Crops Analysis | April 10, 2023
Price action: May corn rose 10 1/2 cents to $6.54, ending the session above the 10-day moving average.
Fundamental Analysis: Corn rebounded from last week’s four-day sell off despite a lack of support from outside markets. Rising tensions surrounding the extension Black Sea grain deal likely provoked buying efforts as Russia threatened to bypass the UN-brokered deal unless barriers to its agricultural exports were removed. Russian Foreign Minister Sergei Lavrov attended talks in Turkey, and stated, “we will work, if necessary, outside of the framework of this initiative,” and that “we have the opportunity to do this with Turkey, with Qatar.”
Traders continue to focus on U.S. weather as planting efforts begin in earnest. World Weather Inc. forecasts favorable conditions for fieldwork in the Midwest during the next two weeks as temperatures will warm overall and precip will be too infrequent and light to prevent farming activity in much of the region outside of the snow-covered areas in the northwest. Though the forecaster states the Red River Basin of the north will see increasing snow melt this week and flooding is likely to soon begin.
USDA reported weekly export inspections of 805,167 MT (31.7 million bu.) for week ended April 6, which were down 293,294 MT from the previous week and near the lower end of the pre-report range of 600,000 and 1.3 MMT.
USDA will update crop progress following today’s close, with a Reuters poll indicating traders are anticipating a 3% increase in corn plantings from a week earlier to 5%.
Technical Analysis: May corn traded a 14 3/4 cent range, finishing the session above the 10- and 50-day moving averages of $6.51 3/4 and $6.52 1/2 after carving an intraday low just above the 40-day moving average of $6.40 3/4, which will continue to serve as support. However, continued upward momentum will meet additional resistance first at the technically significant 100-day moving average, currently trading at $6.57 1/4, with a breach of the level giving bears the technical advantage to then work towards resistance at $6.60 3/4 and the April 3 high of $6.68 1/2. Conversely, a turn below the 40-day moving average will find bears looking to breach resistance at $6.35 1/4, then at $6.23 1/4 and the March 10 low of $6.17 1/4.
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: Soybean futures continued to slide following last Thursday’s rout as traders’ position ahead of tomorrow’s USDA WASDE report. Bloomberg reports that analysts expect the USDA to cut ending stocks to 199 million bushels from 210 in the March report, further tightening the old crop balance sheet. Analysts are looking for a 3.8 MMT cut in the USDA estimate for the Argentine soybean crop as well, bringing it down to 29.2 MMT. Trade shows the Brazilian soybean crop rising 500,000 MT to a record 153.5 MMT.
The Midwest saw warmer than normal temperatures over the weekend and are expected to continue this week before cooling off, World Weather Inc reports. Soil temperatures are rising, allowing growers to get field work done in preparation for spring planting. These warm temperatures caused the snowpack to melt rapidly, increasing the likelihood of spring flooding in the Red River Basin, delaying planting as the soil will need extended drying before fieldwork can begin.
The USDA reported soybean export inspections of 669,566 MT in the week ended April 6, up 165,666 from the previous week and near the top-end of pre-report estimates. Export inspections continue to outpace the necessary pace to hit current the USDA export projection, implying exports could be revised higher in tomorrow’s report.
Technical Analysis: May soybeans are retesting the bottom edge of the prior four-month trading range ahead of tomorrow’s WASDE report. May beans rallied over $1.20 in seven trading days and have since given about 40 cents back, returning to the important $14.70-$14.80 range. Lows were carved in this range in December, January, and February before finally breaking down in March. It also served as resistance as prices rebounded over the last two weeks. If bears manage to break below this significant support, a visit to the March low at $14.05 is likely, with very little support above it. If an extension of recent gains continue, however, resistance can be expected at the psychological $15 level, backed by last week’s high of $15.27 3/4.
Meal futures continued lower after last week’s rejection of the 40-day moving average. Prices spent most of the afternoon basing around $450.00 which will act as a pivot going into tomorrow. If prices fail to bounce from here, a visit to last week’s low of $445.4 is likely, which will act as support. Below there, a visit to the March low of $435.00 is likely. If a rebound ensues following the report tomorrow, resistance can be expected at today’s high of $457.90, with stiff resistance at the 40-day moving average at $463.00.
