Pro Farmer's Crops Analysis
Price action: The corn market recouped about half of Tuesday’s price declines. May corn futures firmed 11 3/4 cents to $7.38, while December corn gains 3 1/4 cents to $6.56.
Fundamental analysis: Outside markets, which pressured corn on Tuesday, were price-supportive today as hopes for a ceasefire between Russia and Ukraine were dashed. Crude oil futures firmed more than $3 in a solid price recovery, while the U.S. dollar index traded near the low end of its nearly four-week choppy trading range. This helped fuel fund buying in the corn market.
Market focus tomorrow should mostly be on USDA’s Prospective Plantings and Grain Stocks Reports. Based on the average pre-report estimate from a Reuters survey, corn acreage intentions in today’s Prospective Plantings Report are expected to decline about 1.4 million acres from last year to 92.0 million acres. USDA’s Grain Stocks Report is expected to show March 1 corn stocks at 7.877 billion bu., based on the average pre-report estimate, but the range of estimates is a wide 457 million bushels. Over the past 36 years, the reaction to USDA’s March 31 reports has been evenly split – 18 years corn closed higher and 18 times lower. The same holds for the past 10 years – five times higher and five times lower. While the post-report reaction is evenly split, the reports have produced some big price moves, with the average change in front-month futures being 18 3/4 cents over the past 10 years.
Technical analysis: May corn futures negated Tuesday’s downside breakout attempt and climbed back into the nearly month-long sideways trading range. Tuesday’s low at $7.13 1/2 is key near-term support, as violation of that level would open downside risk to at least $7.00 and likely to the $6.75 to $6.55 area. Near-term resistance extends from $7.70 1/2 to the contract high at $7.82 3/4.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You should be 90% sold in the cash market on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Cash-only marketers: You should be 90% sold on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Price action: May soybean futures rebounded 21 cents to $16.64, while May soyoil climbed 56 points to 72.22 cents and May soymeal gained $7.10 to $473.10.
Fundamental analysis: Diminished hopes for a quick cease-fire to the Russia/Ukraine war caused many commodity markets to at least partially reverse Tuesday’s big losses. The bounce was led by crude oil, with the soy complex also posting an across-the-board rebound. Ultimately, the greater the commodity market disruptions caused by the war, the greater chances of increased price volatility and larger price moves. A USDA daily system announcement of a 128,000 metric ton (MT) soybean sale to Mexico spurred some buying as well.
It wasn’t terribly surprising to see today’s rebound prove less substantial than Tuesday’s dive, since several important reports concerning the soy complex are coming tomorrow. First, the early-morning weekly USDA Export Sales Report is expected to show net 2021-22 U.S. soybean export sales during the week ended March 24 to be between 400,000 MT and 1.4 million metric tons (MMT). New-crop sales are expected to be between zero and 500,000 MT.
That will be followed by the annual USDA Prospective Plantings Report at 11:00 a.m. CT, which industry surveys show traders expecting 88.7 million acres of soybeans to be planted this spring. Some have predicted larger soybean seedings due to the greatly increased cost of corn planting inputs, especially nitrogen fertilizer. But the strict corn/soybean rotations followed by many Midwest farmers are almost surely limiting that shift.
USDA will also release its quarterly Grain Stocks Report at 11 a.m. tomorrow. The average of pre-report estimates for March 1 soybean stocks is 1.902 billion bu., but the range of forecasts is wide at 363 million bushels. As a result, this may exert greater influence over soybean prices than will planting intentions.
Technical analysis: Technical factors seem balanced between soybean bulls and bears at this point. Bears proved unable to sustain tests of support at the May soybean contract’s 40-day moving average near $16.38 1/2 yesterday and today. Conversely, bulls failed to close the contract above resistance at the contract’s 20- and 10-day moving averages near $16.75 3/4 and $16.84 1/4, respectively. A push above those resistance levels would then have bulls looking to challenge last week’s high at $17.36 1/2 then the contract high at $17.59 1/4. A breakdown below the 40-day moving average would open the door to a test of the $16.00 level, then the Feb. 25 low at $15.79.
The May soyoil chart looks very similar to that for May soybeans, with support supplied by the 40-day moving average at 70.99 cents and resistance near the contract’s 10- and 20-day moving averages at 73.54 cents and 74.01 cents, respectively. A breakdown would have bears targeting the 70-cent level, then the February low at 62.81 cents. A sustained push to the upside would have bulls looking to challenge the March 24 high at 76.63 cents, then the contract high at 78.58 cents.
