Crops Analysis | March 15, 2023
Price action: May corn futures rose 5 3/4 cents to $6.26 1/2 and nearer the session high.
Fundamental analysis: Short covering was featured in the corn futures market today. Today’s gains in corn were impressive given the bearish outside markets that included a “risk-off” trading day, a huge drop in crude oil prices to a 15-month low and a big rally in the U.S. dollar index. Part of today’s price strength in corn is attributed to USDA reporting a daily export sale of 667,000 MT of corn for delivery to China during the 2022-23 marketing year.
World Weather Inc. today said central portions of Argentina corn regions will remain mostly dry the next ten days, though scattered showers and thunderstorms will occur. More significant rainfall is expected in western and southern parts of Argentine corn regions.
U.S. ethanol production in week ended March 10 averaged 1.014 million barrels per day (bpd), up 4,000 bpd from the previous week, but down 1.2% from the same week last year. Ethanol stocks increased by 1.07 million barrels, to 26.39 million.
Thursday morning’s weekly USDA export sales report is expected to show U.S. corn sales of 750,000 to 1.5 million MT in the 2022-23 marketing year and sales of zero to 200,000 MT in the 2023-24 marketing year.
Technical analysis: The corn futures bears still have the overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. The next upside price objective for the bulls is to close May prices above solid chart resistance at $6.42 3/4. The next downside target for the bears is closing prices below chart support at $6.00. First resistance is seen at today’s high of $6.29 and then at $6.35. First support is at today’s low of $6.19 1/4 and then at last week’s low of $6.06 3/4.
What to do: Get current with advised sales. Be prepared to make additional sales on a corrective price rebound.
Hedgers: You should be 65% sold in the cash market on 2022-crop production. You should have 15% of expected 2023-crop production sold for harvest delivery.
Cash-only marketers: You should be 65% sold on 2022-crop production. You should have 15% of expected 2023-crop production sold for harvest delivery.
Fundamental analysis: Overnight bull efforts to breach $15.00 ultimately proved futile, with crude oil weakness and a surging U.S. dollar casting a shadow across commodities. National Oilseed Processors Association (NOPA) data showed U.S. soybean crush was slightly below trade expectations in February at 165.414 million bu., though the daily average processing pace was the highest on record for the month. The February figure was a 7.6% decrease from the 179.007 million bu. processed in January. That’s short of the average analyst estimate of 166.06 million bu. but was up 0.2% from February 2022 crush of 165.057 million bu. Average daily crush for the month rose to 5.908 million bu. in a second straight monthly increase. That was the highest-ever daily rate for the month. Soyoil supplies among NOPA members as of Feb. 28 dropped to 1.809 billion pounds, down 1.1% from the 1.829 billion pounds in NOPA stocks at the end of January and the first decline in five months. Stocks were 12.2% below the year-ago average figure of 2.059 billion pounds and below analyst expectations of an increase to 1.886 billion pounds.
Varying weather continues to occur in South America, with welcome rains in Argentina to start the week, but outside a few pockets much of the rain outside Buenos Aires was light and the moisture should not have a lasting impact on crop or soil conditions, notes World Weather Inc. However, the forecaster continues to note that Paraguay and Brazil will receive enough rain during the next two weeks to slow fieldwork while maintaining or improving conditions for crop development with a few exceptions in the northeast and far south.
Traders are anticipating USDA’s Weekly Export Sales Report, due out before tomorrow’s open. Traders are expecting net sales for week ended March 9 between 50,000 and 700,000 MT, following net sales reductions of 23,234 MT to a new marketing year low the previous week.
Technical analysis: May soybeans traded a 20-cent range, breaching support at $14.86 1/4, marking a session low just above additional support at $14.78 3/4. A close above each ensures that each level will continue to serve as support, with additional support lying at $14.73 1/2. Conversely, $14.99 will continue to serve as initial resistance, along with $15.04 1/2 and the 10-, 20- and 40-day moving averages of $15.08 1/4, $15.12 3/4 and $15.13 3/4, respectively.
May meal futures traded a $10.80 range, making a session low above initial support of $474.70. Additional support lies at $468.20 and $464.20. Initial resistance stands at the 10-day moving average $483.20 then at $485.20, $489.20 and $495.70.
May soyoil traded a 152-point range, marking a high-range close to end the session. Initial support lies at 55.57 cents, then 54.95 cents and 54.20 cents. Upside efforts will encounter resistance first at 56.94 cents, again at 57.69 cents and then 58.31 cents.
