Crops Analysis | March 21, 2023

Crops Analysis
Crops Analysis
(Pro Farmer)

Corn

Price action: May corn futures fell 3 cents to $6.30 and near the session low.

Fundamental analysis: The corn futures market was pressed today in part by solid losses in soybean and wheat futures. A still-bearish overall near-term technical posture in corn futures and tepid-at-best risk appetite in the general marketplace at present are keeping the corn market bulls squelched.

Traders brushed aside another USDA daily U.S. corn sale of 136,000 MT for delivery to China during the 2022-23 marketing year. This follows last week’s daily corn sales totaling 2.111 MT to China for the 2022-23 marketing year.

World Weather Inc. today reported “improved Argentina rainfall and better safrinha corn planting conditions in Brazil will occur over the next ten days and that will be a bearish bias.” However, the forecaster said the changes come too late in the season to have a huge influence on market mentality.

Technical analysis: The corn futures bears have the overall near-term technical advantage. However, a four-week-old downtrend on the daily bar chart has stalled out. The next upside price objective for the bulls is to close May prices above solid chart resistance at $6.50. The next downside target for the bears is closing prices below chart support at the March low of $6.06 3/4. First resistance is seen at last week’s high of $6.38 3/4 and then at $6.42 3/4. First support is at today’s low of $6.28 3/4 and then at this week’s low of $6.25.

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 19 cents to $14.67, near the session low after trading as high as $14.97. May meal closed $2.10 lower to $460.60, while May soyoil dropped 175 points to 56.24 cents.

Fundamental analysis: Soybeans failed overnight and early-session attempts to breach $15.00, with soyoil weakness and waning strength in meal futures pressuring the complex. Macroeconomic uncertainty is hovering over commodities in general as traders await the Federal Reserve’s decision on its benchmark overnight interest rate on Wednesday amid global banking tensions.

Meal futures have turned lower recently with improving moisture prospects in Argentina. World Weather notes rain events coming up over the next several days will provide some much needed relief form months of drought, although more moisture will be needed to end the drought. The forecaster further states the moisture should end the steady decline in crop conditions in the country. Meanwhile, areas in Brazil that remained too wet for many weeks, including Mato Grosso do Sul and Parana into Minas Gerais are drying down favorably this week, and should translate into better late season soybean harvesting.

South American crop consultant Dr. Michael Cordonnier slashed his Argentine soybean estimate an additional 2 MMT to 26 MMT, stating if forecasted rains turn out disappointing, the estimate my be lowered again. As of late last week, the country’s soybean crop was rated 75% poor/very, 24% fair and 2% good/excellent, while soil moisture was rated 71% short/very short and 29% favorable/optimum. Cordonnier notes 62% of the earlier planted soybeans are filling pods, while 14% are maturing. Approximately 7% of the later planted soybeans are filling pods.

Technical analysis: May soybeans traded a 31 1/2-cent range, with bears gaining technical traction with a close below initial support around $14.69 1/2. A continued push to the downside will encounter further support at Monday’s low of $14.62, then $14.52 3/4 and $14.43 1/2. Although bears grasp the near-term technical advantage, oversold conditions could spur buyer interest which would be hindered by resistance near $14.95, again at $15.04 1/4 and $15.20 3/4.

May meal futures traded an $8.70 range, ending lower for the fifth straight session. The contract seems to have carved a near-term top and is consolidating between initial support of $457.50 and initial resistance of $468.00. A breach of initial support will have bears working towards $452.20 and $447.00. Success above initial resistance will then encounter resistance at $473.20 and $478.50.

May soyoil traded a 216-point range, with the session ending below initial support of 56.56 cents. Additional downside attempts will find bears experiencing further support at 55.12 and 54.21 cents. A push higher, however, will experience resistance at Monday’s high of 58.39 cents, then 58.91 and 59.82 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.

 

 

Wheat

Price action: May SRW futures sold 17 1/2 cents to close at $6.83 1/4, near the session low. May HRW futures closed 9 1/2 cents lower at $8.20 1/4. Spring wheat settled 5 3/4 cents lower at $8.45 3/4.

Fundamental analysis: Wheat bears continued in today’s session ahead of tomorrow’s important FOMC interest rate decision. Price was also weighed down by Russia backing the New Land Grain Corridor which is intended to supply grain to the Chinese market. China imports more wheat than the entire European Union, projected at 10 MMT this year. Though China has not recently proven a major buyer of U.S wheat, the proposed new deal ensures that China will be nearly exclusive in importing Russian wheat.

Winter wheat crop ratings came in with Kansas increasing 2% to 19% good/excellent, Texas increasing 6% to 23% good/excellent, Oklahoma dropping 1% to 29% good/excellent, and Colorado dropping 4% to 36% good/excellent after last week’s jump.

Technical analysis: After once again defending the 20-day moving average, SRW bears continued downside pressure wiping out all of last week’s gains. May futures traded in a 25 1/4 cent range and bears settled prices near the low tick of the day. Bears continue to hold the technical advantage, targeting a new low below $6.61. There is very little support between current prices and a move lower. After failing to make a higher high, bulls are targeting a close above the 20-day moving average, currently at $7.07 2/4, for the first time since mid-February. Additional resistance comes at the recent high at $7.12 2/4, and the 10-day moving average at $6.96 2/4. May HRW has continued to show relative strength compared to SRW futures. Prices remain over 30 cents higher than last week’s lows. Price close right on the 10-day moving average at $8.19 2/4 which will act as support going into tomorrow. There is additional support at the psychological $8.00 level with the recent move low at $7.72 2/4 below that. Bears want to defend the 40-day moving average again at $8.36 2/4 which capped all upside today, with additional resistance at $8.64 above that.

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 rose 63 points to 77.85 cents, a low-range close after marking an intraday high 79.16 cents.

Fundamental analysis: Cotton futures have stabilized momentarily after reaching a 20-week low in the previous session, finding support, albeit mild, from a second straight day of crude oil gains and a waning U.S. dollar. Though a looming global banking crisis is seemingly outshining a declining dollar.

Traders are tuned into the Federal Reserve’s two-day FOMC meeting, which began today and anticipate the outcome that could yield an additional rate increases despite the collapse of the Silicon Valley Bank, or a prioritization of financial stability during a period of uncertainty in the global banking system. As tensions stemming from the financial industry are improving, most expect the central bank to increase its key short-term rate by a quarter percentage point, which would indicate a backing off from recent half-point increases.

Technical analysis: May cotton traded a 194-point range, remaining within the previous session’s range. While bears firmly grasp the near-term technical advantage, a run higher will continue to find resistance at 78.91 cents, then at the 10-day moving average of 79.67 cents as well as 80.61 cents and the 20-day moving average of 81.77 cents. A push lower will continue to experience support at Monday’s low of 76.68 cents, then 76.10 cents, 74.99 and 73.29 cents.

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.

 

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