Crops Analysis | March 5, 2024
Price action: May corn futures fell 3 3/4 cents to $4.26 1/4 and nearer the session low.
Fundamental analysis: The corn futures market today was hit by a “risk-off” trading day in the general marketplace, evidenced by solid losses in the U.S. stock indexes and weaker crude oil prices. Traders were also a bit concerned that China’s annual People’s Congress has reportedly eliminated wording that calls for China to have a “peaceful resolution” in its eventual incorporation of Taiwan. That could be loosely extrapolated into meaning less Chinese purchases of U.S. grain down the road. The general marketplace was also uneasy today ahead of Fed Chairman Powell’s testimony before Congress on Wednesday and Thursday.
Solidly lower wheat futures prices today, including May SRW hitting a new contract low, also limited buyer interest in corn futures today.
Pro Farmer South American crop consultant Michael Cordonnier left his Brazilian and Argentine corn estimates unchanged at 112 MMT and 54 MMT, respectively. He maintains a neutral/lower bias for Brazil’s crop and a neutral bias for the Argentine crop.
Technical analysis: The corn futures bears have the solid overall near-term technical advantage. There are still no strong, early clues to suggest a market bottom is close at hand. Prices are in a four-month-old downtrend on the daily bar chart. The next upside price objective for the bulls is to close May prices above solid chart resistance at $4.40. The next downside target for the bears is closing prices below chart support at $4.00. First resistance is seen at this week’s high of $4.33 1/2 and then at $4.40. First support is at $4.21 and then at $4.15.
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 6 cents to $11.49, while may soymeal fell $3.60 to $329.90. Each closed near the session low. May soyoil fell 14 points to 45.04 cents, notching a mid-range close.
Fundamental analysis: Soybeans gave in to selling on Super Tuesday amid broad selling across the marketplace in the wake of mixed economic data ahead of Jerome Powell’s testimony to Congress on Wednesday. News directly tied to the grain and soy complexes was relatively light, with traders mostly focused on Friday, which will provide fresh supply and demand data from USDA.
Meanwhile, South American crop consultant Dr. Michael Cordonnier left his soybean production estimates unchanged for both Brazil and Argentina at 145 MMT and 50 MMT, respectively. Cordonnier noted last week’s rains in Brazil favored northern and southern areas, which benefited late developing crops, especially in Rio Grande Do Sul. However, long-range forecasts from the Brazilian National Weather Service (Inmet) is calling for dryer-than-normal weather during March for much of Brazil. In Argentina, rains favored northern areas of the country, while southern Argentina remained mostly dry with only a few showers in Buenos Aires and La Pampa. Cordonnier reports rain is expected to favor northern Argentina again this week, while dryness and crop stress will continue to build across southern production areas. He maintained a neutral to lower bias toward the Brazilian crop and upgraded to a neutral bias for the Argentine crop going forward.
Technical analysis: May soybeans ended just shy of the session low and 1/2 cent above the 10-day moving average of $11.48 1/2, which has served up support over the past two sessions. The 3 1/2-month downtrend is still firmly in place, with bears maintaining technical control. A move below the 10-day, however, will face additional support at $11.42 1/2, then at last week’s low of $11.28 1/2 and again at $11.00. Conversely, initial resistance stands at $11.63 1/2, which is backed by the 20-day moving average of $11.68 1/2. Additional resistance stands at the 40-day moving average of $11.99 1/2.
May soymeal futures ended the session below the 10-day moving average of $330.20, which had served as support over the past two sessions. Initial support will now serve at $329.40, then at $326.30 and last week’s low of $323.20. Meanwhile, the 10-day moving average will now serve as initial resistance, which is backed by the 20-day moving average of $336.00. From there additional resistance serves at $339.60, $341.60 and the 40-day moving average of $347.80.