What to do: Get current with advised cash sales. Be prepared to advance sales.
Hedgers: You have 70% of 2022-crop sold in the cash market. No 2023-crop sales have been advised.
Cash-only marketers: You have 70% of 2022-crop sold. No 2023-crop sales have been advised.
Price action: May SRW wheat rose 6 1/2 cents to $7.02 3/4 and nearer the session high. May HRW wheat gained 2 cents at $8.19 3/4 and near mid-range. May spring wheat futures rose 2 1/2 cents to $8.52 1/2.
Fundamental analysis: More short covering was featured in winter wheat futures today after May SRW and HRW contracts hit new lows last week. Wheat bulls are encouraged their markets did not sell off today in the face of fully bearish outside markets that saw a keen “risk-off” trading day in the general marketplace. A big drop in crude oil prices to a 15-month low and strong gains in the U.S. dollar index today were also bearish outside market elements for the grains. Generally below average U.S. winter wheat crop conditions early in the growing season are a bullish factor for wheat futures.
Reports said Turkey will continue discussions to extend the Black Sea grain-shipping deal for 12 days rather than Russia’s proposed 60 days.
Thursday morning’s weekly USDA export sales report is expected to show U.S. wheat sales of 75,000 to 500,000 MT in the 2022-23 marketing year and sales of zero to 150,000 MT in the 2023-24 marketing year.
Technical analysis: Winter wheat futures bears still have the solid overall near-term technical advantage. However, price downtrends on the daily bar charts are now in jeopardy. SRW bulls' next upside price objective is closing May prices above solid chart resistance at $7.50. The bears' next downside objective is closing prices below solid technical support at $6.50. First resistance is seen at today’s high of $7.06 and then at the March high of $7.21 3/4. First support is seen at Tuesday’s low of $6.77 1/2 and then at this week’s low of $6.67 1/4. The HRW bulls' next upside price objective is closing May prices above solid technical resistance at $8.50. The bears' next downside objective is closing prices below solid technical support at $7.50. First resistance is seen at $8.25 and then at $8.32 3/4. First support is seen at $8.00 and then at this week’s low of $7.85.
What to do: Wait on an extended price rally to increase cash sales.
Hedgers: You should be 85% sold in the cash market on 2022-crop. You should be 30% forward-priced on expected 2023-crop for harvest delivery next year.
Cash-only marketers: You should be 85% sold on 2022-crop. You should also be 30% forward-priced on expected 2023-crop production for harvest delivery next year.
Price action: May cotton fell 226 points to 79.11 cents, after trading as high as 81.73 cents.
Fundamental analysis: Cotton futures fell under pressure, wiping out gains from the previous two sessions as the U.S. dollar rocketed higher, while equities and crude oil futures posted heavy losses. Global economic uncertainty is hovering over the market following the collapse of Silicon Valley Bank at the end of last week, with U.S. bank stocks falling amid weakened market sentiment after Credit Suisse AG, a Swiss bank incorporated as a joint stock corporation, saw its stock price plunge to a record low.
U.S. February Producer Price Index (PPI) final demand fell 0.1% from January but was up 4.6% on the year. That was weaker than expectations of a 0.3% increase on the month. The 4.6% annual increase was the slowest year-over-year increase in nearly two years. U.S. February retail sales were reported down 0.4% from January, which was within expectations.
Trader focus will soon shift to USDA’s Weekly Export Sales Report, due out early tomorrow morning for week ended March 9. Net sales of 114,500 RB were reported for the previous week, which was down 33% from the previous week and 57% from the four-week average.
Technical analysis: May cotton traded a 351-point range, ending the session below support at 0.28 and 79.20 cents. Additional bear efforts will encounter further support at 78.09 cents along with Monday’s low of 77.95 cents. A turn higher will find resistance at former support at 80.28 cents, then at the 10-day moving average of 82.00 cents and again at 82.47 as well as the 20- and 100-day moving averages of 82.57 and 82.90 cents, respectively.
Hedgers: You should be 70% sold in the cash market on 2022-crop production. You also should have 20% of expected 2023-crop forward sold for harvest delivery.
Cash-only marketers: You should be 70% sold on 2022-crop production. You also should have 20% of expected 2023-crop forward sold for harvest delivery.
