Crops Analysis | March 14, 2024

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn                                                                                             

Price action: May corn fell 7 1/2 cents to $4.33 3/4, forging a low-range close at the lowest level in more than a week.

Fundamental analysis: Corn futures were pressured by followthrough selling in SRW wheat amid bearish supply and demand fundamentals, combined with notable gains in the U.S. dollar. However, crude oil’s push to a near four-and-a-half month high eased losses, while solid weekly sales data and a daily sale of 100,000 MT to Mexico also lent support. USDA reported net corn sales during the week ended March 7 totaled 1.28 MMT, up 16% from the previous week and 19% from the four-week average. Traders were expecting sales to range from 800,000 MT to 1.4 MMT.  

World Weather Inc. reports safrinha corn areas in Mato Grosso do Sul and central and northern Paraguay will see little rain into the middle of next week and stress to the crop should rise as temps will often be hot, while soil moisture is already short. Meanwhile, western and central Mato Grosso have short soil moisture and need soaking rains during the next few weeks to ensure the crop has adequate soil moisture before the typical dry season. The forecaster indicates regular rounds of showers are expected over the next two weeks and some increases in soil moisture should result, but a full restoration of soil moisture does not appear likely and additional rain will be needed in the last days of the month.

Technical analysis: May corn ended the session below the 10-day moving average of $4.34 1/2 for the first time since Feb. 27, though additional support at $4.31 3/4 and the 20-day moving average of $4.29 3/4 limited a move lower and will serve as initial support amid followthrough selling efforts. From there, support lies at $4.25, $4.20 and the Feb. 26 low of $4.08 3/4. Conversely, a fourth test of the 40-day moving average of $4.40 3/4 seemingly ignited selling efforts as bulls seemingly regroup. An earnest move above the 40-day will face additional resistance at $4.44 1/4, then at the 50-day moving average of $4.46 1/4, again at $4.50 and then the 100-day moving average of $4.70 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 1 1/2 cents to $11.95 1/4, though traded as high as $12.17 1/2. May soymeal futures rallied $1.0 to $337.4, though settled nearer session lows. May bean oil fell 18 points to 48.39 cents.

Fundamental analysis: Soybean futures posted impressive gains early in the session, though succumbed to selling pressure as the day went on. Outside markets weighed heavily on the soy market today, as sticky inflation continues to draw the attention of the marketplace. Strength in soybeans was unable to stand alone as corn and wheat saw relative weakness, ultimately dragging prices lower as the day went on. The weakness seen in the latter half of today’s session is concerning for bulls, as continued follow-through to the downside tomorrow would indicate the recent bounce could be coming to an early end. This morning, USDA reported export sales of 376,000 MT for 2023-24, which were up 39% from the previous week but up 55% from the four-week average. China was listed as the top purchaser for the week ended Mar. 7, though the bulk of the increase came from a switch from unknown destinations. Still, it is notable that China is returning to the U.S. market for soy needs.

Frequent and often heavy rain will impact areas from central Santa Fe into Entre Rios, Corrientes and Uruguay through Wednesday of next week, though drier weather late next week should maintain plentiful soil moisture, says World Weather Inc. Most of Argentina will see enough rain to continue to support crop development over the next couple of weeks, though southern San Luis to La Pampa to central and southern Buenos Aires are expected to see little rain, which may cause some crop stress at the tail of the forecast period, the forecaster notes.

Technical analysis: May soybean futures surged higher this morning before reversing lower into afternoon trade. Still, prices closed near unchanged and closed right on downtrend line resistance stemming from November highs. That marks initial resistance at $11.96 and coincides with the 40-day moving average. Additional buying eyes resistance at today’s high of $12.17 1/2, then $12.32 3/4. Meanwhile, additional selling eyes support at $11.84, with firm backing from the 20-day moving average at $11.76 1/4.

May soymeal futures showed relative strength today. Prices are still consolidating from their recent leg higher. Bears continue to hold the near-term technical advantage, though their edge is waning. Resistance stands at $340.0, then the 40-day moving average at $344.7, which coincides with today’s high. Additional buying finds resistance at $350.0. Support stands at $335.8, the 10-day moving average, which capped losses today. Further selling eyes support at $329.9, then $324.9.

May bean oil futures saw weakness today despite overwhelming strength in crude oil. Gains the last two sessions have negated the recent downtrend on the daily bar hart, with the 10-day moving average crossing above the 40-day moving average in a “golden cross,” a bullish technical indicator. Resistance stands at 48.92 cents, with backing from 49.95 cents. Support comes in at 48.32 cents, 47.40 cents, then the 10-day moving average at 46.94 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.

