Crops Analysis | April 2, 2024
Price action: May corn futures plunged 9 cents to $4.26 1/2, settling near session lows.
Fundamental analysis: Corn futures have negated all of last Thursday’s report driven strength as sellers actively took advantage of higher prices. Prices have resumed lower despite relatively bullish reports last week. The realization that while stocks came in tighter than anticipated, the balance sheet is still likely to expand beyond 2.000 billion bushels. We maintain a relatively bullish view compared to the trade, but our current estimate still places ending stocks for 2023-24 above 2.000 billion bushels as well. News that Chinese customs asking some traders to limit deliveries of foreign corn into bonded areas also likely weighed heavily on the market today. Chinese authorities are seeking to ease domestic oversupply and support prices for farmers before planting season, Bloomberg reported.
The ag attaché in Brazil lowered its 2023-24 Brazilian corn production forecast to 122 MMT, 2 MMT less than USDA’s official figure. It cut Brazil’s 2023-24 corn export forecast to 45 MMT, 7 MMT less than USDA’s March outlook. For 2024-25, the attaché projects Brazil’s corn production will rise to 129 MMT and exports will rebound to 51 MMT. That remains well above South American crop consultant Dr. Michael Cordonnier’s estimate of 112 MMT. He holds an estimate of 55 MMT for Argentina, steady from a week ago, though retains a slightly lower bias for the Argentine crop.
Conditions are trending drier in Brazil leading Safrinha corn in need of rain. Mato Grosso do Sul and western and northern Parana have been drying out recently and crop stress has been rising, notes World Weather Inc. Not much rain is expected until early next week. Additional rain will be needed to support safrinha crops during the dry season. The forecaster notes that a few bouts of rain will accompany cooler air moving into Brazil from Argentina in April and early May, which may provide some relief from dryness.
Technical analysis: May corn futures faced steady selling pressure throughout the session as prices dipped below last week’s lows. Bulls are seeking to reclaim support at $4.31 3/4, which is backed by the 10-day moving average at $4.34 1/2. Further buying targets the 40-day moving average at $4.39 1/2, which has capped most of the upside over the past month. Meanwhile, further selling finds support at $4.24 3/4, $4.22, with little backing until $4.13 1/2.
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 fell 11 3/4 cents to $11.74, marking a near four-week low close, while May meal slid $5.10 lower to $328.30, marking the lowest close since Feb. 28. May soyoil rose 36 points to 48.60 cents, above the 100-day moving average.
Fundamental analysis: Soybeans gave up early session strength to mark losses for the fifth straight session amid increasing selling pressure in corn futures and persisting weakness in soymeal. However, continued soyoil strength, bolstered by solid gains in crude oil futures, curbed a move lower.
South American crop consultant Dr. Michael Cordonnier left his soybean production estimates unchanged for both Brazil and Argentina at 145 MMT and 51 MMT, respectively. Cordonnier indicated late February and early March rains favored late planted soybeans in Brazil’s southern state of Rio Grande do Sul and northeastern states and noted a neutral bias toward the crop going forward. Meanwhile, Argentina received weekend rains, which generally favored central and east-central areas, and slowed the drying of crops. Cordonnier also holds a neutral bias toward Argentina’s soybean crop.
World Weather Inc. reports too much rain will be returning to some production areas of Uruguay, eastern Argentina and Rio Grande do Sul later this week into next week, causing some delay to harvest and maturation.
Technical analysis: May soybeans lost technical traction, holding a close below the 40-day moving average of $11.79 1/2. Initial support will now serve at $11.69 1/2, then at $11.57 1/4 and the Feb. 29 low of $11.28 1/2. Conversely, initial resistance stands at 20- and 50-day moving averages of $11.87 1/2 and $11.88 1/2, which is backed by the 10-day moving average of $11.95 1/4 and psychological resistance at $12.00.
May meal extended below and held a close below support at $330.20, giving bears additional leverage towards further support at $327.10 and the Feb. 29 low of $323.20. Initial resistance will serve at today’s failed support level, then at 20- 40- and 10-day moving averages of $336.60, $337.0 and $338.00.
