Crop Analysis | March 28, 2024

Crop Analysis
Crop Analysis
(Pro Farmer)

Corn                                                                                             

Price action: May corn futures closed 15 1/4 cents higher to $4.42, gaining 2 3/4 cents on the week.

5-day outlook: Corn futures surged in the wake of this morning’s reports, negating losses seen earlier this week. USDA released their Prospective Plantings and Grain Stock reports, each of which contained bullish fundamental data for the corn market. Corn acres came in at 90.036 million acres, below expectations of 91.8 million acres in a Bloomberg survey and well below 94.6 million acres in 2023-24. Corn and soy acres combined are down year over year, as well as total acres for all crops, as producers opt to farrow more than usual amid low crop prices. Corn acres lost to both spring wheat and cotton acres in the north and south production areas, as those crops have proved to provide better opportunities this spring than corn. Still, corn futures struggled to hold onto gains following the reports. Whether or not bulls can force a another close above 40-day moving average resistance, currently at $4.40 1/2, after the long weekend will be key.

30-day outlook: Quarterly stocks came in tighter than expected this morning, with USDA reporting stocks of 8.347 billion bushels, which was below the Bloomberg average estimate at 8.445 billion bushels and below all but one analyst estimate. Most of the difference stems from feed use coming in higher that most estimates. Feed use through the first two quarters of the year warrants an increase in next month’s WASDE report. Our analysis indicates that USDA is well behind the curve and has kicked the can down the road in previous reports, but it is now apparent that USDA needs to increase their feed use estimate from current levels. When paired with a warranted increase in exports and ethanol as well, the balance sheet could see adjustments of well north of 100 million bushels in the upcoming WASDE. That could prove quite supportive in the medium-term outlook for the corn market, especially if exports continue at their recent solid pace. This morning, USDA reported corn export sales of 1.21 MMT for the week ended March 21, up 2% from the previous week and 4% from the four-week average. Sales were near the upper end of the pre-report range from 800,000 MT to 1.3 MMT.

90-day outlook: Early planting dates are right around the corner for the corn belt. The spring has been relatively mild thus far and will likely encourage growers to hit the fields early. While corn acres came in tighter than expected this morning, a relatively mild spring and ideal planting conditions could lead to corn acres coming in higher than expected, as producers opt to plant corn rather than beans given the opportunity, similar to what was seen last year. On the other hand, relatively low intentions could lead to a significant weather rally if this spring offers any planting delays, due to excessive moisture or otherwise, as there is little buffer with corn acres at 90.0 million acres. The attention of the market will quickly turn to weather here in the next couple of weeks, which will continue to drive the corn market through the growing season.

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 a penny to $11.91 1/2 and ironically lost 1 cent on the week. May soymeal fell $1.30 to $337.70 and ended $1.40 lower from a week ago. May soyoil rose 28 points to 47.95 cents and gained 31 points on the week.

5-day outlook: While corn bulls stole the show today, soybeans mustered a rally from early session lows but continued to face headwinds at the psychological $12.00 area. A rally in corn to a seven-week high certainly gave a boost to the soy complex. However, gains eased into the close ahead of the long Easter weekend.

USDA’s Prospective Planting figure of 86.51 million acres landed just below the average pre-report estimate, though larger-than-expected March 1 stocks at 1.845 billion bu. largely outshined the neutrality of USDA’s acreage peg. Moreover, stocks are up 13% from a year ago, while implied use during the second quarter was down 12% from the same quarter last year.  

Traders will continue to trade the government’s latest data into next week, with the possibility of a volatile Monday on the horizon.

30-day outlook: Weather throughout much of the Midwest has proven warmer and drier than normal through much of the winter in many key production areas, allowing spring planting to begin a bit earlier than usual. While current weather conditions are favorable for planting in many areas, rains will certainly be needed in many areas throughout the Corn Belt to bolster subsoil moisture for the future growing season. 

World Weather Inc. does indicate the Midwest will see regular rounds of rain and a little snow during the next two seeks with additional moisture welcome in many western areas, though while fieldwork will be slowed at times, much of the precip should not be great enough to cause excessively muddy conditions in most areas. While coming rains will be welcome and important in South Dakota to Iowa and eastern Nebraska, much of the moisture will be light and additional precip would be beneficial.

90-day outlook: Not surprisingly the government reported earlier today that soybean use has dwindled in its Quarterly Grain Stocks Report, as U.S. exports have ratcheted down amid a combination of sustained U.S. dollar strength and hefty South American production. On the contrary, though, U.S. crush activity has certainly gained steam, largely due to Argentina’s lack of supplies due to last year’s drought. Traders will continue to monitor the size of the South American crop as well as crush activity in Argentina as supplies are replenished in the coming months. Furthermore, the direction of the dollar will continue to have influence over soybeans as it affects their value in the global marketplace.

