Crops Analysis | March 20, 2024

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn                                                                                             

Price action: May corn fell 1/2 cent to $4.39 but ended near the session high.

Fundamental analysis: Corn futures spent most of the session favoring the downside as spillover weakness seeped from SRW wheat and notable selling in crude oil futures. However, a rally in the soy complex ultimately curbed selling across grains, allowing corn to close near session highs.

Casting a shadow early in the session, were reports China’s corn imports from Brazil during the first two months of the year surged 178% from the same period last year to 4.1 MMT, while corn imports from the U.S. totaled a meager 766,989 MT, down 67% from the same period last year. Though helping offset U.S. export demand woes a bit, was confirmation from USDA’s local attaché in Mexico that the country’s imports are expected to rise in the 2024-25 season amid heightened demand. Corn imports are slated to trend higher by 5% compared to the previous year to meet growing demand from livestock producers and processors. Through 2023, the U.S. remained the primary supplier of Mexico’s corn, accounting for more than 85% of its imports, due to its proximity and available supply.

Meanwhile, in Brazil, World Weather Inc. reports weather still looks largely favorable, despite some ongoing concern over dryness in portions of Mato Grosso do Sul, Mato Grosso and a few neighboring areas. The forecaster reports 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 in the coming week to ten days will bolster soil moisture in Mato Grosso, Goias and Tocantins sufficiently enough to improve safrinha crop development in April as the rainy season winds down.

The Energy Information Administration reported ethanol production totaled 1.046 million barrels per day (bpd) during the week ended March 15, which rose 22,000 bpd for the week and 49,000 bpd (4.9%) from a year ago. Ethanol stocks rose 227,000 barrels to 26,009 million barrels.

USDA will release its weekly export sales data prior to Thursday’s open. Traders are expecting sales to range from 800,000 MT to 1.4 MMT during the week ended March 14. Last week, net sales of 1.283 MMT were reported for the previous week.

Technical analysis: May corn continued to face pressure at the 40-day moving average, currently trading at $4.39 1/4. While bulls fought to hold a close above the area into the close, efforts fell short of the area, but closed only 1/2 cent from the session high. Initial support will continue to serve at the 10-day of $4.38 3/4. From there, support lies at $4.36 1/4, $4.33 1/4 and the 20-day moving average of $4.31 1/2. Meanwhile, the 40-day will continue to serve as initial resistance, with additional resistance serving at $4.41 1/4, then at $4.43 1/4, $4.46 1/4, then at $4.50 and the 100-day moving average of $4.68.

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

Advice: We advise soybean producers to sell another 10% of 2023-crop production in the cash market to get to 65% priced for hedgers and 60% sold for cash-only marketers.

Price action: May soybeans rose 24 cents to $12.09 1/2. May soybean meal gained $8.60 to $342.50. May bean oil closed up 86 points at 49.00 cents today. Prices closed near their session highs today.

Fundamental analysis: The soybean complex futures markets saw short covering and perceived bargain hunting today. In late trading, soybeans, meal and bean oil extended earlier price gains after the Federal Reserve released its FOMC statement that the marketplace did not deem as too hawkish on U.S. monetary policy. Soybean bulls were also encouraged today as USDA reported a daily soybean sale of 120,000 MT to unknown destinations for 2024-25. 

Somewhat limiting gains in the soy complex today was news China’s soybean imports from Brazil totaled 6.96 MMT during the first two months of this year. That’s a 211% increase from a year ago. Meantime, combined January and February soybean arrivals from the U.S. fell to 4.96 MMT, down 48.9% from the same period last year. 

World Weather Inc. today said South America soybean 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.” Rain in the coming week to ten days will bolster soil moisture, said the forecaster.

Traders are awaiting Thursday morning’s weekly USDA export sales report, which is expected to show U.S. soybean sales of 250,000 to 800,000 MT for 2023-24 and 0 to 100,000 MT for 2024-25. Last week, net sales of 375,980 MT were reported for the previous week.

Technical analysis: The soybean bears have the overall near-term technical advantage. However, a 3.5-month-old downtrend on the daily bar chart has been negated and prices are starting to trend up. The next near-term upside technical objective for the soybean bulls is closing May prices above solid resistance at $12.50. The next downside price objective for the bears is closing prices below solid technical support at the contract low of $11.28 1/2. First resistance is seen at the March high of $12.17 1/2 and then at $12.25. First support is seen at $12.00 and then at this week’s low of $11.81.

