Crops Analysis | April 4, 2024
Price action: May corn rose 3 1/2 cents to $4.35 1/4, marking a high-range close above the 40- and 10-day moving averages.
Fundamental analysis: Albeit mild, corn futures were able to grab gains for a second straight session after facing notable selling to begin the week. Moreover, a close back above the 40- and 10-day moving averages gives bulls a bit of an improved technical posture. Earlier today, USDA reported corn export sales of 948,000 MT during the week ended March 28, which was down 21% from both the previous week and four-week average. Net sales landed below 1.0 MMT for the first time since the week ended Feb. 15. Traders expected sales to range from 800,000 MT to 1.4 MMT for 2023-24. Meanwhile, exports of 1.641 MMT were a marketing-year high.
World Weather Inc. notes some ongoing concern over long term soil moisture in Paraguay, Mato Grosso do Sul and Parana, Brazil. Most of the dryness in southwestern Brazil is expected to be relieved next week, but greater rain may still be needed. Meanwhile, in the U.S., a good mix of rain and sunshine is expected in the Midwest, while the Delta could trend excessively wet for a while next week.
Technical analysis: May corn futures held a close above the 40- and 10-day moving averages, currently trading at $4.33 3/4 and $4.34 3/4, which will now serve as initial support. Meanwhile, extended buying efforts overnight and into Friday will now face initial resistance at the 20-day moving average of $4.36 3/4, then at $4.41 3/4 and last week’s high of $4.48. Conversely, additional support below the 40- and 10-day moving averages lies at $4.30 1/4, then at $4.27 1/4, $4.22 3/4, $4.20 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 soybean futures fell 2 1/4 cents to $11.80, well off session lows. May soymeal futures rose $3.50 on late-session strength to $333.50. May bean oil futures dropped 70 points to 48.15 cents.
Fundamental analysis: Bean futures traded lower throughout most of today’s session, though late-session strength in soymeal helped close prices well off intraday lows. Despite the modest uptick in export sales throughout most of the month of March, sales for the week ended March 28 fell below expectations, as USDA reported net sales of 194,200 MT. That was down 26% from the previous week and 54% below the four-week average. The daily sale of 152,404 MT of soybeans for delivery to Mexico during the 2023-24 marketing year did little to sway sellers this morning.
It was a relatively quiet day across the ag markets with lower-than-usual volume. Fed member Neel Kashkari, president of the Federal Reserve bank of Minneapolis, noted that he believes it is possible that the Fed does not cut rates this year. Several Fed members spoke today with a more hawkish tone, which limited risk appetite in the market, sending stocks lower and interest rates higher intraday.
Early planting dates for crop insurance are right around the corner for much of the soybean belt. The Midwest is forecast to receive a healthy mix of rain and sunshine over the coming ten days, maintaining favorable soil moisture for spring planting, World Weather Inc. notes. Some warmer weather would be beneficial to raise soil temperatures and are forecast to come in the next week, with temperatures increasing Sunday into Monday, the forecaster says.
Technical analysis: May soybean futures continue to trend lower from the mid-March peak, facing steady selling pressure. Bulls are seeking to close prices above downward trendline resistance, currently at $11.84. Prices have tested that mark five consecutive sessions in a row. Additional buying finds resistance at $11.86 3/4, then the 40-day moving average at $11.93 1/2. Meanwhile, a continuation lower finds support at Wednesday’s low of $11.68 1/2, with further selling finding support at $11.55.
May soymeal led late-session strength today, with prices seeking to maintain a modest uptrend from the February lows. Bulls are seeking to overcome resistance at the 10-day moving average, currently at $335.90. Further buying eyes resistance at $340.30. Bulls are seeking to hold support at $328.30, which is backed by the Feb. 29 low of $323.30.
