Crops Analysis | April 18, 2023
Price action: May corn futures rose 1 cent to $6.77 1/2 and near mid-range.
Fundamental analysis: It was not a bad day for the corn market bulls as they were able to hold on to Monday’s solid gains and push prices to a two-month high. A weaker U.S. dollar index was mildly supportive for corn futures today. Less risk aversion in the general marketplace the past couple weeks has also aided the grain market bulls, especially the speculators. Selling interest in grains remains limited amid the Russia-Ukraine grain-shipping deal uncertainties that presently see the deal on shaky ground.
World Weather Inc. today called for wetter conditions for the lower Midwest April 25-26 which will slow corn planting. The forecaster added that overall fieldwork in the Corn Belt should advance relatively well between rounds of precipitation. Meantime, flooding along the Red River Basin of the north will worsen this week, though the situation does not seem to be as bad as feared. USDA Monday afternoon reported that as of Sunday, U.S. corn planting was 8% complete compared to the five-year average of 5%.
Technical analysis: The corn futures bulls have the firm overall near-term technical advantage. A five-week-old price uptrend is in place on the daily bar chart. The next upside price objective for the bulls is to close May prices above solid chart resistance at the January high of $6.86. The next downside target for the bears is closing prices below chart support at $6.60. First resistance is seen at today’s high of $6.82 1/2 and then at $6.86. First support is at today’s low of $6.69 3/4 and then at this week’s low of $6.62 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: Soybeans managed to close marginally higher, despite an overnight run to the highest level since March 8. A soyoil rally led the complex higher as concerns over Argentine output continue to hover over the market. The U.S. ag attaché in Argentina trimmed the country’s soybean crop to 23.9 MMT, below USDA’s official forecast of 27 MMT in last week’s World Agriculture Supply and Demand Estimates. The post expects Argentina to import a record 11 MMT of soybeans in 2022-23 as a result of mounting crop losses due to persisting drought, while it is estimated that soymeal exports will reach only 18.75 MMT and 3.65 MMT of soyoil exports during the marketing year.
Crop consultant Dr. Michael Cordonnier also trimmed his Argentine soybean estimate by 2 MMT, to 24 MMT, noting a neutral to lower bias going forward. Cordonnier noted early soybean yields have been disappointing and highly variable. However, he states harvest in the country is 4.3% completed, advancing only 1% on the week, but around 48% of the early planted soybeans are maturing, which should allow harvest to advance quickly, while 27% of the late planted soybeans are filling pods. Cordonnier left his Brazilian soybean crop estimate unchanged at 153 MMT and indicated a neutral to slightly higher bias going forward. He states that barring any unforeseen problems in Rio Grande do Sul, the estimate could potentially increase by 1 MMT.
Technical analysis: May soybeans carved a 20 1/2-cent range, breaching resistance at $15.25 1/4 overnight, though a close below the level suggests bulls have more work to do before charging higher. If success is ultimately achieved, bulls will find themselves in a battle yet again near $15.33 1/2 and then $15.48. Conversely, initial support lies at $15.10 3/4, with additional support lying at the 10-day moving average of $15.04 3/4, with solid support at the convergence of the 40- and 100-day moving averages, each trading around $14.96. To regain control, bears will need to hold a close below this area, which will then find support at $14.88, the 20-day moving average of $14.85 and then $14.79 3/4.
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 gained 1 1/2 cents, closing at $6.98. Prices closed near mid-range and hit a two-week high. May HRW wheat fell 8 1/2 cents to $8.81 1/4, nearer the session low. Spring wheat futures fell 3 1/2 cents to $8.85 1/2.
Fundamental analysis: HRW wheat futures today saw a normal corrective price pullback following Monday’s decent gains. More short covering was featured in SRW wheat futures. A weaker U.S. dollar index today did work in favor of the wheat market bulls.
USDA Monday afternoon reported 27% of the U.S. winter wheat crop in “good” to “excellent” condition as of Sunday. That’s unchanged from last week. However, the “poor” to “very poor” rating increased two percentage points to 39%. When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop fell another 3.2 points, to 248.0.
Wheat traders continue to monitor the shaky Russia-Ukraine grain-shipping deal that has been supportive to wheat futures prices. Russian Foreign Minister Sergei Lavrov will reportedly discuss the export deal with U.N. Secretary-Genera Antonio Guterres in a meeting in New York next week. Meantime, Inspections of ships moving grain from Ukraine have restarted, according to the RIA news agency, which cited Russia’s foreign ministry. However, a senior Ukrainian official told Reuters, “Nothing has been resolved. There are no inspections.”
World Weather Inc. today reported a cold airmass expected to enter the Great Plains later this week will bring morning temperatures below freezing for parts of Hard Red Winter Wheat country by Saturday. “Most of the wheat crop will manage the cold without much yield impact, but the cold will help raise the potential for rain next week when warm, moist, air from the Gulf of Mexico overruns the colder air,” said the forecaster. Additional opportunities for rain may continue into early May, although the significance of the precipitation is not certain at this point. The increase in moisture is expected to aid in the development of winter wheat, said World Weather.
Technical analysis: SRW wheat futures bears still have the overall near-term technical advantage. However, a price downtrend on the daily bar chart has been negated to suggest a market bottom is in place. 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 the March low of $6.54. First resistance is seen at today’s high of $7.07 and then at $7.15. First support is seen at this week’s low of $6.74 1/2 and then at $6.61.
HRW wheat futures bulls have the slight overall near-term technical advantage. A price uptrend is in place on the daily chart but just barely. 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 $8.20. First resistance is seen at $9.00 and then at $9.09 3/4. First support is seen at this week’s low of $8.62 and then at $8.50.
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 rose 125 points to 84.55, marking the highest close since March 6.
Fundamental analysis: Cotton futures surged higher in an extension of Monday’s strength, breaking above the sideways consolidated price trend seen over the past several sessions. A softer U.S. dollar and supply concerns were the main contributing factors as U.S. weather in key cotton growing areas remain questionable for proper seeding and growth prospects, though World Weather Inc. is predicting an increased chance of moisture in the Southern Plains before the month is over. World Weather expects a cold airmass to move into the eastern U.S. early next week, with warm, moist air from the Gulf of Mexico expected to overrun the colder-than usual conditions, helping induce an opportunity for rain. While conditions will likely remain drier than usual for the next seven days, beginning April 24-25, as the cold airmass exits the region, an opportunity for some showers and thunderstorms will occur. The forecaster indicates that lighter amounts, up to 0.25 inch of rain is expected in the eastern Texas Panhandle, with larger amounts up to 0.75 inch possibly in areas of the Oklahoma Panhandle and southwestern Kansas. Additional opportunities for rain in the Southwest Plains are possible going into the first week of May, though total accumulation is not certain at this point in time.
Technical analysis: May cotton traded a 173-point range, ending the session well above resistance at 83.96 cents, giving bulls an increased edge. Efforts higher will continue to face resistance at 84.61 cents as well as 85.27 cents. Conversely, a downside reversal will find initial support at former resistance at 83.96 cents, then at 83.30 cents and the technically significant 100-day moving average of 83.07 cents. A turn below the level will hand the technical advantage to bears, with efforts then working towards 82.65 cents and 81.99 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.