May soyoil continues to grind sideways, closely tracking the 10-day moving average of 45.11 cents and consolidating mostly between resistance at 45.58 and support at 44.85 cents. An upside breakout of the current range will face additional resistance at the 20-day moving average of 46.07 cents, then at the 40-day moving average of 46.80 cents. Meanwhile, an extension lower will face further support at 44.54 cents, then at the Feb. 23 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 futures fell 13 cents to $5.51, settling nearer session lows. May HRW futures slipped 11 cents to $5.69 1/4. May spring wheat fell 4 cents to $6.55 1/2.
Fundamental analysis: SRW futures led the wheat futures complex lower today, as May SRW forged a fresh contract low. The overarching bearish trend of the wheat market prevailed today, despite conflicting bullish and bearish news. Recent rains and the fading El Niño are expected to boost Australia’s wheat production to 28.4 MMT in 2024-25 from 26 MMT this year, the country’s ag ministry said. Australia typically exports about 75% of their production, which would add to the current glut of wheat on the market. Meanwhile, Ukraine’s grain exports so far in March have decreased to 270,000 MT from 641,000 MT in the same period last year, their agriculture ministry reported Monday. That comes off impressive exports in February, though exports are still seen as falling from year ago, according to Reuters.
Weather in HRW acres remains largely favorable for spring growing, as some shower activity later this week is expected to boost soil moisture throughout the plains, though portions of the west-central and southwestern plains will need more precip, World Weather Inc says. The northern Plains are forecast as dry, though continued snow melt will continue to boost soil moisture where snow is still on the ground. World Weather Inc notes that the risk of the Red River flooding this spring is very low, which will be beneficial for spring plantings.
Technical analysis: May SRW futures saw relentless selling, negating Monday’s rally and marking a fresh contract low. Bears continue to hold full control of the technical advantage. Bulls are seeking to overcome initial resistance at $5.57 3/4 before tackling stiff resistance at the 10-day moving average at $5.69, then $5.78 1/4. Support stands at $5.50, quickly backed by the contract low of $5.46 1/4, then $5.43 1/2.
May HRW futures continue to show relative strength compared to SRW, though bears continue to maintain control of the technical advantage. Resistance stands at $5.77 1/4, backed by the 20-day moving average at $5.84 3/4, then last week’s high close at $5.87 1/4. Meanwhile, support stands at $5.64 1/2, $5.60 3/4, then the contract low at $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 34 cents to 94.24 cents, the lowest close since Feb. 23.
Fundamental analysis: Cotton futures limited losses despite selling across equities and crude oil futures, while persisting weakness in the U.S. dollar provided some support. Meanwhile, recent gains have elevated prices, making it difficult for mills to make purchases of the natural fiber, which is hovering over the market, while traders also prepare for fresh supply and demand estimates from USDA on Friday. According to a Bloomberg poll, analysts see modest reductions in U.S. production, exports, ending stocks as well as world ending stocks and production. Traders anticipate, however, an increase in world consumption of the natural fiber.
World Weather Inc. reports South Texas and a few areas in northeastern Mexico may get some showers and thunderstorms late next week, but net drying is likely until then. The same is true for West Texas, though precip next week is not very likely. The U.S. Delta and southeastern states will be wettest, and some light showers will impact the far western U.S. production areas. In South America, the forecaster reports weather still looks good for cotton and moisture falling over the Middle East over the next two weeks should prove beneficial for planting later this month and next. Australia is drying down a little much and so is South Africa, though yields in both countries should still be greater than anticipated earlier in the growing season.
Technical analysis: May cotton edged sideways in narrow trade, as the 20-day moving average of 93.93 cents limited selling, while the 20-day moving average of 95.99 cents restricted buying efforts. An extension below the 20-day will face additional support at 92.41 cents, then at 90.23 cents, which is backed by the 40-day moving average of 89.35 cents and the 100-day moving average of 85.30 cents. Conversely, a move above the 20-day will face additional resistance at 97.24 cents, then at 99.89 cents, 102.07 cents and 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.
