Crops Analysis | April 19, 2023
Price action: May corn fell 5 1/4 cents to $6.72 1/4, near the session low.
Fundamental analysis: Corn held an inside day, narrowly trading within the previous session’s range amid pressure from strength in the U.S. dollar and fading crude oil futures. As planting efforts have kicked off in the Corn Belt, traders are seemingly unshaken by forecasts of a colder, wetter period in the coming days.
World Weather Inc. forecasts two rounds of significant rain will occur through Thursday of next week, slowing fieldwork, though some planting should advance between rounds of precipitation with planting likely to pick back up when drier weather returns April 29 – May 3. Colder conditions expected during the last days of April may impact planted fields that have emerged, according to the forecaster.
Weekly ethanol production in week ended April 14 rose 7% on the week to 1.024 million barrels per day (bpd), while stockpiles increased less than 1% to 25.29 million barrels.
Traders will be in tune tomorrow for USDA’s early morning Weekly Export Sales Report. Sales will be reported for week ended April 13, with traders expecting net sales to range from 575,000 to 850,000 MT for 2022-23 and 135,000 to 400,000 MT for 2023-24. Net sales for the week prior totaled 527,719 MT for 2022-23, which was down 58% from the previous week and 68% from the four-week average.
Technical analysis: May corn traded a narrow 9-cent range, trading within initial support of $6.70 1/2 and initial resistance of $6.81 1/2. Though bulls hold the near-term technical advantage, a turn below support would find further support at $6.66 1/4 and then $6.57 3/4. However, an extension of recent bull efforts will find additional resistance at $6.89 1/4 and then $6.96 1/4, with $7.00 serving up solid psychological resistance.
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 saw a corrective price pullback today after May futures hit a five-week high Tuesday. Lower corn and wheat futures prices also helped to pressure the soy complex futures today. Some hawkish Fed-speak Tuesday dampened trader and investor spirits at mid-week, and that worked to squelch the grain futures market bulls today.
World Weather Inc. today reported two rounds of significant precipitation will occur in the central U.S. through Thursday of next week and fieldwork will be slowed. However, some planting should advance between rounds of precipitation with planting likely to increase when drier weather resumes Apr. 29-May 3, said the forecaster.
Thursday morning’s weekly USDA export sales report is expected to show U.S. soybean sales of 250,000 to 425,000 MT in the 2022-23 marketing year and sales of zero to 175,000 MT in the 2023-24 marketing year.
Technical analysis: The soybean bulls have the firm overall near-term technical advantage. A price uptrend is in place on the daily bar chart. The next near-term upside technical objective for the soybean bulls is closing May prices above solid resistance at the February high of $15.49 3/4. The next downside price objective for the bears is closing prices below solid technical support at $14.75. First resistance is seen at today’s high of $15.21 1/2 and then at this week’s high of $15.31 1/2. First support is seen at $15.00 and then at this week’s low of $14.96 1/4.
The soybean meal bulls have the overall near-term technical advantage. A price uptrend is in place on the daily chart. The next upside price objective for the meal bulls is to produce a close in May futures above solid technical resistance at $480.00. The next downside price objective for the bears is closing prices below solid technical support at the April low of $445.40. First resistance comes in at today’s high of $462.20 and then at this week’s high of $471.10. First support is seen at $450.00 and then at $445.40.
Soybean oil bears have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. The next upside price objective for the bean oil bulls is closing May prices above solid technical resistance at 60.00 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at the March low of 51.28 cents. First resistance is seen at today’s high of 56.06 cents and then at the April high of 57.40 cents. First support is seen at Tuesday’s low of 54.39 cents and then at this week’s low of 53.36 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 futures fell 16 1/4 cents to $6.81 3/4, near the daily low. May HRW fell 19 1/2 cents to $8.61 3/4, also on the low of the day. Spring wheat futures fell 18 1/2 cents to $8.67.
Fundamental analysis: Wheat prices fell on news that inspections resumed in the Black Sea, giving back the last two days of gains. The European Union is preparing 100 million euros ($109.5 million) of compensation for farmers in countries bordering Ukraine and plans to introduce restrictions on imports of Ukrainian grain. The market took this as bearish as it is likely a compromise that will keep wheat coming out of Ukraine despite the influx of crops weakening prices of their own crop. The E.U. is essentially subsidizing neighboring countries’ producers so Ukraine can continue exporting their own crop. The measure is only for grains that are set for export to other EU countries or the rest of the world, although a report last week remarked how difficult it is to track the origin of grain once it enters another country.
While temperatures are rising across the Midwest, colder air is expected over the weekend, bringing potential frost and freezes from Saturday through Monday, World Weather Inc reports. Freezes will occur as far south as eastern Kansas while frosts will occur in areas farther south. Winter wheat may be advanced enough to be protected from the frost, but there is risk of production loss no less. With the cold front comes potential for rainfall in key production areas, providing much needed precip to areas still drought stricken.
Technical analysis: SRW futures continue to falter against the 40-day moving average, now coinciding with $7.00. We are in a seasonally bearish time for wheat futures, although prices have been tightening over the last month, indicating the market could be trying to put a bottom in place. Bulls defended the March 22 low of $6.54 on last week’s bottom at $6.61 1/4, which will both remain support. Bulls want to make another higher low in the coming days to give confidence that a potential bottom could be in place. Above $7.00 resistance, May SRW futures have some room to run higher. Bears want to force a lower low compared to last week, which would likely mean a trip to the March low soon thereafter.
May HRW continued yesterday’s rejection of $9.00 and bears are targeting the recent low of $8.40. Unlike SRW, price range has been largely expanding. HRW futures have been unable to overcome the bearishness of SRW futures, and the two are likely to move largely in tandem in the coming days. Bulls want to defend support of the recent low at $8.40 with the downside likely to expand with a daily close below it. Bears want to defend yesterday’s high of $8.99 with additional resistance on the way at $8.81 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 futures dropped 131 points to 83.24 cents. July cotton fell 118 points at 83.65 cents. Prices closed nearer their session lows after hitting six-week highs early on today.
Fundamental analysis: The cotton futures markets today fell victim to bearish outside market forces that saw a higher U.S. dollar index and lower crude oil prices. Lower grain futures prices today also spilled over into selling pressure in cotton futures. Also, some hawkish rhetoric from Federal Reserve officials on Tuesday dampened general trader and investor spirits at mid-week, which cast a pall over the U.S. stock market.
World Weather Inc. today reported West Texas cotton areas may have a better opportunity for rain in about a week to ten days, after the weekend and early week next week cold weather abates. Until then, net drying is expected. U.S. Delta weather will remain wetter-biased with new rain coming soon. The U.S. southeastern states will turn wetter late this week and into the weekend, but net drying is likely until then. California and the southwestern desert areas will be dry over the next ten days.
Traders are awaiting Thursday morning’s weekly USDA export sales report. Bulls are hoping to see the recent better cotton sales and shipments numbers continuing to improve.
Technical analysis: Cotton futures prices this week have seen a bullish upside “breakout” from a bullish ascending triangle pattern. Cotton bulls have the overall near-term technical advantage. The next upside price objective for the cotton bulls is to produce a close in July futures above technical resistance at the March high of 86.67 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at the April low of 80.55 cents. First resistance is seen at today’s high of 85.23 cents and then at 86.00 cents. First support is seen at this week’s low of 82.71 cents and then at 82.00 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.