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

Advice: We advise hedgers and cash-only marketers to sell another 10% of 2023-crop in the cash market to get to 80% sold.

Price action: May SRW wheat futures rose 12 3/4 cents to $5.60 1/4, near mid-range and on the week down 5 1/2 cents. May HRW wheat gained 7 cents to $5.85 1/4, near mid-range and for the week down 5 1/4 cents. May spring wheat fell 4 1/2 cents to $6.46 1/2 but rose 5 1/2 cents on the week.

5-day outlook:  Solid gains in corn futures today supported the wheat markets. Still, the winter wheat futures markets continue to languish at lower price levels. The bulls are hoping this “basing” type action is forging a market- bottoming process.

Today’s all-important USDA planting intentions report showed all U.S. wheat acres at 47.498 million acres, which is down 2.1 million acres from last year but 168,000 acres more than market expectations. Other U.S. spring wheat acres are expected to rise 135,000 acres from last year, while durum plantings are expected to rise by 352,000 acres. Meantime, the Quarterly Grain Stocks Report showed U.S. wheat stocks in all positions on March 1 were up 146 million bu. from year-ago and 43 million bu. above the average pre-report trade estimate. Wheat stored on-farm on March 1 totaled 271.9 million bu., up 44.4 million bu. (19.5%) from year-ago.

30-day outlook: Wheat traders and producers will continue to watch weather patterns in the coming weeks. World Weather Inc. today said that in HRW country a storm system is still expected to impact the region late Sunday and Monday. The greatest moisture with this will likely occur in the northern half of the region and the least moisture in southwestern areas. This will leave a continued need for greater precip in the coming weeks to favorably support unirrigated crops. However, any moisture that occurs will be beneficial. Temperatures in southern production areas will be quite warm into Monday which will lead to more winter wheat development. Meantime, in the northern Plains, snow across portions of the region will melt over the next five days and there will be some additional light snow and rain that impact parts of the region. The moisture should prove to be useful during the spring planting season. Winter crops will benefit, too, said the forecaster.

90-day outlook: USDA also this morning reported weekly U.S. wheat export sales of 339,600 MT, down noticeably from the previous week but up noticeably from the four-week average. Net sales were above pre-report expectations. U.S. wheat sales abroad will likely have to continue to improve in the coming weeks/months to sustain price uptrends on the charts. The recent rise in the U.S. dollar index, which hit a six-week high today, will not help the prospects for better U.S. wheat sales forthcoming.

What to do: Get current with advised sales.

Hedgers: NEW ADVICE – Sell another 10% of 2023-crop to get to 80% priced in the cash market. You should be 20% forward priced for harvest delivery on expected 2024-crop production.

Cash-only marketers: NEW ADVICE – Sell another 10% of 2023-crop to get to 80% priced. You should be 20% forward priced for harvest delivery on expected 2024-crop production.

 

 

Cotton

Price action: May cotton rose 61 points to 91.38 points but fell 15 points on the week.

5-day outlook: Cotton remained rather subdued on such a historically volatile trading day. In its annual Prospective Plantings Report, USDA showed cotton acres will rise 443,000 to 10.673 million acres, though the figure was 233,000 acres less than traders expected. Meanwhile, a rally in crude oil futures, which challenged the March 19 high, lent limited support to the natural fiber amid countering U.S. dollar strength.

Price direction next week, following the Easter holiday, could see heightened volatility now that traders have a fresh grasp on U.S. producers’ planting intentions.

30-day outlook: Weather in U.S. production areas will continue to prove noteworthy as planting efforts gathers steam. Areas of West Texas continue to remain quite dry in areas, especially in southwestern dryland production areas, while South Texas would also benefit from some rain. However, World Weather Inc. indicates these areas will be dry for the next nine days. Meanwhile, the U.S. Delta and southeastern states will be favorably moist, as will the southwestern desert areas.

90-day outlook: U.S. export sales will continue to garner marketplace attention as the marketing-year progresses. Earlier today, USDA reported weekly export sales of 98,200 RB of upland cotton for the week ended March 21, which were up 8% from the previous week and 46% from the four-week average. Top purchasers included Turkey, China and Indonesia. Meanwhile, shipments during the week held steady, down 9% from the previous week but up 12% from the four-week average. Cotton exports will largely be influenced by global production, U.S. dollar activity and economic conditions in top importer, China.   

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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