Crops Analysis | April 25, 2024
Price action: May corn rose 3 1/4 cents to $4.41, nearer the session high.
Fundamental analysis: Corn futures deepened gains into the noon hour as selling in soybeans eased. Meanwhile, extended buying in SRW wheat, combined with U.S. dollar weakness and notable weekly export sales were also contributing factors in today’s price action.
For the week ended April 18, USDA reported net sales of 1.3 MMT, which were more than double the previous week and up 74% from the four-week average. Moreover, exports during the week notched a marketing-year high at 1.71 MMT. Top destinations included Mexico, Japan and Colombia.
U.S. weather continues to hold traders’ attention as flooding is expected across the Midwest, northern Delta and parts of Oklahoma this weekend and next as waves of rain impact the region. World Weather Inc. notes replanting of spring crops may be necessary as rain totals of 5.0 to 7.0 inches will be possible in many areas by this time next week. However, in the meantime, the forecaster reports eastern Midwest and southeastern U.S. crop areas will see improving conditions for a while.
Technical analysis: While initial resistance at $4.42 1/2 is currently limiting more profound buying efforts, strong initial support at the 10-, 40- and 20-day moving averages of $4.35, $4.34 1/2 and $4.34. 1/2 continues to lend confidence to bulls. A move above initial resistance will then find bulls working to breach the 100-day moving average of $4.52 1/2, with further resistance serving at the 200-day moving average of $4.82 1/4. However, a test of initial support will face additional support at $4.32 1/2, then at $4.27 3/4 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 slipped 3 1/4 cents to $11.62 3/4, though deferred contracts posted gains. May meal futures fell $2.10 to $343.90, settling near mid-range. May bean oil futures firmed 16 points to 44.82 cents and near session highs.
Fundamental analysis: Soybeans continue to lag behind strength seen in the grain markets, though prices closed well off session lows today. Selling increased following this morning’s export sales report, which showed sales below expectations at 210,900 MT (7.7 million bu.), which were down 57% from the previous week and 29% from the four-week average. Mexico led purchases, while China switched sales from unknown destinations and cancelled a portion of their previous purchases. Outstanding sales for this date are the lowest since 2015/16, which cast a bearish shadow over the coming months of exports. Still, inspections continue to pace above the required pace to hit the current USDA export forecast, but pessimism surrounds exports, which drove selling early today. Still, soy products cumulatively had one of their best weeks of the marketing year. Soymeal sales of 307,900 MT were over twice as much than a week ago and soyoil sales of 16,200 MT were the second highest of the marketing year. Soyoil sales remain historically low as domestic use has dominated the market, but the increase in sales for both products shows that importers will step in when there is a domestic oversupply due to record crush, a bullish sign for crushings.
World Weather Inc. reports heavy rain is expected in southern Brazil, mostly in Rio Grande do Sul, flooding low-lying areas and impacting late planted soybeans, the forecaster notes. No significant declines in production are likely as the majority of Brazil’s soybeans have already been harvested.
Technical analysis: May soybeans traded sharply lower this morning, though saw an increase in buying activity this afternoon. Bears continue to hold full control of the near-term technical advantage. Bulls are seeking to close prices above initial resistance at the 20-day moving average, currently at $11.66 1/4. Further buying finds resistance at the 40-day moving average, currently at $11.76 1/2, which capped gains on Wednesday. Prices have broken a near-term downtrend and retested that breakout today, marking key technical support at $11.52, though initial support lies at $11.61 on the way.
May meal futures saw profit-taking today after trading at the highest mark in over two months on Wednesday. Bulls and bears are on a level overall technical playing fields. Bulls are seeking to overcome initial resistance at $346.0 before tackling the 100-day moving average at $351.9, which capped gains on Wednesday. Support comes in at $341.8 then the 40-day moving average at $340.2, which capped losses today. Continued selling pressure finds support at $335.2.
