Crops Analysis | March 7, 2024
Price action: May corn rose 9 1/4 cents to $4.38, marking the highest close since Feb. 13 and the largest daily gain since Nov. 13.
Fundamental analysis: Corn futures extended Wednesday’s gains, notably above the 20-day moving average for the first time since early December amid short-covering across the grain and soy complexes ahead of Friday’s WASDE. Persisting U.S. dollar weakness pushed the greenback to a one-and-a-half month low, while crude oil moved decidedly higher, lending support to commodities. Meanwhile, solid export sales during the week ended Feb. 29 certainly aided in the rally, with USDA reporting net sales of 1.11 MMT, which were up 3% from the previous week but unchanged from the four-week average. Moreover, net corn sales have topped 1 MMT in six of the past eight weeks, averaging 1.119 MMT over the period, while recent data from Dow Jones indicates January export sales exceeded year-ago by more than 44.4 million bu.
World Weather Inc. maintains concerns over Brazil’s safrinha corn production remains due to the uneven distribution of rain and pockets of dryness. While many areas have received timely rainfall, some others have not, making for significant variations in crop conditions from one field to another, according to the forecaster. Rain is still expected to increase in frequency and coverage this weekend into next week, but a general soaking rain is not likely. Sufficient moisture will fall to support crops, though dep subsoil moisture will remain low and must be bolstered before the end of the rainy to season to leave hope for favorable late-planted safrinha crops once the dry season arrives.
Technical analysis: May corn forged another high-range close, ending the session above the 20-day moving average, currently trading at $4.30 1/4 for the first time since Dec. 8. Initial resistance now at the 40-day moving average of $4.43 3/4, with additional resistance serving at the 100-day moving average of $4.74 3/4. Conversely, initial support will now serve at the 20-day moving average, backed by the 10-day moving average, currently trading at $4.26 1/4. From there, support serves at $4.20 3/4, then $4.18 1/2 and the Feb. 26 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 surged 18 cents to $11.66 1/4 and settled near session highs. May meal rallied $4.00 to $334.40, closing near session highs. May bean oil jumped 103 points to 46.35 cents, also settling near session highs.
Fundamental analysis: Soybean prices surged, fueled higher by the concurrent gain in the corn market, though technical resistance stifled gains. Funds appear to be active buyers ahead of tomorrow's updated supply and demand reports from USDA. The risk remains to the upside, which likely fueled buying today. Analysts have adopted a more pessimistic view on soybean demand in the U.S. as the average ending stocks forecast is seen as rising to 319 million bushels, according to a Reuters poll. A chunk of that increase likely comes from a decrease in expected exports. A Bloomberg poll shows expected exports as falling 8 million bushels to 1,712 million bushels. That reflects remarkably poor sales since late January, though importers seemed to take advantage of cheaper prices, as noted by this morning’s report. USDA reported net soybean sales of 613,500 MT during the week ended Feb. 29, up notably from the previous week and the four-week average. Sales were above the expected pre-report range of 175,000 to 600,000 MT. We maintain a more optimistic view on exports despite lack of outstanding sales, as inspections continue to pace above the needed pace to hit the USDA export estimate.
Most of Argentina is forecast to receive waves of rain during the next ten days, with the greatest wave occurring Sunday into Tuesday of next week, which should supply precip to the driest parts of the nation, World Weather Inc says. Temperatures are expected to remain moderate and have little negative effect on soil moisture. Trade is nearly unanimously expecting cuts to Brazilian production, as a Reuters poll expects USDA to estimate production at 152.28 MMT, down from 156.00 MMT in February. Analysts expect Argentine production to remain relatively steady at 50.23 MMT, up from 50.00 MMT in February.
Technical analysis: May soybean futures surged on the session, retesting Monday’s high and closing near session highs. Bears continue to retain full control of the near-term technical advantage. Prices closed just below 20-day moving average resistance at $11.66 3/4, which is quickly backed by downtrend line resistance at $11.68 1/2. Further buying sees resistance at $11.77 1/4. Meanwhile, a resurgence of selling finds support at $11.55, $11.48 1/4, with firm backing from $11.40 3/4.
