Crops Analysis | March 12, 2024
Price action: May corn futures closed steady at $4.41 3/4 and near mid-range. Prices hit another three-week high early on.
Fundamental analysis: The corn futures bulls have gained momentum the past couple weeks, to begin to suggest a market bottom is in place. Bulls were able to push prices just above the key 40-day moving average Monday and today, but not produce a close above it. May corn prices have not closed above the 40-day moving average since last October and a close above it would be another bullish chart clue.
Conab lowered its production estimate for the Brazilian corn crop by 943,000 MT from last month, to 112.8 MMT, which included a 750,000-MT cut to the safrinha crop estimate. USDA estimates the country’s corn crop at 124 MMT. Pro Farmer’s South American crop consultant, Michael Cordonnier, left his corn production estimates unchanged for both Brazil and Argentina at 112 MMT and 54 MMT, respectively.
The corn market has also seen buying support recently from better risk appetite in the general marketplace and a down-trending U.S. dollar index on the daily bar chart.
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 rallied 16 3/4 cents to $11.96, a one-month-high close, while May meal rose $2.00 to $339.20. May soyoil surged 118 points to 47.82 cents, marking the highest close since Feb. 8.
Fundamental analysis: Nearby soybeans rallied to the highest intraday level in a month, boosted by an additional downgrade in Brazil’s crop. Brazilian crop agency, Conab, lowered projections for the country’s soybean production as farmers continue to face adverse weather in some regions. Conab trimmed production by 2.6 MMT from last month’s estimate to 146.86 MMT. Meanwhile, South American crop consultant Dr. Michael Cordonnier left his Brazilian soybean crop estimate unchanged at 145.0 MMT but maintained a neutral to lower bias going forward. Cordonnier reported yields continue to be variable, though the bright spot in Brazil will likely be the northeastern region of the country where good rainfall has benefitted soybeans even though they were planted later than normal. He left his Argentina soybean estimate unchanged at 50 MMT and indicates a neutral bias going forward.
In it’s monthly Oil Crops Outlook, the Economic Research Service recounted on Brazil’s export competitiveness amid lower export prices from February and down nearly 30% from the same period last year. Brazilian soybean exports from Oct. 2023 to Feb. 2024 totaled 24.1 MMT, nearly 10 MMT above the same period last year amid Brazil’s discounted prices versus the U.S. However, the U.S. has shipped a larger quantity of soybean meal to the world during the 2023-24 marketing year as amid dampened Argentine crush due to a limited 2023 harvest. From Oct. 2023 through Jan. 2024, the U.S. exported 5.9 million short tons of soybean meal, up 21% from the same period a year earlier.
Technical analysis: May soybeans were able to hold gains above the 40-day moving average of $11.90 for the first time since Dec. 11., giving bulls a bit more technical traction. Followthrough gains will face additional resistance at $12.00, with little resistance serving between there and the 100-day moving average of $12.80 3/4, which is backed by psychological resistance at $13.00 and the 200-day moving average of $13.04 1/2. Conversely, initial support will serve at the 40-day moving average, then at $11.81 again at the 20- and 10-day moving averages of $11.62 1/2 and $11.61 1/4 and then the Feb. 29 low of $11.28 1/2.
May soymeal showed corrective strength following Monday’s losses as support at the near convergence of the 20- and 10-day moving averages of $333.70 and $333.50 curbed selling efforts. However, gains were limited by initial resistance at $341.30, which is backed by the 40-day moving average of $344.30. A move below initial support will face further support at $328.10 and the Feb. 29 low of $323.20.
May soyoil notched the largest daily gain since Jan. 22 and the highest close since Feb. 8. The next area of resistance serves at the 100-day moving average of 48.80 cents. Meanwhile, support will serve at the 40-, 20- and 10-day moving averages of 46.53 cents, 45.83 and 45.81 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 rose 1/4 cent to $5.47 1/2 in choppy trade. May HRW futures slipped 1 1/2 cents to $5.97 1/4, settling near the session’s mid-point. May spring wheat rose 2 cents to $6.72.
Fundamental analysis: Wheat futures continue to see heightened volatility on relative low volume, attempting to forge a low though lacking conviction. While corn futures have surged above moving average resistance, wheat futures continue to show relative weakness but have shown signs of life despite recent cancellations of export purchases by China. Russia continues to export a significant amount of wheat, lessening demand for more-expensive U.S. origin wheat. SovEcon estimates March exports will increase to 4.6-5.0 MMT, above 4.1 MMT in February. Russian wheat prices are now at the lowest level since August 2020 and are once again the cheapest available on the market, dropping below French wheat prices.
Some precip is expected to fall throughout the Plains beginning on Wednesday and extending into Friday. Most rain is expected to fall on the eastern half of the Plains, leaving more to be desired for the western half of the Plains. World Weather Inc notes that greater precip will be needed for favorable crop production in the spring. Temperatures are expected to trend cooler over the coming week, with a potential cold blast coming around Mar. 22, which will be closely monitored.
Technical analysis: May SRW futures traded on both sides of unchanged in indecisive trade. Bears continue to maintain full control of the near-term technical advantage. The 10-day moving average, currently at $5.51, served as formidable resistance today, capping gains. Further resistance stands at $5.55 1/2 then the 20-day moving average at $5.63. Meanwhile, bulls are seeking to hold support at $5.41 1/4, $5.37 3/4, with little backing until $5.28 1/2.
May HRW futures continue to show relative strength, though bears continue to maintain control of the near-term technical advantage. Bulls are seeking to overcome downtrend line resistance stemming from the December highs at $6.03 1/2. Further resistance stands at $6.07 1/2 then $6.18 1/4. Support comes in at $5.95 1/2, the 40-day moving average, which is backed by$5.87 1/4, then $5.84 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 rose a modest 17 points to 95.23 cents, though it was a high-range close.
Fundamental analysis: Cotton futures edged sideways in consolidative trade following as technical resistance continued to curb buying. Outside markets were a mixed bag today following February’s Consumer Price Index (CPI) reading, with the U.S. dollar notching modest gains for a second straight day suppressing the natural fiber, while gains and equities lent support.
The Bureau of Labor Statistics reported U.S. annual inflation rose in February to 3.2%, up from 3.1% a month earlier, which surpassed forecasts of 3.1%. Meanwhile, core inflation, which excludes volatile items such as food and energy eased slightly to 3.8%, down from 3.9%, though that was still above the predicted rate of 3.7%. While Fed Chair Jerome Powell indicated last week that he and his colleagues are getting close to the level of confidence they need to begin lowering rates, today’s data could delay such action a bit.
World Weather Inc. reports spring planting delays are anticipated for a part of the U.S. Delta and southeastern states this season, although it is unclear how significant those delays will likely become. Excessive moisture will prevail from the lower Delta into parts of Alabama and in a few Georgia locations during the next couple of weeks. The Carolinas may become wetter as well.
Technical analysis: May cotton continued to face resistance at the 20-day moving average of 95.36 cents, which is backed by the 10-day of 96.45 cents. However, initial support at 93.90 cents limited selling, but an extension below the area will face additional support at 92.73 cents, then at the 40-day moving average of 91.10 cents. Conversely, a move above the 20- and 10-day moving averages will face additional resistance 98.69 cents, then at 99.86 cents and the Feb. 28 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.
