regarding shipping disruptions in the Red Sea as Iran-aligned Houthi rebels step up attacks on vessels.

World Weather Inc. reports cotton weather is expected to improve in northern Argentina later this week as significant rain evolves, while cotton in Brazil will remain favorably rated with the best conditions in Mato Grosso. Some areas in Bahia are a little wet, but crop improvement will occur when drier weather returns, according to the forecaster. In the U.S. cotton prospects are still good, though West and South Texas are in need of greater rain, though the situation in these areas is not nearly as serious as it was in the past two to three years and planting should advance favorably. West Texas will also require rain later this spring, but for now the moisture profile is not bad.

Technical analysis: May cotton closed just short of the session high and above initial resistance at 94.57 cents for the first time in six sessions, giving bulls the upper hand for a charge higher. Initial resistance will now serve at 95.64 cents, then at last week’s high of 96.42 and again at 96.63 cents. Conversely, initial support will now serve at today’s failed level of resistance at 94.57 cents, then at the 10-day moving average of 93.52 cents and again at 92.51 cents, 91.52 cents, backed by the 20-day moving average of 90.83 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.

 

 

 

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