Crops Analysis | March 17, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: May corn futures rose 1 1/2 cents on the day to settle at $6.32 1/4, up 17 cents on the week.

5-day outlook: Corn futures found a bid this week after extensive selling over the last month. It was noted last week that downside would likely be limited as corn was oversold on the daily bar chart. Prices have since bounced 15 cents back to the prior support zone around $6.30. The market is now at a pivotal point, either break above the resistance zone and reenter the prior trading range extending from Oct 2022 to Feb 2023, or continue lower. Prices were bolstered by export sales announcements this week, a development that will have to continue if prices are to extend above current resistance levels.

30-day outlook: China more than quintupled their outstanding sales this week with four daily sales announcements totaling 2.111 MMT. As of Mar 9, China had only 375,100 MT of sales yet to be shipped. Despite this week’s large total, levels are still less than half what they were a year ago in outstanding sales, and we have exported nearly 1.7 MMT less. While demand has been picking up, it is still not what it needs to be to continue to keep corn prices high, especially going into the March 31 USDA Prospective Planting report, following USDA’s Economic Outlook Forum held in February, where early projections pegged acres to be the most since 2016.

90-day outlook: The technical trend leans bearish in corn futures despite this week’s rally. Corn bulls are fighting an uphill battle and our forecasts still indicate the USDA will have to revise corn-for-ethanol use and feed use lower. The Argentine crop continues to decline, but production in Brazil is still expected to be record levels, offsetting any potential demand pick up there.

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. 

 

 

Soybeans

Price action: May soybeans fell 15 cents to $14.76 1/2, the lowest close since Dec. 22 and is down 30 1/2 cents on the week. May meal dropped $8.00 to $466.00, while May soyoil ended the session 27 points lower at 57.46 cents.

5-day outlook: Soybeans edged lower, led by meal weakness as rains are forecast in Argentina. World Weather Inc. notes parts of southern as well as north-central and northeastern Argentina will benefit from rain into Saturday and with additional rain in some northern areas March 25-26, with rains throughout the country March 27-30, offering chances for further improvement in yield potential in late-planted crops. The forecaster notes Brazilian harvest progress is also advancing better from Parana to southern Minas Gerais and some in southern Mato Grosso do Sul locations due to less frequent and less significant rain, with the pattern prevailing through mid-week next week before rain increases once again.

30-day outlook: USDA’s Prospective Planting Report, due out on March 31 will provide the first survey-based look into 2023 acres. Early projections indicate corn acres will top soybean acres due to relatively cheaper inputs, though a surprise at the end of the month shouldn’t be ruled out. USDA projected planted soybean acres of 87.5 million, with analysts sticking close to the government estimate as a recent Reuters poll indicated the average estimate was 87.8 million acres, which would be an increase from the 87.45 million acres planted in 2022. In addition to acreage estimates, USDA will also update quarterly stocks, which may have an equal amount of impact on the market, though trade focus will quickly turn to weather, which will ultimately determine U.S. acres.

90-day outlook: Traders will remain watchful of the U.S. and global economy as the year progresses and the Fed determines the proper route in dampening inflation while anticipating the ramifications of the preferred monetary policy. The recent collapse of Silicon Valley Bank (SVB) and the discovery of other troubled U.S. and European banks revealed a possible global financial crisis, which has rattled trader confidence and set a general risk-off tone. Traders will continue to monitor the Fed’s actions along with U.S. and global economic data that will further provide insight into the state of the financial system.

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.

 

 

Wheat

Price action: May SRW wheat rose 11 1/2 cents to $7.10 1/2, near the session high and hit a two-week high. For the week, May SRW rose 30 3/4 cents. May HRW what gained 16 cents to$8.35 3/4, hitting a three-week high and increasing 37 1/2 cents on the week. May spring wheat futures rose 11 3/4 cents to $8.35 3/4.

