Crops Analysis | March 25, 2024
Price action: May corn fell 1 1/2 cents to $4.37 3/4, ending near the session low.
Fundamental analysis: Corn futures ended the session under mild pressure, in tandem with SRW wheat despite favorable outside markets and notable strength in the soy complex. Meanwhile, USDA’s weekly corn inspection data continued to prove solid, but failed to provide a sustained boost. During the week ended Mach 21, inspections totaled 1.228 MMT (48.4 million bu.), which were down 98,332 MT from the previous week but near the upper end of the pre-report range of 900,000 MT to 1.35 MMT.
Weather continues to prove mixed in Brazil, with frequent rains forecasted through Thursday from Mato Grosso and northern Mato Grosso do Sul into southern Goias, where the increases in soil moisture will be important for safrinha corn as the dry season approaches, notes World Weather Inc. However, little rain is expected from central Mato Grosso do Sul into Paraguay, southern Sao Paulo and southern Brazil where fieldwork should advance well while stress to safrinha corn may increase in the drier areas in Paraguay and Mato Grosso do Sul as moisture from recent rains is lost to evaporation. Showers are expected to return to the region Sunday into April 8.
Technical analysis: May corn spent most of the session trading between the 10-day moving average of $4.38 1/2 and Friday’s high of $4.41 1/2. A move below the 10-day will face additional support at the 20-day moving average of $4.34 3/4, then at $4.30 3/4, $4.25 and the Feb. 26 low of $4.08 3/4. Conversely, buying efforts will be met with further resistance at last week’s high of $4.45 3/4, then at $4.50 and the 100-day moving average of $4.66 1/4.
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 soybean futures rallied 16 3/4 cents to $12.09 1/4 and settled on session highs. May meal futures rose $2.60 to $341.70 and settled nearer session highs. May bean oil futures surged 138 points to 49.02 cents and closed on session highs.
Fundamental analysis: Soybeans showed relative strength today though the May contract traded almost entirely within Friday’s range. Soybean oil showcased impressive strength, leading the soy complex, but continued to consolidate from the gains seen in early March. USDA reported soybean export inspections of 768,711 MT (28.2 million bu.) during the week ended March 21, up 68,466 MT from the previous week and within the pre-report range of 400,000 MT to 1.0 MMT. That continues to exceed the seasonal pace needed to hit the current USDA export estimate though USDA is likely to continue to be pessimistic on exports given poor outstanding sales.
Brazil had harvested 69% of its soybeans as of last Thursday, up 6% on the week and slightly behind last year’s pace of 70%. Frequent rain throughout the week could limit some fieldwork, though conditions are expected to turn favorable for harvesting in the latter half of the week throughout Brazil. Argentina is expected to see more sunshine than rain in the next couple of weeks and fieldwork should advance well, World Weather Inc notes. There is enough soil moisture in place to keep conditions favorable for most crops with some exceptions in the west where soil moisture is short and additional precip is needed to prevent rising levels of crop stress, the forecaster says.
Technical analysis: May soybean futures posted solid gains on the session and continued the recent uptrend. Bulls put in another higher low on the daily bar chart as well. Resistance stands at $12.12 and is backed by $12.17 then the psychological $12.25 mark. Meanwhile, sellers will encounter support at the 40-day moving average at $11.96 1/2, which bulls reclaimed as support today. Further selling finds support at $11.88 1/4, then $11.85 1/2.
May meal futures continue to slowly grind higher on the daily bar chart. A three-and-a-half-month downtrend on the daily bar chart has been negated. Bulls are seeking to overcome resistance at the 40-day moving average, currently at $342.90, which is backed by last week’s high of $347.60, then the psychological $350.00 mark. Meanwhile, support stands at $338.00, $336.50, then $331.90.
May bean oil futures showed the greatest strength out of the soy-plex today, though continue to flag in a bull flag on the daily bar chart. Bulls are seeking to overcome resistance at 49.10 cents, a close above which would indicate a technical breakout from the bull flag, targeting the recent for-the-move high at 49.80 cents, then the psychological 50.00 cent mark. Selling pressure finds support at 48.88 cents, the 100-day moving average which bulls reclaimed today, with backing from 48.20 cents, then 47.60 cents, the 20-day moving average.
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 1/4 cent to $5.55 and nearer the session low. May HRW wheat closed a penny lower at $5.89 1/2, nearer the session low. May spring wheat futures slipped 1 1/2 cents to $6.59 1/2.
Fundamental analysis: The winter wheat futures markets saw mild corrective price action after recent modest gains. A lower U.S. dollar index and higher crude oil prices today did limit selling interest in the wheat futures markets.
USDA this morning reported U.S. wheat export inspections of 315,395 MT (11.6 million bu.) during the week ended March 21, down 79,084 MT from the previous week and near the low-end of pre-report expectations.
World Weather Inc. today said, “wheat production areas around the world are still in mostly good shape.” U.S. crop weather still looks favorable, “although some winterkill has occurred this year in the northwestern Plains and possibly a little yield damage may have occurred in a few other areas.” Freezes coming up next week should not have a big impact on Midwest or Great Plains crops, although it will be closely monitored. Meantime, there may be a little concern over limited precipitation in Russia’s Southern Region and Ukraine, although those areas are not dry and have sufficient moisture to start planting when the time comes. Rain in Spain, Portugal, France and Morocco will improve short term crop development and field working moisture, although some flooding rain will be possible. The remainder of Europe and North Africa are favorably moist.
Wheat traders are starting to look ahead to Thursday’s important USDA planting intentions and quarterly grain stocks reports.
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 $5.67 and then at $5.80. First support is seen at $5.40 and then at last week’s low of $5.27.
Recent sideways price action in HRW 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 $6.00 and then at the March high of $6.05 1/4. First support is seen at Friday’s low of $5.72 1/2 and then at last week’s low of $5.63 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 rose 59 points to close at $92.12 after dipping to a five-week low during Monday’s trading session.
Fundamental analysis: May cotton notched mild corrective gains amid notable support from a rally in crude oil and concurrent U.S. dollar weakness, although slippage in the equity indexes likely dampened buying efforts. The natural fiber will likely remain mostly subdued into Thursday’s USDA Prospective Planting Report as traders prepare for the data, though some additional short covering could continue up until the report.
Weather will continue to be a focus as planting efforts gather steam through much of the U.S. World Weather Inc. reports western Texas and southwestern Oklahoma will be dry through much of the next two weeks and fieldwork should advance well around some infrequent and mostly light showers. That region remains in need of significant precip before the planting season. The Blacklands, Coastal Bend and south Texas will also be dry most often through the next two weeks with a couple rounds of rain that should not cause lasting delays to fieldwork.
Technical analysis: May cotton spent the session trading mostly between initial support and resistance of 91.02 and 92.45 cents, respectively. Buying efforts are being subdued by technical pressure stemming from the 40- and 10-day moving averages of 92.97 and 93.35 cents, which are backed by the 20-day moving average of 95.11 cents. Sideways- to lower price action seems likely as the week progresses, with additional support likely appearing at 90.50 cents, then at 89.59 cents and the 100-day moving average of 86.31 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.