Soyoil remains in a bearish market marked by lower highs and lower lows. This week’s downside has been limited by the March 30 low of 54.20 cents, which will serve as support. However, if bulls can gain ground in the coming days, the daily bar chart would read a higher low, resistance can then be expected at last week’s high of 57.40, coinciding with the 40-day moving average, backed by the March 20 high of 58.39 cents. If support at 54.20 cents fails, a revisit to the March low of 51.28 cents is likely.
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 3 cents at $6.78 1/2 and near mid-range. May HRW wheat gained 11 1/2 cents at $8.76 and nearer the session high. Spring wheat futures rose 3 cents to settle at $8.75, 11 cents off the intraday high.
Fundamental Analysis: The HRW wheat futures market pulled SRW prices higher today amid ongoing concerns about dry weather in U.S. HRW country and other world wheat-growing regions. Some improved risk appetite in the general marketplace to start the trading week was also a positive for the speculative grain market bulls.
World Weather Inc. today reported “no relief from drought is expected for the next ten days in Spain, North Africa or the west-central and southwestern U.S. Plains, despite a few showers. Parts of Canada’s Prairies are still too dry along with a part of the northwestern U.S. Plains”. Traders are looking forward to this afternoon’s USDA weekly crop progress reports to get the latest readings on winter wheat conditions in key U.S. growing states. No change this week is expected from last week’s 28% good to excellent condition rating for HRW.
Wheat futures prices were also supported today by rising tensions regarding the ongoing viability of the Black Sea grain-shipping deal.
USDA this morning reported U.S. wheat export inspections of 335,444 MT for week ended April 6, up 166,901 MT from the previous reporting week and near mid-range of market expectations.
USDA’s monthly S&D report is out Tuesday morning, but only fine-tuning is expected following the recent quarterly grain stocks report.
Technical Analysis: SRW wheat bears have the solid overall near-term technical advantage. SRW bulls' next upside price objective is closing May prices above solid chart resistance at the March high of $7.24. The bears' next downside objective is closing prices below solid technical support at $6.50. First resistance is seen at $6.93 1/4 and then at $7.00. First support is seen at $6.70 and then at $6.61.
HRW bulls have the overall near-term technical advantage. A price uptrend is in place on the daily chart. The HRW bulls' next upside price objective is closing May prices above solid technical resistance at the February high of $9.09 3/4. The bears' next downside objective is closing prices below solid technical support at $8.40. First resistance is seen at today’s high of $8.82 1/2 and then at $8.88 1/4. First support is seen at today’s low of $8.62 3/4 and then at last week’s low of $8.53 1/4.
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 75 points to 82.45 cents, ending the session below the 100-day moving average.
Fundamental Analysis: Cotton experienced mild selling pressure after early attempts to extend last week’s gains, though a rising U.S. dollar and easing crude oil futures ultimately limited gains. Traders are also likely positioning ahead of USDA’s April Supply and Demand updates, due out tomorrow at 11 a.m. CT.
Despite looming recessionary concerns, the U.S. labor market continues to confirm strength, as indicated by last Friday’s monthly payroll report which revealed a larger-than-expected increase of 236,000 in March nonfarm payrolls compared to expectations of 230,000 along with an unexpected 0.1% decline in the March unemployment rate to 3.5%, showing a more robust labor market than anticipated.
Planting weather will continue to help guide prices as planting efforts gain momentum. World Weather Inc. states today’s weather outlook remains too dry in West Texas where planting usually begins in a few weeks. However, the forecaster notes some rain occurred during the weekend in eastern and southern Texas, the Delta and southeastern states delaying fieldwork in some areas and raising soil moisture for better planting and emergence later.
Technical Analysis: May cotton traded a 130-point range and posted a low-range below the 100-day moving average of 83.09 cents. Persisting downside efforts will continue to face support at the 10-day moving average of 82.12 cents, again at the 20-day moving average of 80.37 cents and 79.56 cents. However, upward momentum will face initial resistance at the 100-day moving average of 83.09 cents, then at 84.02 and 84.84 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.
