Crops Analysis | March 21, 2024
Price action: May corn rose 1 3/4 cents to $4.40 3/4, ending the session above the 10- and 40-day moving averages.
Fundamental analysis: Nearby corn futures notched a six-week high in overnight trade, though technical and outside market pressure limited buying throughout the day trade. The dollar index rallied amid stronger-than-expected economic data, while crude oil extended Wednesday’s losses in the wake of weaker U.S. gasoline demand data and reports of a United Nations draft resolution calling for a ceasefire in Gaza. Meanwhile, USDA reported weekly export sales data this morning, which showed net sales of 1.186 MMT, down 8% from the previous week but up 10% from the four-week average. Net sales were within the expected pre-report range of 800,000 MT to 1.4 MMT. This marked the eighth week in the past 10 with sales more than 1 MMT. Marketing-year to date, U.S. export sales exceed the seasonal pace required to hit USDA’s target by 44 million bu., while shipments exceed the pace by 34 million bushels.
World Weather Inc. reports outside portions of northeastern Brazil and western into southern Rio Grande do Sul, much of Brazil and Paraguay will receive rain today into Friday, with the moisture important in safrinha corn areas from central and southern Mato Grosso do Sul and central and northern Paraguay. Short soil moisture and hot temps have stressed safrinha in these areas and rain expected into Friday along with cooler temps will temporarily improve conditions for the crop. However, a drier weather pattern will resume Saturday through Friday of next week, drying out the soil while stress to safrinha corn likely increases again.
Technical analysis: May corn rallied overnight, extending above the 40- and 10-day moving average of $4.38 1/2 and $4.39 to the highest level since Feb. 13, with a close ultimately held above the levels. An extension higher will now face initial resistance at $4.42, then at $4.44 1/2, $4.50 and the 100-day moving average of $4.67 1/2. Conversely, initial support will serve at the 10- and 40-day moving averages, then at $4.36 1/2 and the 20-day moving average of $4.32 1/2, then at 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 futures rallied 2 1/2 cents to $12.12, though settled nearer session lows. May soymeal futures rose $1.8 to $344.3, near the middle of today’s range. May bean oil futures slipped 21 points to 48.79 cents.
Fundamental analysis: Soybean futures struggled to maintain overnight gains though bulls managed to keep the downside largely intact, despite a slew of bearish fundamental headlines throughout the day. Reuters reported that China’s soy imports from Jan.-Feb. were a five-year low of the period, though imports of Brazilian soy increased 211% from last year to 7 MMT, making up the bulk of Chinese imports. Reports also circulated that China may ask its soybean crushers to prioritize local supplies as it seeks to reduce the reliance on imports from Bloomberg. That comes on the heels of China increasing their use of GMO corn and soy seeds in an attempt to boost production, further reducing their reliance on imports. It is clear that China is trying to become less dependent on other countries for their food use, though it remains to be seen by just how much it will affect U.S. exports, which are already face stiff competition from top exporter Brazil.
Excessive rain has caused flooding throughout Argentina, Uruguay and western Rio Grande do Sul in the past ten days, which damaged crops and property, though a significant impact on soy production is not likely, World Weather Inc reports. Current soil moisture levels are likely enough to carry soybeans through the dry period that is likely to persist until Mar. 29, after which rain should increase, the forecaster says.
Technical analysis: May soybean futures posted modest gains though closed well off session highs. May soybeans closed at the highest mark in a month and a half, though bears continue to maintain the near-term technical advantage. Bulls are seeking to overcome initial resistance at $12.17 1/2 before tackling today’s high at $12.26 3/4. Further buying eyes resistance at $12.32 3/4. Meanwhile, support stands at $12.09 1/2. That is backed by support layered from the psychological $12.00 mark down to the 40-day moving average at $11.96. Further selling eyes support at $11.85 1/2.
