Crops Analysis | March 19, 2024

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn                                                                                             

Price action: May corn futures rose 3 1/2 cents to $4.39 1/2 and nearer the session high.

Fundamental analysis: The corn futures bulls are showing resilience and keeping alive a fledgling price uptrend on the daily bar chart. Decent short-covering gains in the winter wheat futures markets today were also supportive for corn prices.

Pro Farmer South American crop consultant Michael Cordonnier this week kept his Brazilian corn crop estimate unchanged at 112 MMT. He increased his Argentine estimate 1 MMT to 55 MMT.

World Weather Inc. today said South America weather “still looks largely favorable, despite some ongoing concern about dryness in portions of Mato Grosso do Sul, Mato Grosso and a few neighboring areas. Some yield reduction is possible, but the key for Safrinha crops is not the rainfall that occurs in the next few weeks as much as it will be rainfall and/or soil moisture in April and May.” Rain later this week will bring a temporary improvement to topsoil moisture in the driest areas, said the forecaster. 

Technical analysis: The corn futures bears have the overall near-term technical advantage. However, a four-month-old downtrend on the daily bar chart has been negated to suggest a market bottom is in place. The next upside price objective for the bulls is to close May prices above solid chart resistance at $4.50. The next downside target for the bears is closing prices below chart support at $4.21. First resistance is seen at last week’s high of $4.45 and then at $4.50. First support is at last week’s low of $4.31 3/4 and then at $4.25.

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 2 1/4 cents to $11.85 1/2, ending the session below the 40-day moving average for the first time since March 11. May soymeal gained $2.00 to $333.90, forging a high-range close, while May soymeal fell 56 points to 48.14 cents.

Fundamental analysis: Soybean futures attempted to climb into positive territory as strength in corn and SRW wheat prompted light buying. However, a continued rally in the U.S. dollar dampened gains across commodities. Traders also remain focused on Brazil’s harvest as fresh supplies hit the global marketplace. South American crop consultant, Dr. Michael Cordonnier left his Brazilian soybean production estimate unchanged at 145 MMT and maintained a neutral to lower bias going forward. Cordonnier did raise is Argentine soybean estimate, however, by 1 MMT to 51 MMT amid improved weather conditions and indicated a neutral bias toward the crop going forward.

In additional supply-related news, soybean crush levels in Brazil’s main agricultural-producing state, Mato Grosso, reached a record high for the month of February, according to the state’s agriculture institute IMEA. Crush levels during the month were just above 1 MMT, up 20% from January and 19% from February 2023. IMEA noted, “some factors contributed to the increase in crush volumes, such as the start-up of new crush facilities in the state and strong export demand, in particular for soymeal.”

China’s ag ministry also reportedly approved 3 genetically modified soybean varieties as the country looks to improve yields and lower costs compared to conventional types of seeds. The world’s top buyer of soybeans aims to raise domestic production through higher yielding seeds and cut its grain imports.

Technical analysis: May soybeans struggled to find sustained buying but continued to find support at he 40- and 10-day moving averages of $11.85 3/4 and $11.83 1/2. An extended move lower will face additional support at $11.74 1/4, then at the 20-day moving average of $11.66. Meanwhile the 50-day moving average of $11.97 3/4 serves as initial resistance, with additional resistance at last week’s high of $12.17 1/2 and again at $12.20.

May meal ended well off the session low and above the 20-day moving average of $332.90. Initial resistance will now serve at the 10-day moving average of $335.70, then at the 40-day of $341.30. Conversely, initial support will now serve at the 20-day moving average, then at $329.40, $327.00 and the Feb. 29 low of $323.20.

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 futures rallied 9 3/4 cents to $5.52 1/2, settling nearer session highs. May HRW futures rose 9 cents to $5.82 3/4. May spring wheat rose a nickel to $6.55 3/4.

Fundamental analysis: Wheat futures worked to the upside for the second consecutive session today, supported by reports that the EU will levy tariffs on grain imports from Russia and Belarus. While that supported futures price action today, it is worth noting that the EU does not import a lot of grain from Russia. While the narrative has been that Russia is undercutting world wheat prices, French wheat is nearly as cheap as (and sometimes cheaper than) wheat coming out of Russia. The tariffs will only be grains used in the EU and not on grains transported through the bloc to other countries. Wheat futures have rebounded the last couple of days despite strength in the U.S. dollar index. Much of the growth in demand for wheat is going to come from exports, especially as food use continues to pace well under year-ago, which will likely be reflected in next week’s Grain Stocks report.

Winter wheat conditions continue to improve throughout most of the Plains. Still, some concerns remain that the recent cold front could damage winter wheat throughout the U.S. World Weather Inc reported that hard freezes occurred this morning in the Tennessee River Basin, which could have damaged some winter wheat. A big surge of unusually cold air will occur behind a storm system that moves through HRW acres this weekend will likely burn-back some early winter wheat growth as well. The west-central and southwestern Plains will not get much moisture in the next couple weeks, leaving the area in need of greater precip, the forecaster notes.

Technical analysis: May SRW futures posted gains for the second consecutive session, though bears continue to maintain the near-term technical advantage. Prices stopped just shy of 20-day moving average resistance at $5.54 today. Additional resistance stands at $5.57 3/4 then $5.68 1/4. Bulls are seeking to hold support at $5.44 1/2 then $5.30 1/2 on a reversal lower.

May HRW futures continued higher today as well, though bears retain the technical advantage. Resistance stands at $5.91 1/2, the 40-day moving average, backed by downtrend line resistance stemming from the December highs at $5.99. Meanwhile, support stands at $5.81 3/4, the 20-day moving average, then $5.66 1/4.

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.

 

 

Cotton

Price action: May cotton fell 123 points to 93.34 cents, marking the lowest close since Feb. 20.

Fundamental analysis: Cotton futures encountered notable selling, reaching the lowest intraday level in nearly a month. Gains in equities and crude oil futures were unable to fend off pressure from follow-through strength in the U.S. dollar, which touched a more-than-two-week high in overnight trade. Meanwhile, the Federal Open Market Committee (FOMC) monetary policy meeting began this morning and will end Wednesday afternoon with a statement and press conference from Fed Chair, Jerome Powell. While no change in policy is expected, the marketplace will tune in to the statement and look for clues on the future path and timing of monetary policy.

As spring approaches and planters begin to roll in earnest, U.S. weather will have an increased impact on trade. World Weather Inc. notes West Texas rainfall over the weekend was welcome, although more is needed, especially in the west. The Low Plains and Rolling Plains topsoil moisture improved temporarily, while other areas in Texas have good soil moisture or will soon experience some improvement. However, wet conditions in a part of the Delta and some southeastern states may induce some delay to early season planting.

Technical analysis: May cotton tested the 40-day moving average of 92.40 cents for the first time since mid-January and held well below the 10- and 20-day moving averages of 95.04 and 95.51 cents, which currently serve as initial resistance. A move below the 40-day will face additional support at 90 cents, with little support serving until the 100-day moving average of 86.09 cents. Conversely, a move above the 10- and 20-day moving averages will face further resistance at 97.26 cents, then at 98.31 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.

 

 

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