Crops Analysis | April 15, 2024
Price action: May corn fell 4 cents to $4.31 1/2, ending the session below the 10- and 40-day moving averages.
Fundamental analysis: Corn futures faced pressure to start the week as crude oil toppled and selling across the soy complex cast a combined shadow over prices amid a general risk-off tone given rising geopolitical tensions. However, a flash sale of 165,000 MT to Mexico continued to illustrate decent demand, which likely limited today’s losses. Of the total, 135,000 MT were for delivery for 2023-24, while 30,000 MT were booked for 2024-25. Meanwhile, USDA reported weekly export inspections, which totaled 1.332 MMT (52.5 million bu.) during the week ended April 11, down 111,133 MT from the previous week but within the pre-report range of 1.2 MMT to 1.5 MMT. Corn export inspections continue to exceed the seasonal pace required to hit USDA’s target, currently by 53.0 million bu. Year-to-date inspections are currently running 34% ahead of year-ago.
U.S. weather is becoming an increasingly important market focus as planting efforts begin to occur in many key growing areas. World Weather Inc. reports planting weather should advance relatively well during the next two weeks around a few rounds of rain, with rain during the next ten days not likely to be heavy enough to cause lasting delays to fieldwork. Moderate- to heavy rain and notable increases in soil moisture is expected in the eastern Dakotas and northeastern Nebraska through Iowa and into central and southern Wisconsin and northern Illinois today into Wednesday. The forecaster notes the two-week outlook is wetter overall for the Delta and Southeast, compared to last week and planting will be slowed at times, but much of the rain is not likely to be heavy enough to cause lasting delays to fieldwork in most areas.
USDA will release its weekly Crop Progress Report this afternoon following the close. Analysts expect corn planting efforts to have reached 7% by Sunday.
Technical analysis: May corn continued to face resistance at the 20-day moving average of $4.34 1/2, while a close was held below the 10- and 40-day moving averages, which have converged at $4.32 1/2. Initial support will now serve at $4.29 1/4, then at $4.33 3/4 and $4.18 1/2. Conversely, a move above the 20-day will encounter additional resistance at $4.39 1/2, then at $4.43 3/4 and $4.50.
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 dropped 15 3/4 cents to $11.58 1/4, settling nearer the session low. May meal futures sunk $5.90 to $338.50, closing near session lows. May bean oil skid 42 points to 45.47 cents.
Fundamental analysis: Soybean futures extended overnight losses throughout today’s session, negating all of Friday’s rally. Still, last week’s lows held, giving a key technical backdrop for the remainer of the week. Crush coming in at a record pace in this morning’s report from NOPA did little to stifle selling efforts today. NOPA’s crush report for March came in at a record 196.406 million bushels, up 10.212 million bushels from February. It was also a record for the month though relatively neutral against expectations. Crush was below trade forecasts of 197.787 million bushels from Reuters but above expectations of 194.87 million from Bloomberg. It is well above March 23 crush at 185.81 million, up 10.596 million or 5.7%. The per day crush pace of 6.336 million bushels was down from last month’s record. The crush pace for the marketing year continues to imply that USDA is too pessimistic, which leads us to believe they will increase their crush estimate in the coming months.
Inspections data came in as expected, as USDA reported soybean export inspections of 432,905 MT (15.9 million bu.) during the week ended April 11, which fell 58,967 MT from the previous week but were within the pre-report range from 375,000 to 600,000 MT. Inspections are ahead of the pace required to hit the current USDA export estimate, though lack of outstanding sales led USDA to lower their export forecast last week.
Weather across the Soybean Belt remains largely favorable for planting. Temperatures are expected to peak today before cooling off the rest of the week and into the weekend, World Weather Inc. says. Planting should advance relatively well during the next two weeks around a few rounds of rain, as rain during the next ten days will not likely cause fieldwork delays, the forecaster notes.
USDA is expected to release their initial planting progress rating today, with a Bloomberg poll estimating soybeans as 2% sowed.