5-day outlook: It was a good week for the winter wheat futures bulls as short covering and perceived bargain buying were featured. The technically bullish weekly high closes on Friday also suggest some follow-through buying interest early next week. The fly in the bulls’ ointment could be keen risk aversion next week amid the banking crisis that continues to play out. If that situation continues to produce general trader/investor anxiety, then buying interest in the grain futures would be limited.

Traders will continue to closely monitor the U.N. Ukraine grain-shipping agreement negotiations. Reports todays said Russia was extending the deal for 60 days. However, both Ukraine and Turkey say the deal must be rolled over in full under the existing terms, including the 120-day duration.

30-day outlook: Weather patterns will come more into focus as springtime is near. World Weather Inc. today reported drought in the U.S. western Plains is the most serious out of all dryness in North America. A little rain is possible in the next ten days, said the forecaster. Concern remains over flood potential in a part of the Red River Basin of the North and in the upper U.S. Midwest, although much depends on how fast the snow melts and how much rain falls during the snowmelt season. Europe wheat, barley and rye areas are experiencing mostly good conditions for the start of spring growth and planting. India’s wheat production may be reduced in unirrigated areas this year because of limited rain and warm temperatures since January 1. The first USDA Crop Progress report is April 3, when traders will get a better read on HRW crop conditions. 

90-day outlook: The U.S. dollar index has seen choppy and volatile trading recently, as the banking crisis plays out. An appreciating greenback would exacerbate already tepid worldwide demand for U.S. wheat. Weekly export sales this week came in at 250,700 MT. Despite the weakest exports since early January, net sales this week came in 22% above the prior four-week average at 336,700 MT. Wheat bulls are hoping foreign buyers step up and take advantage of the lowest U.S. prices since 2021.

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. 

 

 

Cotton

Price action: May cotton fell 133 points to 77.83 cents, marking the lowest close since Nov. 1 and is down 35 points on the week.

5-day outlook: Cotton extended lower for the third straight session as crude oil and equity weakness cast a shadow over prices. Traders will continue to closely monitor U.S. and global economic data, which will provide the U.S. dollar and crude oil futures direction and ultimately cotton futures. The Fed’s upcoming meeting on March 21-22 will also likely hold market attention as traders anticipate next steps after the recent banking turmoil.

30-day outlook: USDA’s Prospective Planting Report, due out on March 31, will provide a bit more insight into 2023 acres. The National Cotton Council reported a preliminary figure of 11.4 million acres, suggesting a near 20% drop year over year. Once the data has been released, traders will quickly shift their focus to weather, which continues to vary throughout major cotton-growing areas. World Weather Inc. notes that South Texas will have an opportunity for some periodic rainfall during the next ten days, though more rain will be needed, while West Texas will also have an opportunity for “some rain” but not enough to seriously raise long term soil moisture. The forecaster notes much of the Delta and southeastern states will remain favorably to abundantly wet.

90-day outlook: Export data will continue to be closely monitored as it will provide insight into the health of the global economy. In the week ended March 9, USDA reported weekly export sales of 225,500 RB, which was up 97% from the previous week, but down 3% from the four-week average. Net sales were primarily to Vietnam (120,200 RB including 8,400 RB switched from China and 1,000 switched from South Korea), China (35,800 RB) and Turkey (16,900 RB, including decreases of 3,200 RB). Chinese economic data will be of particular note as the country serves as the world’s largest cotton importer.

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.

 

Latest News

H&P Report negative compared to pre-report expectations
H&P Report negative compared to pre-report expectations

Nearly every category topped the average pre-report estimates.

After the Bell | March 28, 2024
After the Bell | March 28, 2024

After the Bell | March 28, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

PF Report Reaction: Bullish USDA data for corn
PF Report Reaction: Bullish USDA data for corn

Corn planting intentions and March 1 stocks came in lower than expected.

Report Snapshot: USDA shows lighter-than-expected corn acres and stocks
Report Snapshot: USDA shows lighter-than-expected corn acres and stocks

USDA reported corn acres of 90.036 million acres for 2024 and March 1 stocks of 8.347 billion bu., both well below trade estimates. Soybean acres were slightly lower than expectations, while stocks were higher.