May bean oil futures closed modestly higher after trading lower throughout much of today’s session. Bears continue to maintain full control of the technical advantage as prices are consolidating in a bear flag on the daily bar chart. Bulls are seeking to overcome initial resistance at 45.25 cents, the 10-day moving average, which capped gains early this week. Further buying finds resistance at 45.96 cents. Meanwhile, support comes in at 44.57 cents, which is backed by today’s low at 44.01 cents, then the contract low at 43.50 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: July SRW wheat rose 7 1/2 cents to $6.20 1/2, near the session high and hit another 10-week high. July HRW wheat gained 10 1/2 cents to $6.40 1/2, near the session high and hit another three-month high. July spring wheat futures rallied 12 3/4 cents to $6.98 1/4, closing near session highs.
Fundamental analysis: The winter wheat futures bulls kept their foot on the gas today on fresh technical buying and likely some more fund short covering. The wheat market bulls today ignored some downbeat U.S. economic news. U.S. GDP rose an annualized 1.6% in the first quarter, well below 3.4% in the previous quarter and below market forecasts. The U.S. stock market sold off on the news, while U.S. Treasury yields rose to five-month highs. The GDP data prompted some analysts to wonder about pending “stagflation” in the U.S.—slowing economic growth and higher inflation.
World Weather Inc. today said that in U.S. HRW country, rain in the next seven days will still be greatest in eastern and northern production areas and could be enough to cause localized flooding. In southwestern areas, from the western Texas Panhandle into southwestern Kansas, conditions will be particularly drier biased through Tuesday. However, some thunderstorm activity is likely to increase Wednesday. Strong winds today through Saturday will likely cause some areas of blowing dust. Also, severe thunderstorms are expected in central production areas today with locally large hail, some damaging winds, and possibly a few tornadoes, said the forecaster. Meantime, in the northern Plains rain in the next seven days will be greatest in southeastern production areas of the region where soil moisture is already highest. Northeastern Montana is one of the driest parts of the region and will receive some of the lowest rain amounts. “Montana and western North Dakota, in general, need greater rainfall to better support crop planting and early season crop development,” said World Weather.
Weekly U.S. wheat export sales totaled 82,000 MT for 2023-24 and 371,900 MT for 2024-25 during the week ended April 18, according to USDA. Net sales were within market expectations.
Technical analysis: Winter wheat futures bulls have the overall near-term technical advantage. Prices are in six-week-old uptrends on the daily bar charts. SRW bulls' next upside price objective is closing July prices above solid chart resistance at $6.50. The bears' next downside objective is closing prices below solid technical support at $5.60. First resistance is seen at $6.25 and then at $6.33. First support is seen at $6.00 and then at Tuesday’s low of $5.83 1/2. The HRW bulls' next upside price objective is closing July prices above solid technical resistance at $6.80. The bears' next downside objective is closing prices below solid technical support at this week’s low of $5.81 3/4. First resistance is seen at $6.50 and then at $6.60. First support is seen at today’s low of $6.27 1/4 and then at Wednesday’s low of $6.09 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 firmed 7 points to 81.08 cents and settled near mid-range.
Fundamental analysis: Cotton futures continue to consolidate near recent lows, trading on both sides of unchanged today. Litte fundamental data has risen to negate recent selling pressure, with technical selling likely to persist. Front-month crude oil futures continue to consolidate in what appear to be a bear-flag technical pattern on the daily bar chart, similar to that seen in July cotton futures. Further selling pressure in crude would not bode well for cotton prices. Meanwhile, grain prices have shown resilient strength this week, spilling over modest strength to cotton prices.
Cotton sales were the highest in two and a half months this morning. USDA reported net sales of 189,600 bales, up 27% from last week and 74% from the four-week average. China bought about half of that total. Meanwhile, export shipments fell to the lowest mark in nearly eight weeks. While the increase in sales was beneficial for bulls today, it is worrisome to see shipments continue to flounder, considering this is the time of year that shipments are generally the strongest.
Technical analysis: July cotton futures saw choppy price action today and closed near mid-range. Bears continue to retain full control of the near-term technical advantage as prices consolidate in a bear flag on the daily bar chart. Bulls are seeking to overcome resistance at 81.44 cents, which is backed by Monday’s close at 82.42 cents, coinciding with the 10-day moving average at 82.61 cents. A sustained upward push is seeking to close prices above resistance at 84.59 cents. Support stands at 80.61 cents, backed by the psychological 80.00 cent mark, then 79.65 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.