Technical analysis: May soybeans led the grain and soy markets lower today as bears continue to hold the near-term technical advantage. Resistance stands at $11.65 3/4 with backing from the 10-day moving average at $11.72 3/4. Further buying finds resistance at Friday’s high of $11.79 3/4. Bulls are seeking to hold support at today’s low of $11.55 1/2, which is backed by last week’s low at $11.51 (which coincides with psychological $11.50 support), then $11.40 1/4.
May meal futures gave up a significant portion of Friday’s gains, though continue to trade sideways on the daily bar chart. Initial resistance now stands at the 40-day moving average at $339.20. Further buying eyes last Friday’s close at $344.40, then resistance at $347.60. Support comes in at the converged 10-day and 20-day moving averages at $336.50, which capped losses today. Further selling finds support at $330.90.
May bean oil futures showed modest relative strength today, though bears retain control of the near-term technical advantage. Bulls are seeking to overcome resistance at 46.00 cents, which is backed by the 10-day moving average at $47.02 cents, then 47.45 cents. Continued selling pressure finds support at the psychological 45.00 cent mark, then 44.50 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 fell 4 1/4 cents at $5.51 3/4 and near mid-range. May HRW wheat lost 5 3/4 cents at $5.84. May spring wheat futures sunk 5 3/4 cents to $6.37.
Fundamental analysis: The wheat futures markets today saw selling pressure from a “risk-off” environment in the general marketplace following the weekend Iranian air strikes against Israel. Israel said it will retaliate for the weekend strikes. Lower corn and soybean futures prices today also limited buying interest in wheat. Look for geopolitics to continue to have an impact on the grain markets in the near term—limiting upside price moves as long as tensions in the Middle East remain high.
World Weather Inc. today said warmer temperatures in the U.S. this week will help reduce concerns over a freeze threat to winter crops. Dryness remains a concern for the west-central U.S. Plains, but moisture abundance is expected in the Midwest. Canada’s western Prairies still need greater rain, although there has been some moisture improvement and a little more is expected. Europe weather will be good with drier weather in the west and wetter conditions in the east. There is still some concern over Russia’s New Lands’ dryness as well as that in Kazakhstan and eastern Ukraine, said the forecaster.
USDA this morning reported decent U.S. wheat export inspections of 551,278 MT during the week ended April 11, up 34,443 MT from the previous week. Net inspections were above market expectations.
This afternoon’s weekly USDA crop progress report is expected to show U.S. winter wheat condition at 55% good to excellent, compared to 56% last week and 27% at this time last year. U.S. spring wheat planted as of Sunday is seen at 7% versus 4% last week and 3% at this time last year.
Technical analysis: Winter wheat futures bears have the overall near-term technical advantage. However, recent sideways and choppy price action at lower levels begins to suggest market bottoms are in place. SRW bulls' next upside price objective is closing May prices above solid chart resistance at $5.80. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.23 1/2. First resistance is seen at Friday’s high of $5.62 1/2 and then at the April high of $5.74 3/4. First support is seen at today’s low of $5.44 1/4 and then at $5.35. 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 today’s high of $5.90 3/4 and then at $6.00. First support is seen at last week’s low of $5.71 and then at the April low of $5.60 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 rose 31 points to 82.93 cents and closed near the session low.
Fundamental analysis: Cotton futures faced corrective buying to start the week, with the nearby contract notching gains for the first session in six. Moreover, the natural fiber was able to forge the move despite lacking support from outside markets amid a broad risk-off tone to start the week amid rising geopolitical tensions.
World Weather Inc. reports few changes have occurred in U.S. crop areas, though rain would be welcome in South and West Texas. There is some rain in the forecast for these areas in the coming week although it is unclear how significant it may be. The forecaster notes the Delta will dry down for a little while this week and the southeastern U.S. will see a favorable mix of weather.
USDA will release its weekly Crop Progress Report following the close. Last week, cotton plantings were estimated to be 5% complete as of April 7, slightly behind the five-year average.
Technical analysis: May cotton gains were limited by the 100-day moving average of 83.43 cents, while support served at Friday’s close of 82.62 cents. A move above the 100-day will face additional resistance at 85.03 cents, then at the 40- and 20-day moving averages of 86.42 and 87.37 cents. Meanwhile, resumed selling efforts will face additional support at 81.56 cents, then 80.49 cents and 79.29 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.