May bean oil futures attempted to breakout today, though closed well off session highs. Prices continue to consolidate from mid-March highs. Resistance stands at 48.82 cents, with backing from today’s high of 49.77 cents, then the psychological 50.00 cent mark. Support comes in at 48.21 cents, the 10-day moving average, then 47.84 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 futures dropped 11 3/4 cents to $5.45 1/4, settling near session lows. May HRW futures sunk 12 1/4 cents to $5.63 1/4, settling on session lows. May HRS fell 7 1/4 cents to $6.27 1/2.
Fundamental analysis: Wheat futures trended lower throughout the session and are now challenging technical support as winter wheat conditions improved over winter dormancy. Steady selling in corn futures throughout the session weighed heavily on the wheat market today. USDA rated 56% of the winter wheat crop as “good” to “excellent,” the highest initial spring rating since 2019. When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 22.0 points from last fall to 345.4. The SRW crop slipped 0.1 points to 371.5, though that was 7.7 points above last year on this date. Click here for details. Winter wheat conditions improving over the winter months generally implies that yields will not stray far below trend.
Windy conditions are expected to bring storms to HRW acres this weekend, which will provide some beneficial rainfall, World Weather Inc says. Additional rainfall is forecast next week. Meanwhile, any remaining snow in the northern Plains is expected to melt in the coming week. Some rain this weekend should provide additional moisture which will be beneficial for spring planting, the forecaster says.
Technical analysis: May SRW futures gave up all of last Thursday’s gains and then some. Prices continue to trade in a moderate uptrend from the March low, though are challenging uptrend line support. Bulls are seeking to reclaim support-turned-resistance at the psychological $5.50 mark, which coincides with the 10-day moving average. Further buying finds resistance at $5.60 1/4, then the 40-day moving average at $5.63 1/4. Meanwhile, uptrend line support stands right under today’s close at $5.44, which is backed by $5.38 1/2, then $5.28 1/2.
May HRW futures faced stiff selling pressure for the second consecutive session. Prices remain in a downtrend on the daily bar chart, which was confirmed with this week’s breakdown. Bulls are seeking to overcome resistance at $5.72 1/4, which is backed the 10-day moving average at $5.78, with significant backing from downtrend line resistance at $5.88 1/2. Support stands at $5.61, which capped losses today, then $5.56 1/4.
What to do: Get current with advised sales.
Hedgers: You should be 80% 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 80% priced on 2023-crop. You should be 20% forward priced for harvest delivery on expected 2024-crop production.
Cotton
Price action: May cotton plummeted 195 points to 90.81 cents, near the session low.
Fundamental analysis: Cotton sellers returned today as spillover weakness stemmed from weakness across equities and broad selling across commodities. Meanwhile, crude oil gains limited stronger selling efforts as futures rose amid heightened geopolitical risks in the Middle East that could ultimately disrupt crude supplies from the region. However, stronger-than-expected JOLTS job openings and February factory orders had a mixed effect on the natural fiber as bond yields rose to a four-month high following the news, which pressured equities, but supported crude oil as the marketplace anticipates improved demand.
U.S. growing areas in South Texas, West Texas and the Coastal Bend are in need of greater rain, though not much change is likely, according to World Weather Inc. However, the forecaster notes the situation is not nearly as big of an issue as it was a year ago and timely rain in the next couple of weeks would easily remove the concern over drying. The Texas Blacklands, Delta and far western U.S. will see a good mix of weather for a while as will the southeastern states, although southeastern areas will experience some periodic drying from northern Florida into South Carolina and southeastern North Carolina.
Technical analysis: May cotton extended below the 10-day moving average of 92.04 cents, with bears notching a close below the level as well as support at 91.05 cents. Initial support will now serve at 90.57 cents, then at the 100-day moving average of 86.74 cents. Conversely, initial resistance will serve at today’s failed support levels, then at 93.25 cents and the 20- and 40-day moving averages, which have nearly converged around 93.60 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.