May bean oil futures saw heavy selling pressure following Wednesday’s rejection off 100-day moving average resistance. Bulls are seeking to reclaim prior support at the 10-day moving average, currently at 48.30 cents, which is solidly backed by the 100-day moving average at 48.80 cents, which capped most of the upside in the last couple of weeks. Support stands at 47.95 cents, with backing from the 40-day moving average at 47.66 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 closed up 1/4 cent at $5.56 1/4 and nearer the session high. May HRW wheat fell 3 cents to $5.77 1/2 and nearer the session low. May HRS rallied 6 3/4 cents to $6.46 1/4.
Fundamental analysis: The winter wheat futures markets today saw more choppy and consolidative trade that the bulls hope has produced or soon will produce major market price bottoms. A weaker U.S. dollar index and firmer crude oil prices today did limit selling interest in wheat markets, as did modest price gains in corn futures. It’s likely the wheat futures markets will continue to look to the corn market for daily price direction.
World Weather Inc. today said that in HRW wheat country very windy conditions are expected Friday through Saturday, with some wind gusts as high as 50 to 65 mph. A couple of storm systems will impact the region, with one being Saturday into Sunday and the other being late Monday into Wednesday. The first system will mostly miss southwestern areas. However, the second system could provide some needed, beneficial moisture to southern parts of the region, said the forecaster. In the northern Plains, precipitation in the first week of the outlook will occur mostly in Montana and in South Dakota and southern production areas of Minnesota. “The moisture will be beneficial, especially in southwestern Montana where the greatest is expected. The need for more precipitation will gradually increase in the drier-biased areas,” said World Weather.
USDA this morning reported more disappointing U.S. wheat export sales of 16,100 MT for 2023-24, down 95% from the previous week and 89% from the four-week average. USDA reported net sales of 262,000 MT for 2024-25. Traders expected (100,000) to 400,000 MT for 2023-24 and 75,000 to 250,000 MT for 2024-25.
Technical analysis: Winter wheat futures bears have the overall near-term technical advantage. However, SRW prices are starting to trend up. SRW bulls' next upside price objective is closing May prices above solid chart resistance at $5.90. The bears' next downside objective is closing prices below solid technical support at $5.00. First resistance is seen at last week’s high of $5.68 1/2 and then at $5.80. First support is seen at today’s low of $5.49 1/2 and then at last week’s low of $5.38 1/2.
The HRW bulls' next upside price objective is closing May prices above solid technical resistance at the March high of $6.05 1/4. 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 $5.90 and then at $6.00. First support is seen at this week’s low of $5.60 1/2 and then at $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 futures plunged 184 points to 87.14 cents, settling on session lows.
Fundamental analysis: Cotton futures continue to break down, closing lower for the third consecutive session. Cotton futures and the U.S. dollar index have faced concurrent selling pressure for three sessions in a row, which is opposite of what one might suppose and is a testament to the weakness in the cotton market. Crude oil futures posted modest profit taking from five-month highs this morning, though rebounded into the close following remarks from Fed members noting that inflation is likely to be stickier than most expect. Export sales of cotton remain poor. It is disappointing to see cotton sales remaining poor despite prices trending lower for the past month. USDA reported export sales of 86,300 bales, down from 111,700 bales last week and modestly below the four-week average. China was the top purchaser in the week ended March 28. Still, export shipments of cotton remain quite robust, coming in at 372,800 bales. On average, shipments peak around the beginning of April before trending lower throughout the remainder of the crop year.
It is worth noting that December futures have shown relative strength while old crop futures have sustained heavy selling pressure. While May futures are nearly 14 cents off the February highs, December futures have fallen less than 2 cents. Tight ending stocks and low estimated acres for 2024-25 continue to support new crop prices and lends a bullish narrative to the market, despite flailing old crop prices.
Technical analysis: May cotton futures underwent heavy selling for the third consecutive session, closing prices on two-month lows. Bears retain control of the near-term technical advantage, though some corrective buying is possible to finish out the week. Bulls are seeking to reclaim resistance at 88.15 cents, which is backed by the 100-day moving average at 89.07 cents. Prices remain well below the 10-day moving average at 90.82 cents, which could entice dip buyers. Support stands at 86.98 cents, which coincides with the 200-day moving average at 86.88 cents. Further selling targets the psychological 85.00 cent mark.
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.
