Crops Analysis | March 4, 2024
Price action: May corn rose 5 1/4 cents to $4.30, the highest close since Feb. 20.
Fundamental analysis: Corn futures started the week on a fairly strong note, closing at the highest level since Feb. 20. A daily sale to Taiwan spurred some early session excitement, as it marked the first U.S. flash sale to the country since Sept. 2022, and the first corn flash sale since Jan. 2017. The sale totaled 110,000 MT for delivery during 2023-24, which was the first daily export sale since Japan’s purchase on Feb. 20. Meanwhile, optimism around possible export demand from China, along with hovering concerns over Brazil’s safrinha crop is likely inspiring a continuance of last week’s notable short-covering efforts. Bloomberg News reported late Sunday that China had purchased more than 20 cargoes of feedgrains, amounting to more than 1.2 MMT on the international market over the past two weeks. The report indicated China had secured shipments of corn, sorghum and barley from suppliers including Ukraine and the U.S.
Brazil’s growing season over the next month will likely determine the fate of near-term U.S. export business with China. Currently, soil moisture is short in parts of Paraguay, Mato Grosso do Sul and western Parana and rain during the next two weeks will be most important throughout the region, notes World Weather Inc. Regular rain will need to continue through late this month in safrinha crop areas to ensure soil moisture is adequate to support crop development during the dry season.
This morning, USDA reported weekly export inspections of 1.084 MMT (42.7 million bu.) for the week ended Feb. 29, which were down 205,590 MT from the previous week but within the pre-report range of 850,000 MT to 1.35 MMT.
Technical analysis: A mid-morning test of the 20-day moving, something that’s not occurred since Dec. 26, ignited a mild retreat, though support at the 10-day moving average of $4.24 1/2 limited selling. An additional test of the 20-day will likely include heftier buying action toward the 40-day moving average of $4.46 3/4, which is backed by resistance at the 100- and 200-day moving averages of $4.77 1/4 and $5.03 1/2. Meanwhile, besides the 10-day moving average, additional support serves at $4.20 3/4, $4.16 3/4, $4.10 and last week’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.
Price action: May soybeans rose 3 3/4 cents to $11.55, while May soymeal rose $1.20 to $333.50. Both closed near session lows. May soyoil closed 1 point higher to 45.17 cents.
Fundamental analysis: Soybean futures traded higher most of the session but struggled to maintain overnight gains. Technical resistance limited buying interest today as sellers have taken the recent rally as an opportunity to sell the bounce. Inspections this morning proved fruitful for bulls. Historically, inspections will fall from a November peak throughout most of the remainder of the marketing year. This year, following an early drop, inspections have stabilized. Inspections for February actually totaled more than December, which is rare and points to sustained demand for U.S. soy, which could entice USDA to increase their export estimate in this week’s WASDE, as inspections are running above the required pace to hit the USDA export estimate and show no signs of slowing.
Much of northern, central and eastern Argentina received rain over the weekend, with totals increasing soil moisture, while southwestern Argentina missed much of the precip, World Weather Inc says. Little rain is expected until late this week, when most of the country will see rain into the weekend, with even more rain forecast early next week, which will continue to provide favorable growing conditions, the forecaster says.
This morning, USDA reported daily soymeal sales of 126,000 MT to unknown destinations. Of the total, 30,000 MT is for delivery during 2023-24 and 96,000 MT is for 2024-25. The U.S. continues to garner additional market share in soymeal exports, likely boosted by depressed Argentine crush and relatively cheap soymeal prices due to record crushing.
Technical analysis: May soybeans closed higher on the day, though settled nearer session lows. Volume was light considering prices were attempting to rally above the 10-day moving average for the first time in over a month, indicating little conviction on the bull side. Bears continue to maintain full control of the technical advantage. Resistance stands at $11.54 3/4, the 10-day moving average, with backing from $11.66 then the 20-day moving average at $11.71. Support stands at the psychological $11.50 mark, $11.44 1/2, then $11.40 3/4. Bears are ultimately targeting the contract low of $11.28 1/2.
