Crops Analysis | April 24, 2024
Price action: May corn fell 5 1/4 cents to $4.37 3/4, closing near the session low.
Fundamental analysis: Corn futures extended recent gains overnight but faced selling through most of today’s session. However, continued rallies in winter wheat futures helped limit losses, though outside market pressure ultimately cast a shadow over corn prices.
U.S. weather continues to be a trade focus as current forecasts indicate planting may become hindered by rain, which is expected throughout the Midwest, northern Delta and part of Oklahoma this weekend and next week as waves of rain impact the region.
The Energy Information Administration reported weekly ethanol production averaged 954,000 barrels per day (bpd) during the week ended April 19, down 29,000 bpd (3.0%) from the previous week and 1.3% below year-ago. Ethanol stocks dropped 347,000 barrels to 25.733 million barrels.
Tomorrow comes USDA’s weekly export sales data, due out early morning. Traders are expecting sales to have ranged from 400,000 MT to 900,000 MT for 2023-24 during the week ended April 18. Last week, net sales of 501,200 MT were reported for the previous week, which were up 54% from the previous week but down 45% from the four-week average.
Technical analysis: May corn gave up a portion of this week’s gains as resistance at $4.45 continued to curb buying. While a close was held below initial support at $4.39 3/4, additional support serves at $4.36 1/2, which is backed by notable resistance at the 40-, 10-, and 20-day moving averages, each trading around $4.34. Meanwhile, returned strength will face additional resistance at $4.47, $4.50 1/4 and the 100-day moving average of $4.53.
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: July soybeans fell 1/2 cent to $11.81 1/2 and nearer the session low. July soybean meal gained $3.10 to $349.20, near mid-range and hit a 10-week high. July bean oil closed down 61 points at 45.27 cents and nearer the session low.
Fundamental analysis: Selling interest in soybeans was limited today by the impressive gains in the soybean meal futures markets recently. Soybean meal futures are now trending up on the daily chart. History shows that meal can lead soybeans out of a price downtrend. Spreaders today were likely buying meal and selling soybean oil futures. The recent good gains in the winter wheat futures markets are also supporting some buying interest in soybeans. However, buying interest in the soybean complex today was limited by bearish outside markets that saw a firmer U.S. dollar index and weaker crude oil prices.
World Weather Inc. today said some U.S. soybean-planting delays are expected this weekend and into the first full week of May. However, “overall the outlook is mostly good for early spring development.” Some flooding is expected in Missouri, Illinois, eastern Iowa, eastern Kansas and Wisconsin. The southeastern U.S. will have the best weather over the next two weeks. Portions of the Delta and central Midwest may trend a little too wet at times. Warmer temperatures will induce some better drying conditions between rain events, said the forecaster.
USDA this morning made a correction to a daily U.S. sale reported on April 19, which showed 121,500 MT of soybeans to “unknown destinations.” The correction said the sales were to Mexico. Traders are awaiting Thursday morning’s weekly USDA export sales report, which is expected to show U.S. soybean sales of 300,000 to 600,000 MT in the 2023-24 marketing year and sales of zero to 300,000 MT in the 2024-25 marketing year.
Technical analysis: The soybean bears have the overall near-term technical advantage. However, a four-week-old downtrend on the daily bar chart has been negated and there is now the specter of a bullish double-bottom reversal pattern forming. The next near-term upside technical objective for the soybean bulls is closing July prices above solid resistance at $12.00. The next downside price objective for the bears is closing prices below solid technical support at the contract low of $11.40 1/2. First resistance is seen at today’s high of $11.91 3/4 and then at $12.00. First support is seen at this week’s low of $11.59 3/4 and then at $11.50.
The soybean meal bulls and bears are back on a level overall near-term technical playing field, but the bulls have momentum. Prices are trending higher on the daily bar chart. The next upside price objective for the meal bulls is to produce a close in July futures above solid technical resistance at $365.00. The next downside price objective for the bears is closing prices below solid technical support at $335.00. First resistance comes in at today’s high of $351.90 and then at $355.00. First support is seen at today’s low of $345.70 and then at $340.00.