May meal futures posted gains on the session, though were relatively weak when compared to both beans and corn. Bears continue to hold full control of the near-term technical advantage. Resistance lies at $336.1, the 20-day moving average, which is backed by $341.7, then the 40-day moving average at $346.5. Support stands at $330.0, which has acted as an important pivot the past two weeks. Further backing stands at $325.0.
May soyoil traded to the highest mark in over two weeks. Bears continue to maintain control of the technical advantage. Resistance stands at 46.68 cents, the 40-day moving average. Further buying sees resistance at 47.40 cents, then 48.00 cents. Bulls are seeking to hold support at 45.83 cents then 45.10 cents on further 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.
Price action: May SRW wheat fell 2 1/2 cents to $5.28 1/2 and near the session low. Prices hit another contract low today. May HRW wheat closed up 18 1/2 cents at $5.74 3/4 and nearer the session high. May spring wheat futures settled 9 1/2 cents higher to $6.54 3/4.
Fundamental analysis: The HRW wheat futures market today saw short covering. The U.S. dollar index hit a five-week low today and is trending down on the daily bar chart. That’s a bullish daily “outside-market” element for the wheat markets. Solid gains in corn futures today also spilled over into some buying interest in HRW wheat.
SRW is struggling following confirmation of purchase cancellations from China. USDA today reported SRW export sales cancellations of 130,000 MT to China for delivery for 2023-24. USDA reported weekly wheat export sales of 353,137 MT during the week ended Feb. 29. That’s down 17% from the previous week and down 16% from the four-week average. Net sales were in line with expectations.
World Weather Inc. today said weather patterns in global wheat regions have not provided much incentive for change in trade mentality. Rain and snow expected in northern and eastern U.S. hard red winter wheat areas “will be welcome, but the southwest will remain dry biased. Most of the Midwest will get rain and Canada’s Prairies will experience some gradual melting of snow during the weekend and next week as temperatures trend up,” said the forecaster. Russia, China, most of Europe, the Middle East and parts of North America are seeing favorable or improving weather.
Traders are awaiting Friday morning’s monthly USDA supply and demand report. It’s more likely this report will impact the corn and soybean markets more than wheat. However, if corn and beans make significant price moves, post-report, then wheat futures prices would likely be influenced.
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 futures surged the daily limit, settling 400 points higher to 99.28 cents.
Fundamental analysis: Cotton futures showed remarkable strength as agricultural commodities as a whole saw intensive buying. The S&P 500 pushing to fresh record highs helped support cotton prices today, as gains in cotton continue to tightly track risk appetite in the stock market. Eyes will be on updates to the U.S. and world balance sheets in tomorrow’s USDA supply and demand report. A Bloomberg survey estimates a modest drop in domestic production, which was implied by weaker ginning’s data released last month. Production is estimated as falling to 12.35 million bales from 12.43 in February. That led analysts to cut their ending stocks forecast to 2.72 million bales, down from 2.8 million bales in February. World production and ending stocks are seeing as falling concurrently to 112.77 million bales and 83.31 million bales, from 112.82 million bales and 83.7 million bales a month ago.
Cotton export sales remain rather lackluster as prices have surged. USDA reported weekly sales of 63,100 bales, which is up 39% from the previous week but down 40% from the four-week average. While sales have been poor, shipments have remained quite robust, continuing above exports seen last year at this time. Continued physical demand for cotton on the export market has likely underpinned the recent rally, as stocks are quite tight, and shipments have seen little signs of slowing.
Technical analysis: May cotton futures surged as bulls continue to retain full control of the technical advantage. Bulls are eyeing resistance at the psychological 100.00 cent mark, backed by the high-close of 101.08 cents, then the contract high at 103.80 cents. Prices overcame prior resistance at 96.16 cents today, marking that as significant support, with additional backing at 97.70 cents on the way. Further selling eyes support at 94.42 cents, a close below which would challenge bull’s hold on the market.
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.