May soybean meal closed higher for the four-consecutive session. Bears continue to retain full control of the technical advantage, defending 20-day moving average resistance at $337.70 today. Further resistance stands at $340.00, then $341.70. Meanwhile, support comes in at $332.40, the 10-day moving average, which bulls closed prices above for the first time since January. Additional support stands at $328.50, then $324.90.
May soyoil continues to trade solidly sideways, though bears retain control of the technical advantage. Bulls are eyeing resistance at 45.41 cents, backed by 45.61 cents, the 20-day moving average, then 46.12 cents. Support stands at 45.00 cents, 44.60 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.
Price action: May SRW wheat rose 6 1/4 cents at $5.64 and hit a contract low early on. May HRW wheat closed up 15 3/4 cents at $5.80 1/4. Both markets closed near the session highs. May spring wheat futures rallied 13 1/2 cents to $6.57 1/4.
Fundamental analysis: The winter wheat futures markets today saw some short covering and perceived bargain hunting. Wheat prices were also lifted due in part to decent gains in corn futures today. A slightly weaker U.S. dollar index to start the trading week was also a friendly outside market element for the grain markets.
World Weather Inc. today said that in HRW wheat country, temperatures are expected to trend cooler later this week, “which will temporarily limit crop development in the region.” The cooling will occur behind a storm system which will impact the region Thursday into early Friday. “This will provide beneficial moisture in the eastern half of the region. Some shower activity will occur in the west as well. However, this will be more limited compared to areas in the east. More precipitation will be needed for favorable winter wheat development in spring,” said the forecaster. Meantime, in the northern Plains a snow event this past weekend provided some beneficial moisture to the northern half of the region. Very little melting is expected though until Friday when warmer temperatures occur. “As the snow melts, this will help increase topsoil moisture which will be beneficial for crop development in spring,” said World Weather.
USDA this morning reported U.S. wheat export inspections of 353,137 MT, down 128,862 MT from the previous week and in line with market expectations.
Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. Prices are in three-month-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing May prices above solid chart resistance at $6.00. The bears' next downside objective is closing prices below solid technical support at $5.25. First resistance is seen at today’s high of $5.68 and then at $5.80. First support is seen at today’s contract low of $5.53 and then at $5.50. 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 last week’s high of $5.91 1/4 and then at $6.00. First support is seen at today’s low of $5.61 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.
Price action: May cotton fell 99 cents to 94.58 cents, the lowest close since Feb. 23.
Fundamental analysis: Cotton futures were subdued to start the week on followthrough weakness after reaching an 18-month high last week. Fading demand to China in recent weeks has spurred some corrective selling, while weakness in crude oil futures presented additional price pressure. Moreover, while there was no major U.S. economic data released today, traders are likely preparing for Fed Chairman Powell’s address to Congress on Wednesday and Thursday, along monthly U.S. employment numbers, due out Friday.
World Weather Inc. maintains greater planting moisture is needed in south Texas and Mexico and may be needed in West Texas later this season, but there is time for change. Meanwhile, South America weather still looks good for cotton and moisture falling in the Middle East over the next two weeks should prove beneficial for planting later this month and next. The forecaster indicates Australia is drying down a little much and so is South Africa which could have a small impact on production, although yields in both countries should still be greater than anticipated earlier in the growing season.
Technical analysis: May cotton extended below the 10-day moving average of 95.71 cents and tested the 20-day moving average of 93.62 cents for the first time since Jan. 10, but ultimately held a close just above the level, which will continue to serve as initial support. Extended selling efforts will face additional support at the 40-day moving average of 89.02 cents, backed by the 100-day moving average of 85.24 cents. Meanwhile, initial resistance will continue to serve at the 10-day moving average, then at 98.72 cents, 101.88 cents, with notable resistance at last week’s high of 103.80 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.