Soybean oil futures bears have the solid overall near-term technical advantage. The next upside price objective for the bean oil bulls is closing July prices above solid technical resistance at the March high of 50.29 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at 43.00 cents. First resistance is seen at this week’s high of 46.12 cents and then at 47.00 cents. First support is seen at this week’s low of 44.91 cents and then at the contract low of 44.06 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 rose 9 1/2 cents to $5.94 1/2, ending the session above the 100-day moving average, while May HRW rallied 15 1/2 cents to $6.24 1/4, marking the highest close since Jan. 30. May spring wheat futures closed 12 1/2 cents higher at $6.79.
Fundamental analysis: Wheat futures gathered enough strength to muster another day of solid gains, despite returned U.S. dollar strength. Headlines indicating India is struggling to replenish it wheat stocks helped spur larger buying efforts as the session progressed, as the country’s purchases are down 25% from last year’s levels due to untimely rains and higher open markets. The notable drop in purchases has pushed India’s wheat inventories to their lowest level in 16 years, which may force the world’s second-largest wheat producer to import wheat for the first time since 2017.
Meanwhile, a need for rain in Russia’s southern region is becoming an increasing market focus as World Weather Inc. reports another ridge of high pressure is expected to evolve in mid- to late-May, which will appear frequently during the summer, bringing back a greater level of crop moisture stress and concern over production. The forecaster notes, however, recent drying in Russia and eastern Ukraine has been supporting aggressive planting.
USDA will release weekly export data early Thursday morning, with traders expecting sales to range from net reductions of 100,000 MT to 100,000 MT for 2023-24 and between 100,000 MT and 400,000 MT for 204-25. Last week, USDA reported net sales reductions of 93,556 for 2023-24 and net sales of 222,016 for 2024-25.
Technical analysis: May SRW wheat rallied to the highest intraday level since mid-February, with a close held above the 100-day moving average, currently trading at $5.88 1/4, since Jan. 25. Extended buying would face resistance at $6.00, then at $6.12 1/4, $6.26 1/2 and the Dec. 6 high of $6.60 1/2. Conversely, initial support will now serve at the 100-day moving average, then at $5.78 3/4, $5.71 3/4 and the 10-, 20- and 40-day moving averages of $5.58 1/4, $5.57 1/2 and $5.52 3/4.
May HRW extended gains for the fifth straight session, with bulls gaining an increased technical posture with a close held above resistance at $6.14 and $6.19 1/2. Additional buying will now face initial resistance at $6.27 1/4, then at $6.40. Initial support will now serve at today’s failed resistance levels, then at the 100-day moving average of $6.05 3/4, $6.00 3/4 and the 10-, 20- and 40-day moving averages of $5.90 1/2, $5.85 1/4 and $5.82 1/2.
What to do: Get current with advised sales.
Hedgers: You should be 90% sold 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 90% sold on 2023-crop. You should be 20% forward priced for harvest delivery on expected 2024-crop production.
Price action: July cotton futures fell 71 points to 81.01 cents and near the session low.
Fundamental analysis: The cotton futures market saw more technical selling pressure today as the near-term charts firmly favor the bears. The rallies in the grain futures markets recently have provided little, if any, support for the cotton futures market. The key outside markets were also negative for cotton futures today as the U.S. dollar index was firmer and crude oil prices were weaker.
Fundamentally, the recent rise in certificated stocks of U.S. cotton suggests slowing demand for the natural fiber.
World Weather Inc. today said west Texas will be dry-biased through early next week, but then the potential for rain will increase. The southwestern dryland areas of the region received some light rain during last weekend, but much more is needed. “The Rolling Plains were wettest during the weekend and will be that way again periodically in the future. Significant rain impacted the Blacklands during the weekend with some of that rain getting to the central Delta. South Texas and the Texas Coastal Bend rainfall is not advertised to be very great in the coming ten days, despite some showers,” said the forecaster.
Traders are awaiting Thursday morning’s weekly USDA export sales report. Last week’s reported sales showed some improvement, but traders need to see better U.S. cotton export sales numbers to suggest the market can turn around and start to trend up.
Technical analysis: The cotton futures bears have the solid overall near-term technical advantage. Prices are in a seven-week-old downtrend on the daily bar chart. A bear flag has also formed on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in July futures above technical resistance at 85.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 75.00 cents. First resistance is seen at this week’s high of 82.96 cents and then at 84.00 cents. First support is seen at the April low of 79.70 cents and then at 79.00 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.