May soybean meal futures closed above the 40-day moving average for the first time since November. Bulls are seeking to overcome resistance at $347.6. That is backed by $350.2, which coincides with the psychological $350.0 mark. The 40-day moving average now stands as initial support at $343.2. Further selling would encounter support at $341.4, then $337.4.
May bean oil futures showed relative weakness today as prices continue to consolidate near recent highs. The 100-day moving average stands as initial resistance at 48.91 cents. Additional resistance stands at 49.42 cents, then the psychological 50.00 cent mark. Support stands at the 10-day moving average at 48.11 cents, 47.76 cents, then the 20-day moving average at 47.30 cents.
What to do: Get current with advised sales.
Hedgers: You should be 65% sold in the cash market on 2023-crop. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Cash-only marketers: You should be 60% sold on 2023-crop. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Price action: May SRW wheat rose 1 3/4 cents to $5.46 3/4. May HRW wheat gained 1 1/4 cents at $5.81 3/4. Prices closed near their mid-ranges. May spring wheat futures rose 1 1/2 cents to $6.56 1/2.
Fundamental analysis: The winter wheat futures markets continue to languish at lower price levels. Today, a stronger U.S. dollar limited the upside in wheat futures, but a rise in May corn futures to a five-week high limited the downside for wheat.
USDA this morning reported more disappointing U.S. wheat export sales, with reductions of 109,600 MT during the week ended March 14, a marketing-year low. There were net reductions of 262,700 MT by China. Net sales were down noticeably from both the previous week and four-week average but were within market expectations.
World Weather Inc. today said that in HRW country shower activity in the first week of the outlook will be beneficial. However, net drying is likely to occur in west-central and southwestern production areas, “leaving a continued need for more rain to favorably support unirrigated crops.” The greatest precipitation will occur in eastern production areas. Unusually cold air next Monday through Wednesday will likely burn-back some early winter wheat growth and temporarily cool soil temperatures, said the forecaster. In the northern Plains, two rounds of snow are expected in the first week of the outlook. The first round will occur today and will likely involve a significant band near the border of North Dakota and South Dakota. The second and more notable snow event is then expected late Saturday into Monday. The greatest and most significant snow is possible in the southeastern part of the region. The snow will be beneficial for soil moisture, said World Weather.
In HRW futures, recent sideways price action begins to 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 $6.20. 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 $5.88 and then at $6.00. First support is seen at this week’s low of $5.63 1/2 and then at $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.
Price action: May cotton futures rose 3 points before settling at 92.21 cents.
Fundamental analysis: Cotton futures traded on both sides of unchanged before closing modestly higher, nearer session lows. Cotton has faced selling pressure alongside crude oil futures, which saw followthrough selling following their peak early this week. The surging U.S. dollar index also weighed heavily on cotton futures today, as both higher prices and a stronger dollar have discouraged importers. The dollar reversed yesterday’s losses, resuming higher and trading near the highest mark in two weeks. The dollar has been supported by increasing long-term interest rates, which have perked up following hotter-than-expected inflation data last week.
This morning, USDA reported net cotton sales of 94,700 bales, which was up modestly from last week and the four-week average. However, sales continue to pace below 100,000 bales, which is abnormal for this time of the year. Cotton sales typically wind down in late March and early April, but this year’s rally caused sales to fall off earlier than usual. Whether or not the recent price break will increase sales remains to be seen, but some concerns over export demand are arising. Export shipments continue to be robust, with this morning’s report indicating 398,500 bales were shipped in the week ended Mar. 14, the second highest mark this marketing year.
Technical analysis: May cotton futures traded on both sides of unchanged, though continue to trend lower from the late February high. Bulls are seeking to close prices above the 40-day moving average at 92.33 cents before tackling additional resistance at 93.48 cents. That is backed by the 10-day moving average at 93.80 cents. Support stands at 91.69 cents, which is backed by 90.84 cents, then the psychological 90.00 cent mark.
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.
