Crops Analysis | March 20, 2023
Price action: May corn fell 1 1/4 cents to $6.33, near the session high.
Fundamental analysis: Corn succumbed to mild spillover pressure from the wheat complex due to hovering economic uneasiness and diminishing global supply concerns through the extension of the Black Sea grain agreement. However, despite claims by Ukrainian officials that the initiative was extended for 120 days, Russia has called for non-renewal in May if certain conditions are not met, including the restoration of access to the SWIFT financial messaging system for Russian state-owned agriculture-focused bank Rosselkhozbank, a resumption of farm machinery supplies and the unblocking of foreign assets and accounts held by Russian agricultural companies.
Safrinha corn planting efforts have increased to a completion rate of 91% as of last Thursday, though the pace is still behind last year’s rate of 97%, due to delays in Mato Grosso do Sul, Minas Gerais and Paraná. Producers will continue to plant safrinha corn during the second half of March but there will be acreage reductions in some regions.
Earlier today, the government reported weekly export inspections totaling 1.189 MMT for week ended March 16, which was up 173,491 MT from the previous week and near the top-end of the pre-report range from 600,000 MT to 1.475 MMT. Inspections are running 36.1% behind a year-ago compared to 37.0% behind last week.
Technical analysis: May corn traded a 9-cent range, briefly falling below initial support of $6.30, though maintaining above the 10-day moving average of $6.24 3/4 throughout the session. Both levels will continue to serve as support along with $6.21 1/2. Conversely, a push higher will encounter initial resistance at the 20-day moving average of $6.36 1/2, along with $6.38 1/2, then $6.42 3/4 and $6.47.
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: Soybean futures were lower overnight following favorable weather conditions for South America. Argentina received some rainfall over the weekend in southern regions and central Argentina is forecast to receive rainfall in the middle of this week, says World Weather Inc. While rains are certainly beneficial, it is of minimal help as it is simply too late to have a meaningful impact on production. Traders seemed to realize this as the market rallied most of the day session, regaining most of Friday’s losses.
USDA reported soybean export inspections of 716,618 MT (26.3 million bu.) for week ended March 16, up 83,251 MT from the previous week, but down nearly 20% from the prior four-week average. Inspections were near the top-end of pre-report expectations ranging from 350,000 to 800,000 MT. Exports to China have rose 15.4% in the first two months of the year as a delayed Brazilian harvest has enticed China to buy U.S. beans. Brazil is expected to experience further delays in Mato Grosso and nearby areas as frequent rain is expected in the region.
Technical analysis: May soybeans rebounded during the day session after making a new-move-low in the overnight session at $14.62. Bears continue to fight to push this market lower despite strong fundamentals. Bulls defended the 200-day moving average today which will remain support around $14.60 2/4. Bulls are targeting the recent high at $15.38 2/4 in an attempt to make a higher high, contrary to the recent trend of lower highs and lower lows. Bears are nearing a technical advantage, attempting to push this market lower into next week’s report. Bulls are aiming to take out initial resistance at $14.89 3/4 tomorrow, support that capped all losses last week until Friday. Additional resistance comes in at the psychological $15.00 level.
Soybean meal bears have come out in full force, forcing the market over $30 lower in the last two weeks. On Friday, bears closed prices below the 40-day moving average for the first time since November. Bulls want to recapture this level around $472 here in the next couple days. Additional resistance comes in at $480 with bulls ultimately targeting the recent contract high at $498. Bears are now aiming to take out the 100-day moving average at $452.4. Bears have forced lower highs and lower lows in the meal market, signaling an interim top could be in place. Additional support comes in at the January low at $441.4.
Soyoil bulls have continued last week’s rebound off a move-low and returned to prior support turned resistance at the Mar 7 low of 58.31 cents. Bulls are fighting an uphill battle as prices have continued in a downtrend all year with all rallies getting sold. As prices have traded sideways for the last three sessions, bulls want to break out of this range above 58.31 and target the Feb 28 low of 59.78, followed up by psychological 60 cent resistance. A daily close above 60 cents would give bulls confidence that an interim low might be in place. Bears want to break price below last week’s move low at 54.99 cents to make a run at the July 2022 low at 53.83 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 fell 9 3/4 cents at $7.00 3/4 and nearer the daily low. May HRW wheat lost 6 cents at $8.29 3/4 and nearer the session high. May spring wheat futures fell 9 1/4 cents to $8.51 1/2 and nearer the session low.
Fundamental analysis: Lingering risk-off trader attitudes in the general marketplace helped to sink the wheat futures markets today. The U.S. and European banking crisis raises the odds of a global economic recession. Also, the Black Sea grain-shipping deal was renewed Sunday for at least 60 days.
Weather in U.S. wheat country is mostly neutral for futures price action. World Weather Inc. today reported “a little relief is possible to the dry areas of Nebraska, northern Kansas and northeastern Colorado in the next few weeks.” Wheat conditions in the Midwest will stay good. Cold temperatures during the weekend in the southern Plains, Delta and interior southeastern states likely had little to no permanent impact on winter crops. However, freeze damage is expected to booting and heading winter wheat in the lower Delta and interior southeastern states.
USDA today reported U.S. wheat export inspections totaling 374,224 MT (13.8 million bu.) for week ended March 16, up 117,323 MT from the previous week and near mid-range of pre-report expectations ranging from 200,000 to 500,000 MT.
Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. However, price downtrends on the daily charts have stalled out. 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 last week’s high of $7.12 1/2 and then at the March high of $7.21 3/4. First support is seen at $6.85 and then at $6.75. 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 last week’s high of $8.37 3/4 and then at $8.50. First support is seen at $8.15 and then at $8.00.
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 futures fell 61 points to settle at 77.22 cents.
Fundamental analysis: Cotton futures fell but rebounded off the midday low with help from a recovering crude oil market and a sinking U.S. dollar index. Concerns over macroeconomic health continue to weigh on the cotton market as traders are seeking safe-haven assets. Concerns remain over the demand in the natural fiber if the economy does continue to worsen and the world enters a recession.
The continued drought in the southern Plains has done little to keep prices afloat, even as acres are expected to drop over 20% from the prior year. There will be more clarity on acreage estimates next week in the USDA Prospective Plantings report.
Technical analysis: May futures are near the bottom of the past four-month trading range. Prices have been trending lower since late January’s failed breakout above the 200-day moving average. While bears remain in the driver’s seat, bulls have a good opportunity to establish a low at the Nov 28 level of 77.02 cents. Bulls first target is closing price over the 10-day moving average for the first time in over two weeks at 79.91 cents. Additional resistance will come in at last week’s high of 82.49 cents. Bears are attempting to breakdown out of the last four month’s trading range, confirmed with a close below 77 cents. This would open the door to Nov 2022 lows at 70.40 cents with very little support on the way.
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.