The meal bears have the overall near-term technical advantage. The next upside price objective for the meal bulls is to produce a close in May futures above solid technical resistance at $350.00. The next downside price objective for the bears is closing prices below solid technical support at the contract low of $323.20. First resistance comes in at the March high of $344.50 and then at $3.50. First support is seen at today’s low of $333.50 and then at this week’s low of $329.30.

Soybean oil bears have the overall near-term technical advantage. However, prices are starting to trend up to suggest a market bottom is in place. The next upside price objective for the bean oil bulls is closing May prices above solid technical resistance at the November high of 53.16 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at 46.00 cents. First resistance is seen at this week’s high of 49.80 cents and then at 50.00 cents. First support is seen at 48.00 cents and then at 47.00 cents.

What to do: Get current with advised sales.

Hedgers: NEW ADVICE -- Sell another 10% of 2023-crop production in the cash market to get to 65% priced. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.

Cash-only marketers: NEW ADVICE -- Sell another 10% of 2023-crop production to get to 60% priced. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.

 

 

Wheat

Price action: May SRW wheat closed 7 1/2 cents lower at $5.45, but finished in the upper trading range, while May HRW fell 2 1/4 cents to $5.80 1/2, ending near the session high. May spring wheat fell 3/4 cent to $6.55.

Fundamental analysis: SRW wheat gave up most of Tuesday’s gains as the U.S. dollar extended its recent climb and looming technical pressure continued to curb buying. The wheat complex remains subdued as global supply and demand fundamentals continue to prove tepid. However, the European grain trading association Coceral did make a cut to its forecast for this year’s soft wheat production in the European Union, including the UK, to 134.1 MMT, down from its projection of 139.5 MMT in December.

World Weather Inc. notes most of the U.S. winter crop has not seen much damaging conditions for a while, although a bitter cold with no snow earlier in the winter in Montana and the western Dakotas likely damaged a few crops. A few other crops in the Tennessee River Basin may have been damaged by hard freezes Tuesday morning, although the impact should have been low.

USDA will release its weekly export sales data prior to Thursday’s open, with traders expecting net sales to range from net reductions of 200,000 MT to 500,000 MT during the week ended March 14. Last week net sales of 83,804 MT were reported for the previous week.  

Technical analysis: May SRW continued to face resistance at the 20-day moving average of $5.53 1/4, though the 10-day moving average of $5.40 1/2 continues to serve up initial support. A move higher will face additional resistance at $5.63 1/4, then at the 40-day moving average of $5.75 1/2 and the 100-day moving average of $6.00 1/4. In addition to the 10-day moving average, support serves at $5.33 1/2, then at $5.28 1/4 and the March 11 low of $5.23 1/2.

May HRW held a close between the 10- and 20-day moving averages of $5.82 1/2 and $5.78 1/4 after trading as low as $5.67 1/4. A move above the 10-day will face additional resistance at the 40-day moving average of $5.91 1/2, and again at $5.96 1/2, $6.05 1/2 and the 100-day moving average of $6.20 3/4. Meanwhile, initial support will remain at the 20-day moving average, which is backed by support at $5.73 1/2. $5.64 1/2 and the March 6 low of $5.51 1/2.

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 116 points to 92.18 cents and nearer the session low. Prices hit a four-week low.

Fundamental analysis: The cotton futures market saw chart-based selling pressure from the speculators today as the near-term technical have turned more bearish. A rally in the U.S. dollar index for five sessions in a row is a bearish “outside market” element for the cotton market. Today’s solid losses in Nymex crude oil futures was also a daily negative for the natural fiber.

World Weather Inc. today said west Texas rainfall “will be restricted for a while after some beneficial moisture occurred during this past weekend. Other areas in Texas either have good soil moisture or will soon experience some improvement. Wet conditions in a part of the Delta and some southeastern states may induce some delay to early season planting.”

Cotton traders are awaiting Thursday morning’s weekly USDA export sales report. Recent weekly sales numbers have been disappointing and are partly responsible for the recent sell-off. Bulls are hoping for better numbers tomorrow.

Technical analysis: The cotton futures bulls have lost their overall near-term advantage. A 2.5-month-old uptrend on the daily bar chart has been negated. The next upside price objective for the cotton bulls is to produce a close in May futures above technical resistance at this week’s high of 96.20 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 90.00 cents. First resistance is seen at today’s high of 93.47 cents and then at 94.65 cents. First support is seen at today’s low of 91.81 cents and then at 91.00 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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