The 40-day moving average at $462.10 also marks initial support for May soymeal futures, while the 20- and 10-day moving averages mark resistance at $475.70 and $479.10, respectively. A bullish breakout would have bulls targeting last week’s high at $494.70, then $500.00, whereas a bearish move would open the door to a test of the Feb. 16 low of $435.80, then the $425.00 area.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You should be 95% sold in the cash market on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Cash-only marketers: You should be 85% sold on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Price action: May SRW wheat closed up 13 cents at $10.27 1/4. May HRW wheat closed up 20 cents at $10.44 1/2. Prices closed nearer the session highs today. Spring wheat futures advanced 15 cents to close at $10.58.
Fundamental analysis: Wheat futures prices saw short-covering and perceived bargain-hunting bounces today, following Tuesday’s strong selling pressure. The bulls today focused on the big rebound in crude oil prices from Tuesday’s intra-day spike low and on the weakening U.S. dollar index this week. However, U.S. wheat prices are still not competitive in the global markets.
Wheat traders are likely to continue to look to the corn and soybean markets for some direction in the near term, after those two markets have turned wobbly this week.
Focus of wheat traders Thursday will be on the important USDA Prospective Plantings Report that is expected to show all U.S. wheat acreage intentions at 47.8 million acres--34.4 million acres of winter wheat, 11.8 million acres of other spring wheat and 1.7 million acres of durum. The quarterly Grain Stocks report is expected to show March 1 U.S. wheat stocks at 1.045 billion bu., though the range of estimates is very wide.
Thursday morning’s weekly USDA export sales report is expected to show U.S. wheat sales of 50,000 to 300,000 MT in the 2021-22 marketing year, and sales of 150,000 to 500,000 MT in the 2022-23 marketing year.
Traders continue to monitor weather in U.S. wheat country, much of which has dry to very dry soil conditions. For HRW wheat regions, World Weather Inc. today reported frequent shower activity is expected in the next week, though most of the showers in western areas will be light and erratic. Any moisture will be beneficial, but there will continue to be a need for more moisture until greater precipitation falls. The exception will be in the eastern 25% of the region where thunderstorm activity will promote much greater moisture totals and a more favorable environment for crop development.
Technical analysis: Winter wheat futures bulls and bears are on a neutral overall near-term technical playing field. However, May SRW and HRW prices are in three-week-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing May prices above solid technical resistance at $11.69 1/4. The bears' next downside objective is closing prices below solid technical support at $9.50. First resistance is seen at $10.50 and then at Tuesday’s high of $10.68 1/4. First support is seen at $10.00 and then at this week’s low of $9.72. The HRW bulls' next upside price objective is closing May prices above solid technical resistance at $11.64 1/2. The bears' next downside objective is closing prices below solid technical support at this week’s low of $9.93. First resistance is seen at today’s high of $10.58 3/4 and then at Tuesday’s high of $10.78 3/4. First support is seen at today’s low of $10.14 3/4 and then at $10.00.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You should be 90% sold on 2021-crop in the cash market. You have 10% of 2021-crop hedged in July SRW futures at $8.75 1/4. You should also have 50% of expected 2022-crop forward-sold for harvest delivery.
Cash-only marketers: You should be 90% sold on 2021-crop. You should also have 50% of expected 2022-crop forward-sold for harvest delivery.
Fundamental analysis: A big rebound in Nymex crude oil futures prices from Tuesday’s intra-day low of $98.44 a barrel helped to propel the cotton futures market sharply up today. Crude prices were trading back above $106 in afternoon trading today. U.S. stock index futures are trending up again and this week hit nine-week highs, which is also encouraging for better U.S. consumer demand for apparel in the coming months.
Traders Thursday will closely examine the USDA Prospective Plantings report. U.S. cotton planting intentions are expected to come in at around 12 million acres, based on a Reuters survey. However, with the recent sharp price gains in cotton futures and significant increase in the spring insurance price compared to year-ago, there is a higher level of uncertainty on planted acreage intentions.
At present, cotton traders are pushing aside the surging Covid cases in parts of China that have shut down much of one major city. If Covid cases continue to significantly rise in China such could hurt the cotton futures market due to the potential for reduced demand for the fiber coming from the world’s second-largest economy.
Traders are also awaiting Thursday morning’s weekly USDA export sales report, with bulls hoping for another good showing on U.S. sales and shipments numbers, following last week’s solid performance in both categories.
Technical analysis: Cotton bulls have the strong overall technical advantage and gained more power today. The next upside price objective for the cotton bulls is to produce a close in May futures above psychological technical resistance at 150.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 130.00 cents. First resistance is seen at the contract high of 141.80 cents and then at 145.00 cents. First support is seen at today’s low of 136.36 cents and then at this week’s low of 134.05 cents.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You are 100% priced in the cash market on 2021-crop. You should also be 50% forward-priced for harvest delivery on expected 2022-crop production.
Cash-only marketers: You should be 90% priced on 2021-crop. You should also be 50% forward-priced for harvest delivery on expected 2022-crop production.
