Crops Analysis | March 26, 2024

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn                                                                                             

Price action: May corn futures closed down 5 1/4 cents at $4.32 1/2 and near the session low.

Fundamental analysis: There was a “risk-off” mentality in the raw commodity sector today, likely due in part to the major bridge collapse in Baltimore, MD that shut down a major U.S. shipping port and reminded the marketplace of supply chain bottlenecks experienced during the pandemic. The recently up-trending U.S. dollar index has also been a bearish element for the corn market.

Pro Farmer’s South American crop consultant Michael Cordonnier left his corn estimates unchanged for both Brazil and Argentina, at 112 MT and 55 MMT, respectively. He has a neutral/lower bias for Brazil and neutral/slightly lower bias for Argentina.

World Weather Inc. today said weather in South America corn-growing regions will remain favorable as long as rainfall increases in Brazil as advertised. “The biggest dryness issue will remain in Paraguay, southern and western Mato Grosso do Sul and western and northern Parana through at least this week with some relief possible next week. Argentina will get timely rain,” said the forecaster.

Corn traders are awaiting Thursday morning’s USDA planting intensions and quarterly grain stocks reports. These reports are typically some of the most influential government reports of the year.

Technical analysis: The corn futures bears have the overall near-term technical advantage. However, prices are in a fledgling uptrend on the daily bar chart but the bulls need to show fresh power soon to keep it alive. 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 this week’s high of $4.41 1/4 and then at the March high of $4.45 3/4. First support is at $4.30 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 10 1/4 cents to $11.99, while May soymeal fell $1.90 to $339.80. May soyoil fell 60 points to 48.42 cents, ending the session below the 10- and 100-day moving averages. Each soy derivative ended near their respective session low.

Fundamental analysis: Soybean futures gave up a portion of Monday’s gains amid a general risk-off tone across commodities, though selling was limited by technical support. Meanwhile, a lack of fresh news kept soybeans subdued throughout the session as the soy complex as consolidative trade likely persists into Thursday’s government reports.

South American crop consultant Dr. Michael Cordonnier left his soybean estimates for both Brazil and Argentina unchanged at 145 MMT and 51 MMT, respectively. Cordonnier noted the last two areas to be harvested in Brazil will be Rio Grande do Sul and northeastern Brazil where yields are expected to be good, though he maintains a neutral/lower bias toward the crop. Meanwhile, Cordonnier indicated a neutral/slightly lower bias toward the Argentine soybean crop in the wake of strong storms that affected parts of the country last week. He reports the extent of the damage to the crops as undetermined at this point, but there is expected to be excessive lodging and localized flooding especially in low lying areas. The area impacted was estimated to be less than 10% to 15% of the country’s total crop acreage, though it is some of the most productive land in Argentina.

Technical analysis: May soybeans ended the session lower, though losses were limited by the 10-day moving average of $11.98 1/2, which is backed by the 50-, 40- and 20-day moving averages, currently trading at $11.91 3/4, $11.82 3/4 and $11.80. Conversely, initial resistance stands at Monday’s high of $12.10, and is layered from $12.16 1/2 to the 100-day moving average of $12.6 3/4.

May soymeal futures held an inside day in consolidative trade, with support serving at the 40-, 10- and 20-day moving averages of $339.40, $338.20 and $335.80. Buying efforts will continue to face initial resistance at Monday’s high of $342.80, then at $346.60 and $350.00.

May soyoil spent the session trading within Monday’s upper range, limited by resistance at the previous session high of 49.09 cents, though a close below the 10- and 100-day moving averages of 48.61 and 48.55 cents will make these levels an area of resistance. Additional resistance serves at 50.09 cents, then at 51.10 cents. Meanwhile, initial support remains at 48.02 cents, then at the 20- and 40-day moving averages of 47.21 and 46.75 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.

 

 

Wheat

Price action: May SRW wheat fell 11 1/2 cents to $5.43 1/2. May HRW wheat dropped 12 1/4 cents at $5.77 1/4. May spring wheat fell 12 1/4 cents to $6.47 1/4. Prices closed near their session lows.

Fundamental analysis: The wheat market bulls were timid today amid a general risk-off day in the general marketplace, including likely some brief uncertainty about the major bridge collapse in Baltimore, MD, that has closed a major U.S. shipping channel.

Also negative for winter wheat prices today, state-level winter wheat condition ratings showed more improvement in the HRW crop over the past month, despite a slight decline in Kansas. On the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved another 1.5 points from the end of February to 351.7 and stood 28.4 points above USDA’s final national rating at the end of November.

World Weather Inc. today said that in HRW country conditions will be mostly dry today through Sunday with a warming trend and this will lead to more of a need for greater moisture in unirrigated fields. Unusually cold air has likely temporarily slowed or stopped winter wheat growth. However, warmth later this week and weekend will begin to warm the soil again and lead to some more development, said the forecaster. A storm system Monday and Tuesday of next week will provide some shower activity; though, much more will be needed. In the northern Plains, more snow in the first week of the outlook will be beneficial for further raising soil moisture when it melts to better support crops later in spring. Temperatures will trend warmer but remain below normal.

Wheat traders are awaiting Thursday morning’s USDA planting intentions and quarterly grain stocks reports, which history shows can be markets-moving.

Technical analysis: Winter wheat futures bears have the solid 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 $5.57 1/2 and then at this week’s high of $5.67. 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 may be 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 $5.90 3/4 and then at $6.00. First support is seen at $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.

 

 

Cotton

Price action: May cotton rose 139 points to 93.41 cents, a more than one-week high close.

Fundamental analysis: Cotton futures expanded Monday’s corrective gains as strength in equities propped up prices following a sell off from a recent high. Meanwhile, rather subdued price action in the U.S. dollar and crude oil limited a move higher in addition to remaining overhead technical resistance. Traders are also likely looking toward USDA’s Planting Intention Report, due out Thursday, which will provide market direction.

In the U.S., World Weather Inc. reports West Texas cotton areas still need some moisture in the southwestern dryland production areas, while South Texas would also benefit from some rain, but these areas will be dry for the next ten days. The Delta and southeastern states will be favorably moist as will be the southwestern desert areas. Meanwhile, the forecaster indicates crop conditions in South America are rated favorably with little change likely.

Technical analysis: May cotton rallied to close above the 10- and 40-day moving averages, which have converged at 93.16 cents. Follow-through short covering will now face additional resistance at 93.89 cents, then at the 20-day moving average of 94.84 cents, with little resistance serving between here and the Feb. 28 high of 103.80 cents. Conversely, initial support will serve at today’s failed resistance levels at the 10- and 40-day moving averages and again at 92.56 cents, 91.77 cents, 91.23 cents and 90.44 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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