 

 

Wheat

Price action: May SRW wheat lost 12 cents to $5.32 1/4. May HRW wheat fell 12 3/4 cents at $5.74 3/4. Prices closed nearer their session lows today. May spring wheat futures dipped 8 1/2 cents to $6.55.

Fundamental analysis:  The winter wheat futures markets were hit with technical selling pressure today amid near-term charts that still lean bearish. A risk-off day in the general marketplace today also squelched the wheat market bulls. Another warmer-than-expected inflation report today, in the form of the producer price index that rose double the rise that was expected, also had the wheat market bears confident. A strong rebound in the U.S. dollar index today was another negative outside-market element for the wheat markets.

USDA this morning reported weekly U.S. wheat export sales of 83,800 MT, which are a marketing-year low and down 69% from the previous week and 71% from the four-week average. USDA reported reductions of 120,100 MT to China, which were known via the daily sales cancellations announcements recently. Net sales were within market expectations.

The International Grain Council has forecast global wheat production for 2024-25 at 799 MMT, up 10 MMT from 2023-24.

World Weather Inc. today said most of the U.S Midwest winter wheat is rated favorably and crop development in the Delta and southeastern states has advanced well. There is potential for frost and a few freezes as far south as the Tennessee River Basin next week, but no permanent crop damage is expected. Meantime, wheat is rated favorably in much of Europe and the western CIS, although there is still a considerable amount of snow on the ground in parts of western Russia. Recent rain in Spain and northern Africa was beneficial for wheat, although more would be welcome. No changes in the condition of wheat in India or China have occurred recently.

Technical analysis: Winter wheat futures bears have the overall near-term technical advantage. SRW prices are in a three-month-old downtrend on the daily bar chart. SRW bulls' next upside price objective is closing May prices above solid chart resistance at $5.80. The bears' next downside objective is closing prices below solid technical support at $5.00. First resistance is seen at today’s high of $5.43 and then at this week’s high of $5.56. First support is seen at the contract low of $5.23 1/2 and then at $5.15.

Recent price gains in HRW, however, suggest a near-term market bottom is in place. The HRW bulls' next upside price objective is closing May prices above solid technical resistance at $6.38 1/2. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.51 1/2. First resistance is seen at today’s high of $5.86 3/4 and then at this week’s high of $6.05 1/4. First support is seen at today’s low of $5.70 3/4 and then at $5.60.

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 fell 142 points to 93.48 cents, settling nearer session lows.

Fundamental analysis: Cotton futures fell under selling pressure for the second consecutive session, marking the lowest close since Feb. 21. Agricultural commodities saw selling across the board today, alongside an overall risk-off tone in the marketplace. Producer inflation coming in higher than expected this morning, marking only the second gain in PPI in the last six months, built on concerns that inflation will remain elevated for longer. The bond market is pricing in higher interest rates over a longer period, which likely dampened the attitude in commodity markets as concerns over high rates harboring economic growth persist. Meanwhile, the crude oil market appears to be breaking out to the upside, so cotton’s weakness today is particularly concerning.

This morning’s USDA export sales report proved weak as high prices continue to discourage imports of the natural fiber. Export shipments continue to prove quite robust, indicating strong demand for physical crop, while purchases are lacking. USDA reported net sales of 92,600 RB, up from 63,100 RB a week ago, though down 9.3% from the four-week average. New crop cotton sales continue to build, with sales of 112,700 RB outpacing sales for old crop this week.

Technical analysis: May cotton futures saw selling pressure throughout the session. Bulls continue to hold the near-term technical advantage, though bears have forced lower highs and lower lows and are challenging that advantage. Bulls’ greatest concern is a bearish head and shoulders pattern that seems to have formed on the daily chart, which would target a move to 82.00 cents in May futures. Resistance stands at 94.53 cents, the 20-day moving average, which is backed by 96.42 cents, then 99.28 cents. Further selling targets support at 92.89 cents, the 40-day moving average at 92.09 cents, then 91.69 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.

 

 

Latest News

Ahead of the Open | March 28, 2024
Ahead of the Open | March 28, 2024

Corn, soybeans and wheat traded in tight ranges overnight, with grains showing relative strength into the break.

Weekly wheat sales exceed expectations, while soybeans miss
Weekly wheat sales exceed expectations, while soybeans miss

Weekly wheat sales were just above the pre-report range for the week ended March 21, while soybean sales missed the expected range by 36,000 MT. Corn sales held steady at 1.21 MMT.

First Thing Today | March 28, 2024
First Thing Today | March 28, 2024

Corn, soybeans and wheat traded in narrow ranges during the overnight session ahead of USDA’s reports later this morning.

After the Bell | March 27, 2024
After the Bell | March 27, 2024

After the Bell | March 27, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

Market Watch | March 27, 2024
Market Watch | March 27, 2024

Cash cattle prices soar to all-time high.