Crops Analysis | February 29, 2024

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: May corn rose a penny to $4.29 1/2 and closed nearer the session high.

Fundamental analysis: Nearby corn futures spent most of the session above the 10-day moving average and held gains into the close, marking the fourth consecutive close higher. USDA’s weekly export sales data spurred optimism along with a weaker U.S. dollar in early trade, though buyers ultimately stepped in mid-morning and ratcheted the greenback higher. Export sales during the week ended Feb. 22 totaled 1.082 MMT, which rose 32% from the previous week but down 5% from the four-week average. Net sales were near the upper end of the pre-report range from 600,000 MT to 1.2 MMT.

Meanwhile, weather in Argentina continues to prove mostly favorable as timely rainfall and seasonal temps continue to prove supportive for production. However, areas of Brazil are currently experiencing lacking soil moisture from western to southern Mato Grosso do Sul to western Parana into parts of Paraguay, which has permitted rapid planting of safrinha crops, though World Weather Inc. reports moisture will soon be needed. The forecaster indicates the second week of the forecast today is advertising improved rainfall for the region, though follow-up moisture will be important later in March and early April to protect production potential of safrinha crops.

Technical analysis: May corn closed near the session high after an early test of the 10-day moving average of $4.25 1/4, though resistance at $4.32, backed by the 20-day moving average of $4.36 1/4 limited buying efforts. Bulls are needing a close above last week’s high of $4.34 tomorrow, which could indicate a near-term low has been forged, However, a move above the area will face additional resistance serving at the 40-, 100- and 200-day moving averages of $4.49 1/4, $4.79 and $5.04 1/2. Conversely, initial support will remain at the 10-day moving average, which is backed by support at $4.18 1/4. $4.14 1/2 and Monday’s low of $4.08 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.

 

 

Soybeans

Price action: May soybeans fell 4 1/2 cents to $11.40 3/4, though traded as low at $11.28 1/2. May soybean meal rallied $1.7 to $329.2, settling nearer the session high. May bean oil closed 2 points higher at 45.21 cents.

Fundamental analysis: Soybean futures saw resurgent selling pressure, though losses have been limited across the past five sessions as buyers attempt to limit selling under the $11.50 mark in May futures. Corrective gains on light volume Wednesday did not make it through the overnight session as bears forced prices to fresh contract lows. Soybean export sales remain poor, as USDA reported sales of 159,700 MT, nearly triple last week’s marketing year low but still down 30% from the four-week average. Sales were at the low end of expectations that ranged from 100,000 to 600,000 MT. Meanwhile, soymeal sales of 456,200 MT were at the upper end of expectations and the most since the last full week of January. U.S. origin soymeal exports continue to pace well ahead of years past as Argentine production is down due to last year’s severe drought. That boosted soymeal futures modestly, though prices continue to trade near recent lows.

Welcome rain fell on southern Mato Grosso do Sul Wednesday alongside most of southern and parts of central Brazil, World Weather Inc says. Temperatures are remaining high, with highs in the upper 80’s and 90’s, rendering frequent rain necessary to combat evaporation. The next two weeks should bring a healthy mix of rain and sunshine, with breaks between bouts of rain to allow for fieldwork to advance, says World Weather Inc.

Technical analysis: May soybean futures posted losses on the day but closed well off session lows. Bears continue to maintain full control of the technical advantage. Bulls are seeking to overcome resistance at $11.50 then $11.56 1/4, the 10-day moving average, on corrective buying, followed up by resistance at $11.66. Meanwhile, support stands at $11.40 3/4, backed by today’s contract low at $11.28 1/2, then the psychological $11.25 mark.

May soymeal futures posted modest gains today, though bears retain full control of the near-term technical advantage. Prices closed higher for the second consecutive session, a feat done only twice in the month of February. Bulls are eyeing resistance at $332.1, the 10-day moving average, backed by $338.8, then $340.5. Meanwhile, support comes in at $328.0, $324.9, then $323.2 on resurgent selling pressure.

May bean oil futures showed relative strength today as well, though bears retain control of the technical advantage. Bulls are eyeing a close above resistance at 45.53, the 10-day moving average, which capped gains earlier this week. Additional resistance stands at 46.08 cents, then 47.00 cents. Support comes in at 45.00 cents, 44.60 cents, then 44.18 cents on renewed selling.

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 rose 1 1/2 cents to $5.76 1/4 and near mid-range. May HRW wheat closed up 6 1/4 cents at $5.87 1/4 and near the session high. May spring wheat futures rallied 3 cents to $6.59.

Fundamental analysis: The winter wheat futures markets saw tepid short covering today, drawing mild support from modest gains in corn futures. The wheat futures markets continue to languish at lower price levels as the bulls are waiting for a fresh fundamental spark to ignite a rally, but not yet finding it.

World Weather Inc. today said winter crop damage may have occurred earlier this week in the northwestern U.S. Plains, “but the extent of damage should not have a huge impact on the total U.S. crop.”  Snow in eastern Canada’s Prairies this weekend will provide some moisture when it melts to improve spring planting prospects. Precipitation in the U.S. west-central and southwestern high Plains region will leave those areas in need of additional moisture, said the forecaster.

Reports out of Russia said that nation is not interested in renewing the Black Sea grain deal because it has its own grain-export capabilities.

USDA this morning reported U.S. wheat export sales of 327,300 MT for the week ended Feb. 22, which rose 40% from the previous week and 2% from the four-week average. Net sales were within the 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. A bearish symmetrical triangle pattern has formed on the daily bar chart for May SRW. 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 today’s low of $5.69 and then at this week’s low of $5.60. The HRW bulls' next upside price objective is closing March 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 this week’s high of $5.91 1/4 and then at $6.00. First support is seen at Wednesday’s low of $5.73 1/4 and then at the contract low of $5.56 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.

 

 

Cotton

Price action: May cotton futures slipped 151 points before settling at 99.57 cents but ultimately settled in the upper third of today’s range.

Fundamental analysis: Cotton futures saw profit taking, but closed well off session lows, showing bulls still have some fuel left. Abysmal cotton export sales did little to support prices today. With most of U.S. cotton demand coming from exports, it is concerning to see little sales, though shipments continue to prove strong. USDA reported export sales of 45,500 RB, down from 133,900 RB last week, both of which are well below figures seen above 350,000 RB in January. Crude oil futures continue to trade near recent highs but have seen minimal volatility, providing little direction. While the U.S. dollar index has been trending weaker, cotton prices have surged to such a point that export demand was minimal for the week ended Feb. 22 as noted above, as prices have firmed even more over the following week, export demand is likely to have remained weak.

Despite the recent blowout in futures, open interest has remained relatively steady across all contracts. Usually, one would expect a sharp drop in open interest on a blow off top, which would be due to speculators covering their short positions, driving the market higher. Wednesday’s pop higher did not see such a drop, which indicates that some additional upside could be still on the table for cotton futures. Volume is down across all contracts today in quiet trade.

Technical analysis: May cotton futures faced a healthy bout of corrective selling, though bulls continue to maintain full control of the technical advantage. Bulls are eyeing resistance at 99.03 cents, with backing from Wednesday’s close of 99.72 cents, the psychological 100.00 cent mark, then the contract high at 102.68 cents. Meanwhile, support comes in 97.68 cents, 95.25 cents, which is the 10-day moving average and coincides with the mid-February peak, then 93.75 cents.

What to do: Get current with advised sales.

Hedgers: You should be 90% sold in the cash market on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.

Cash-only marketers: You should be 90% sold on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.

 

 

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