Crops Analysis | April 10, 2024
Price action: May corn rose 3 cents to $4.34 1/4, ending nearer the session high.
Fundamental analysis: Corn futures favored the upside, though gains were limited by looming techincal resistance and sharp gains in the U.S. dollar following this morning’s stronger-than-expected Consumer Price Index (CPI) data. Notable strength in HRW wheat amid forecasts of hot, dry weather conditions in U.S. growing areas keyed up the wheat complex and ultimately provided some spillover support for corn, though notable selling in the soy complex weighed on prices. Meanwhile, traders are also waiting for USDA’s supply and demand update, due out Thursday at 11 a.m. CT. Pre-report expectations indicate the marketplace is expecting mostly minor changes to the balance sheet. A Reuters poll showing analysts anticipate 2023-24 ending stocks to drop slightly from March to 2.102 billion bu., while world ending stocks are expected to drop nearly 3 MMT from March to 316.72 MMT.
The Energy Information Administration reported weekly ethanol production during the week ended April 5 averaged 1.056 million barrels per day (bpd), down 17,000 bpd (1.6%) from the previous week but up 10.1% from a year-ago. Ethanol stocks declined 208,000 barrels to 26.208 million barrels.
USDA will release weekly export sales data for the week ended April 4 Thursday morning. Traders are expecting net sales to range from 750,000 MT to 1.3 MMT. Last week, net sales for the previous week were reported at 948,000 MT, down 21% from the previous week and from the four-week average.
Technical analysis: Corn futures spent most of the session trading between the 10- and 40-day moving averages of $4.33 1/2 and $4.32 3/4, which served up support, while buying efforts were limited by the 20-day moving average of $4.35 1/2. The 10- and 40-day moving averages will continue to serve as initial support, with further support serving at $4.32 1/4, $4.28 3/4, $4.25 and $4.22 3/4. Buying efforts will continue to face resistance at the 20-day moving average, then at $4.38 1/4, $4.40 3/4 and the March 28 high of $4.48
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 9 3/4 cents at $11.64 3/4, nearer the session low and hit a four-week low. May soybean meal closed down $4.70 at $330.90 and near the session low. May bean oil rose 8 points at 47.60 cents, nearer the session high after notching a four-week low early on.
Fundamental analysis: The soybean and meal futures were pressured today due in part to a strong rally in the U.S. dollar index that hit a 4.5-month high after a hotter-than-expected U.S. consumer price index report. It was a “risk-off” day in the general marketplace, following the uptick in U.S. consumer inflation. The U.S. stock indexes sold off sharply. This also squelched buying interest in the soybean complex futures.
Soybean bulls got no traction after USDA this morning reported a daily U.S. soybean sale of 254,000 MT to unknown destinations for 2024-25. Today’s flash sale brought the daily sales total over the past week to 530,404 MT and marks the first back-to-back soybean sale since Dec. 14/15.
Traders are looking ahead to Thursday morning’s weekly USDA export sales report, which is expected to show U.S. export sales of 200,000 to 600,000 MT in the 2023-24 marketing year, and sales of zero to 100,000 MT in the 2024-25 marketing year. The monthly USDA supply and demand report is also out Thursday morning, including updates to the U.S. balance sheet for soybeans, as well as fresh crop production estimates for South American soybean-growing regions.
Technical analysis: The soybean bears have the firm overall near-term technical advantage. Prices are starting to trend down on the daily bar chart again. The next near-term upside technical objective for the soybean bulls is closing May prices above solid resistance at the March high of $12.26 3/4. The next downside price objective for the bears is closing prices below solid technical support at the contract low of $11.28 1/2. First resistance is seen at today’s high of $11.80 3/4 and then at this week’s high of $11.93 1/4. First support is seen at $11.60 and then at $11.50.
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 $340.00 and then at $345.00. First support is seen at $330.00 and then at $325.10.
Soybean oil futures bears have the 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 today’s high of 48.03 cents and then at this week’s high of 49.13 cents. First support is seen at today’s low of 46.92 cents and then at 46.00 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 3/4 cent to $5.58 1/2, near the session low, while May HRW rallied 17 1/4 cents to $5.94 1/2 and marked the highest close in nearly a month. May HRS wheat rose 1/2 cent to $6.51 3/4.
Fundamental analysis: HRW wheat strength led wheat futures higher, though a surging U.S. dollar crimped gains as the session progressed. Stronger-than-expected Consumer Price Index (CPI) data released early this morning sent the dollar rocketing higher, while equities tumbled as market expectations for Fed rate cuts faded a bit in the wake of the CPI update.
World Weather Inc. reports unusual heat in the U.S. HRW wheat growing region Friday through Monday will stress livestock and accelerate drying in the area. Temps should easily reach 90 degrees Fahrenheit, while windy conditions will increase drying rates as well. Crop stress in unirrigated areas of the west is expected to rise. The forecaster notes a storm system Monday through Tuesday could promote strong to severe thunderstorms in a part of the region, although the high Plains will not likely see much relief to dryness.
USDA will release its weekly export sales data for the week ended April 4 early Thursday morning. Traders are expecting sales to range from reductions of 100,000 MT to 250,000 MT. Last week, net sales of 16,100 MT were reported for the previous week.
Technical analysis: SRW wheat traded mostly above the 10- and 40-day moving averages, which have converged at $5.57 1/2, during today’s session. The area will continue to serve up support, as will the 20-day moving average of $5.51, with additional support serving at $5.47 3/4, $5.42 and the March 11 low of $5.23 1/2. Conversely, initial resistance will continue to stand at $5.63 1/2 , then at $5.69 1/4, $5.74 1/4 and the 100-day moving average of $5.91 3/4.
May HRW bulls held a close above the 40-, 10- and 20-day moving averages, each trading around $5.80, as well as recent resistance of $5.91 3/4. Initial resistance will now serve at $5.98 1/2, then at the 100-day moving average of $6.09 3/4.Profit-taking, however, will find initial support at today’s failed resistance levels, then at $5.80 1/2, $5.63 3/4 and $5.56 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 fell 73 points at 85.31 cents and near the session low. Prices hit a nine-week low today.
Fundamental analysis: The cotton futures bulls were absent today following a hotter-than-expected U.S. consumer price index report that prompted a sharp selloff in the U.S. stock indexes and sent the U.S. dollar index soaring to a 4.5-month high. Notions the Federal Reserve will make interest rate cuts this year were thrown into serious question today, which also raises questions about consumer demand for apparel with inflation in the U.S. still sticky and interest rates possibly not coming down as much as expected this year.
World Weather Inc. noted today rain in northern and central portions of West Texas and the Texas Panhandle cotton regions Tuesday “was ideal in bolstering soil moisture for use during the planting season. However, southern parts of the region were left dry or received a minimal amount of moisture.” More beneficial rain fell in the Texas Blacklands while portions of South Texas remain too dry. The southeastern U.S. cotton areas along with those in the far west are experiencing mostly good weather with little change likely, said the forecaster. Flooding rain did occur in a part of the central Delta overnight with rainfall of 2.00 to more than 5.00 inches and more expected. Delays in cotton planting will continue in a part of this region, said World Weather.
Cotton traders are awaiting the latest USDA weekly export sales report and the monthly USDA supply and demand report, both out on Thursday morning. Recent weekly U.S. cotton export sales data has been mostly downbeat.
Technical analysis: The cotton futures bears have the firm 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 90.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 82.00 cents. First resistance is seen at today’s high of 86.69 cents and then at this week’s high of 88.24 cents. First support is seen at 85.00 cents and then at 84.00 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.
