Crops Analysis | April 16, 2024
Price action: May corn futures dipped 1/2 cent to $4.31 and near mid-range.
Fundamental analysis: The corn futures market continues to languish in sideways trading at lower price levels, which the bulls are hoping is “basing” action that will soon confirm a market bottom is in place. This week’s “risk-off” trader/investor mentality in the general marketplace continues to squelch buying interest in the grain futures markets. Such may continue to be the case as long as Middle East tensions are running high. The U.S. dollar index today hit a 5.5-month high, which is also a bearish outside-market element for the corn market.
USDA Monday afternoon reported that as of April 14, U.S. corn planting was 6% complete. That’s slightly ahead of the five-year average of 5% in the ground.
Pro Farmer’s South American crop consultant, Michael Cordonnier, cut his Argentine corn production estimate by 3 MMT, to 50 MMT. He kept his Brazilian corn estimate unchanged at 112 MMT. World Weather Inc. today said rainfall from Rio Grande do Sul into Mato Grosso do Sul will be timely into May supporting the Safrinha crop, despite some ongoing low subsoil moisture in Mato Grosso do Sul and immediate neighboring areas. Meantime, some planting delays are expected in U.S. corn and soybeans production areas into May, but overall the outlook is mostly a “normal” planting potential. “Fieldwork should advance fastest in the western Corn Belt,” said the forecaster.
Technical analysis: The corn futures bears have the overall near-term technical advantage. The next upside price objective for the bulls is to close May prices above solid chart resistance at $4.50. The next downside target for the bears is closing prices below chart support at the contract low of $4.08 3/4. First resistance is seen at this week’s high of $4.35 and then at $4.42. First support is at last week’s low of $4.27 and then at the April low of $4.24 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 13 1/4 cents to $11.45, while May soymeal fell $3.20 to $335.30. Both ended near session lows. May soyoil fell 56 points to 44.91 cents, the lowest close since Feb. 23.
Fundamental analysis: Monday’s selling carried over into the overnight session, which commenced with a gap lower amid technical pressure and eventually pushed the nearby contract to a more than one-month low in early trade today. USDA’s weekly Crop Progress Report, released Monday afternoon, showed soybean planting progress at 3% complete, which was two percentage-points ahead of the five-year average. Meanwhile, data released by oilseeds lobby, Abiove, which represents global soybean processors, showed an upward revision to Brazilian soybean production in 2023 to 160.3 MMT. The group also made a 1.2 MMT upward revision to the country’s 2023 ending stocks to 5.9 MMT, while ending stocks for 2024 were increased to 5.2 MMT, up from the previous forecast of 4 MMT.
South American crop consultant Dr. Michael Cordonnier also revised his 2023 Brazilian soybean estimate up 2 MMT to 147 MMT, noting a neutral to slightly higher bias going forward. He indicated the increase resulted from higher-than-expected yields in areas of Rio Grande do Sul, which is expected to set record production. Cordonnier maintained his previous Argentine estimate of 51 MMT and noted a neutral bias going forward.
Technical analysis: Soybeans continued to face technical pressure, with bears holding the lowest close since March 6. Initial support will now serve at $11.42 3/4, followed by $11.30 and the Feb. 20 low of $11.28 1/2. Meanwhile, buying efforts will remain stifled by resistance at $11.50 1/2, then at $11.63 ¼ and the 10-, 40-, and 20-day moving averages of $11.70 1/2, $11.74 1/2 and $11.82 3/4, which are backed by psychological resistance at $12.00.
May soymeal ended the session below the 20-day moving average of $336.60, giving bears an improved technical posture. Initial support will now serve at the nearly converged 10- and 40-day moving averages, which are trading around $335.00, with further support at $331.90, $327.20 and the Feb. 29 low of $323.20.
May soyoil edged lower for the fourth straight session and closed below support at 45.09 cents. Initial support will now serve at 44.72 cents, then at 44.10 cents. Conversely, initial resistance will stand at today’s failed support level, then at 46.08 cents, 46.70 cents and the 40-, 10- and 20-day moving averages of 46.98 cents, 47.12 and 47.73 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 fell 2 cents to $5.49 3/4, settling near the mid-point of today’s range. May HRW futures rose 3 1/2 cents to $5.87 1/2, nearer session highs. May HRS futures closed up 1 1/4 cents at $6.38 1/4.
Fundamental analysis: Winter wheat futures traded on both sides of unchanged as condition reports weighed on the market. USDA rated 55% of the winter wheat crop as “good” to “excellent,” down one percentage point from the previous week. SRW futures struggled to trade higher throughout the day, weighed down by improved conditions in SRW acres. When plugged not the Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the SRW crop improved 8.3 points to 382.1. Meanwhile, HRW futures posted modest gains on the session as HRW conditions worsened week-over-week, as noted by the HRW crop falling 8.3 points to 337.0 when conditions were calculated in our index. Monday afternoon’s USDA crop progress reported noted spring wheat as 7% sowed as of Sunday, ahead of the five-year average of 6%.
Showers are expected in the first week of the outlook in HRW areas, which will be beneficial and increase topsoil moisture in some areas, though a larger, more significant rain event is needed to help boost the HRW crop, World Weather says. Some concerns remain over freezing temperatures in the mornings from Friday to Sunday as far south as the Oklahoma panhandle and as far east as central Kansas, though no notable damage is expected, aside from some potential burned back winter wheat.
Technical analysis: May SRW futures traded in a moderately wide range before settling near the middle of today’s range. Prices continue to consolidate in a largely sideways range, though recently broke the uptrend stemming from the March lows. Resistance stands at $5.54 1/2 then the 40-day moving average at $5.60 3/4. Continued selling pressure finds support at $5.45 3/4 then $5.41 3/4. Bears are ultimately seeking to close prices below $5.28 support.
May HRW futures showed relative strength today. Prices continue to consolidate sideways on the daily bar chart. Bulls are seeking to overcome resistance at $5.94 1/2, which is backed by the psychological $6.00 mark. Selling pressure finds support at $5.84 then $5.78. Further selling finds support at the psychological $5.75 mark.
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 164 points to 81.29 cents, while the most-active July contract plunged 206 points to 83.09 cents, marking a 3-month-low close.
Fundamental analysis: Cotton futures dove to a near four-month low as technical pressure continued to hover over prices along with minimal outside market support. The U.S. dollar rallied to 5 1/2-month high due to hawkish sentiments across the marketplace in the wake of stronger-than-expected U.S. March manufacturing data released earlier today.
In its weekly Crop Progress Report, USDA estimated cotton plantings advanced to 8% as of Sunday, equal to the five-year average. Planting stood at 13% in Texas and 1% in Georgia, both one point behind average for this year.
Weather prospects are improving for West Texas this weekend, with some computer forecast models suggesting some follow up rain will be possible next week, according to World Weather Inc. The forecaster notes South Texas and Texas Coastal Bend are also expected to get some needed moisture in the coming week to ten days. The U.S. Delta will likely dry out a bit and the southeastern states will see a good mix of rain and sunshine.
Technical analysis: May cotton futures were able to close off of session lows but didn’t stop bears from gaining an improved technical posture, as evidenced by a close held below support at 82.26 and 81.60 cents. Initial support will now serve at 80.59 cents, then at today’s low of 79.50 cents and again at 79.28 cents. Corrective buying efforts, however, will face resistance at today’s failed support levels, then at 83.93 cents, and again at the 10-, 100-, 20-day moving averages of 85.05 cents, 87.14 cents and 88.55 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.
