Crops Analysis | April 3, 2024
Price action: May corn futures rose 5 1/4 cents to $4.31 3/4 and nearer the session high.
Fundamental analysis: Corn futures posted mild corrective gains but spent the session within Tuesday’s lower range as overhead technicals limited heftier buying. A rally in the soy complex helped deepen gains a bit as traders shook off earlier news from the ag attaché in China, which projected the country’s corn production will rise 2.4% to 296 MMT this year amid an expected increase in yields and slightly larger planted area in 204-25. Meanwhile, imports are forecast to decline 3 MMT to 20 MMT.
The Energy Information Administration reported weekly ethanol production average 1.073 million barrels during the week ended March 29, marking a 19,000 bpd (1.8%) increase from the previous week and was 7.0% above year-ago. Ethanol stocks rose 324,000 barrels to 26.416 million barrels.
Weather in South America continues to prove mixed, with World Weather Inc. reporting there will be some ongoing concern over long-term soil moisture in Paraguay, Mato Grosso do Sul and Parana, Brazil. However, the forecaster indicates most of the dryness in southwestern Brazil is expected to be relieved during the weekend and especially next week, though greater rain may still be needed. Other areas of Brazil will continue to experience a good mix of weather to support summer crops.
USDA will release weekly export sales data Thursday morning for the week ended March 28, with traders expecting sales to range from 800,000 MT to 1.4 MMT.
Technical analysis: May corn recaptured a bit of Tuesday’s losses, though looming technical pressure at the 40-, 10- and 20-day moving averages of $4.34 1/4, $4.35 ¼ and $4.36 1/2 continued to curb buying efforts. A move above the area, however, will face additional resistance at $4.50 and the 100-day moving average of $4.62 1/4. Conversely, initial support lies at Tuesday’s low of $4.24 1/2, then at $4.21 3/4, $4.17 and 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 rose 8 1/4 cents to $11.82 1/4, nearer the session high after hitting a three-week low early on. May soybean meal gained $1.70 at $330.00, nearer the session high and hit a four-week low early on. May bean oil closed up 25 points at 48.85 cents and near mid-range.
Fundamental analysis: The soybean and meal futures markets early on today faced some chart-based selling pressure as the near-term technical postures for both markets lean bearish. However, some short-covering buying interest late in the session pushed those two markets back above unchanged. Higher corn and wheat futures prices did support some buying interest in the soy complex, as did a weaker U.S. dollar index and crude oil prices that touched a six-month high today.
World Weather Inc. today said U.S. weather is expected to trend wetter in the eastern and lower Midwest during the next two weeks. Traders will be more closely monitoring Midwest weather patterns in the coming weeks as planters will be rolling in some southern areas in the next few weeks.
Soybean market bulls are hoping the seasonally price-friendly month of April and recent strong U.S. crushing reports will help to keep a floor under prices, if not provide some upside price potential in the near term. Still U.S. soybean exports need to show improvement for a sustainable price uptrend to develop in soybeans. Thursday morning’s weekly USDA export sales report is expected to show U.S. sales of 200,000 to 600,000 MT in the 2023-24 marketing year and sales of zero to 200,000 MT in the 2024-25 marketing year.
Technical analysis: The soybean bears have the overall near-term technical advantage. The next near-term upside technical objective for the soybean bulls is closing May prices above solid resistance at $12.50. The next downside price objective for the bears is closing prices below solid technical support at $11.73. First resistance is seen at $11.90 and then at this week’s high of $12.01 3/4. First support is seen at today’s low of $11.68 1/2 and then at $11.60.
The soybean meal bears have the solid overall near-term technical advantage. The next upside price objective for the meal bulls is to produce a close in May futures above solid technical resistance at the March high of $347.60. The next downside price objective for the bears is closing prices below solid technical support at the contract low of $323.20. First resistance comes in at Tuesday’s high of $334.50 and then at this week’s high of $338.70. First support is seen at today’s low of $325.10 and then at $323.20.
Bean oil bears have the slight overall near-term technical advantage. The next upside price objective for the bean oil bulls is closing May prices above solid technical resistance at the November high of 53.16 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at 46.00 cents. First resistance is seen at the March high of 49.80 cents and then at 50.00 cents. First support is seen at this week’s low of 48.06 cents and then at last week’s low of 47.25 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 10 3/4 cents to $5.56, while HRW rallied 17 1/4 cents to $5.80 1/2. Each closed near session highs. May HRS closed up 12 cents to 6.39 1/2.
Fundamental analysis: Wheat futures moved correctively higher, with notable pressure in the U.S. dollar lending support, though overhead technicals curbed momentum. News that Russian authorities have halted grain exports on ships belonging to Aston, one of the biggest local grain trading houses, in an effort to expand a quality probe propped up prices. According to sources, Russia’s agricultural watchdog Rozzelkhoznadzor has not provided some of the company’s vessels with phytosanitary certificates. It was reported in late March that there had been an increase in complaints from importing countries regarding non-compliance of Russian grain quality with quarantine requirements, with ships reportedly unable to leave the port. Frozen shipments are estimated at 400,000 MT.
USDA will release its weekly export sales data for the week ended March 28 Thursday morning, with traders expecting sales to range from net reductions of 100,000 MT to 400,000 MT. Last week, net sales totaled 339,598 MT, which were down noticeably from the previous week but up noticeably from the four-week average.
Technical analysis: May SRW was able to muster a rally to recover a portion of early-week losses, though resistance at $5.57 1/2, which is backed by the 40-day moving average of $5.62 1/2 limited stronger buying efforts. A move above the 40-day, however, should stir the bull camp, who have their sights set on the 100-day moving average of $5.94 1/2, though interim resistance serves at $5.69 3/4 and $5.76 3/4. Conversely, initial support will now serve at the 10-day moving average of $5.51 1/4 and again at the 20-day, currently trading at 5.45 1/4. From there, support lies at $5.38 1/4, $5.31 1/4 and the March 11 low of $5.23 1/2.
May HRW notched a close just above the 10- and 20-day moving averages, which have converged at $5.80 1/4, though resistance at the 40-day moving average of $5.81 3/4 remains. A move above the 40-day will face further resistance at $5.86 1/2, $5.92 1/4, then at the psychological $6.00 level and again at the 100-day moving average of $6.13 1/2. Meanwhile, initial support will serve at $5.74 3/4, then at $5.57 1/4 and $5.51 1/2.
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 fell 183 points to 88.98 cents, near the session low and hit a near two-month low.
Fundamental analysis: The cotton futures market today was pressured by chart-based selling and worries about demand for U.S. cotton coming from China. Bulls are concerned Thursday morning’s weekly USDA export sales report will show a sixth straight week of disappointing U.S. cotton export sales.
Cotton bulls are still pinning some hope on last week’s lower U.S. planting figures, which could lead to a tighter supply and demand balance sheet for cotton in the coming months.
World Weather Inc. today said not much change is likely in weather patterns in south or west Texas, the Texas Coastal Bend or eastern Mexico--all of which need greater rain. “The situation is not nearly as big of an issue this year as it was a year ago and timely rain in the next couple of weeks would easily remove the concern over drying,” said the forecaster. The Texas Blacklands, Delta and far western U.S. will see a good mix of weather for a while as will the southeastern states.
Technical analysis: The cotton futures bears have the overall near-term technical advantage. Prices are in a five-week-old downtrend on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in May futures above technical resistance at 95.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 85.00 cents. First resistance is seen at today’s high of 91.15 cents and then at this week’s high of 92.90 cents. First support is seen at 89.00 cents and then at 88.00 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.
