Crops Analysis | April 26, 2023
Corn
Price action: July corn fell 6 3/4 cents to $6.01, near the session low and is the lowest close since July 25.
Fundamental analysis: Followthrough selling persisted in the corn market for the sixth straight session, as crude oil edged lower. Midwest weather is proving mostly favorable for planting to continue to progress, with risk-off market sentiments lingering amid growing recession fears and looming uncertainty around the Black Sea grain deal.
World Weather Inc. notes the Midwest, Plains and Delta will be quite cool over the coming week, keeping soil temperatures low, though warming is expected in the Plains next week and in the Midwest and Delta late next week and into the following weekend. The forecaster indicates the second week of May is expected to be seasonably warm through much of the aforementioned areas. As a result, aggressive planting is expected throughout the Midwest during the first ten days of May, with expectations of only light moisture through the time period.
Ethanol production in week ended April 12 averaged 967,000 barrels per day (bpd), a 57,000-bpd decrease from the previous week, but was up 0.4% from the same week last year. Stocks dropped 987,000 barrels to 24.306 million barrels—the lowest level since week ended Jan. 13
Traders will be tuned in for USDA’s Weekly Export Sales data for week ended April 20, due out early tomorrow morning. A pre-report range of 100,000 to 800,000 MT has been carved for old-crop, with expectations of 0 to 400,000 MT for 2023-24. Last week net sales were reported at 312,400 MT, which were down 41% from the previous week and 79% from the four-week average.
Technical analysis: July corn traded an 11 3/4-cent range and ended the session just below initial support of $6.02 1/4. Continued selling would face additional support at $5.96 3/4, which corresponds with the March 10 low, and then $5.92 3/4. If bears are able to successfully turn below these particular levels, momentum will likely increase toward the July 22 low of around $5.74. Conversely, corrective buying will continue to face resistance at $6.11 3/4, then at $6.15 3/4 and $6.21 1/4, with the 40-, 10- and 20-day moving averages of $6.21 3/4, $6.24 1/4 and $6.26 3/4 serving as notable resistance for bulls.
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: The soybean and meal futures markets today were pressured by a general “risk-off” trading day in the marketplace. Solid losses in corn and wheat futures also spilled over into selling in the soybean and meal markets. A lower U.S. dollar index today did somewhat mitigate selling interest in soybeans.
Bearish for the soy complex futures is a mostly open planting window the next couple weeks. World Weather Inc. today reported planting prospects across the U.S. Midwest “will improve greatly next week as producers recognize the warming trend expected during the first ten days of May and the light moisture in parts of the Midwest. Aggressive planting is expected.”
Meantime, USDA’s Brazil ag attaché anticipates 2023-24 soybean production at 159 MMT, topping this year’s record crop.
Traders are awaiting Thursday morning’s weekly USDA export sales report, which is expected to show U.S. soybean sales of 75,000 to 500,000 MT in the 2022-23 marketing year and sales of zero to 150,000 MT in the 2023-24 marketing year.
Technical analysis: The soybean futures bears have the overall near-term technical advantage. The next near-term upside technical objective for the soybean bulls is closing July prices above solid resistance at $14.70. The next downside price objective for the bears is closing prices below solid technical support at the March low of $13.83 3/4. First resistance is seen at today’s high of $14.28 1/4 and then at Tuesday’s high of $14.39 3/4. First support is seen at this week’s low of $14.11 1/4 and then at $14.00.
The soybean meal bears have the firm overall near-term technical advantage. The next upside price objective for the meal bulls is to produce a close in July futures above solid technical resistance at $450.00. The next downside price objective for the bears is closing prices below solid technical support at $415.00. First resistance comes in at today’s high of $437.80 and then at $440.00. First support is seen at $425.00 and then at $420.00.
The next upside price objective for the bean oil bulls is closing July prices above solid technical resistance at 56.21 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at the March low of 51.50 cents. First resistance is seen at this week’s high of 53.78 cents and then at 55.00 cents. First support is seen at 51.50 cents and then at 51.00 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: July SRW fell 11 cents before settling at $6.42, a penny off the intraday low. July HRW futures fell 19 3/4 cents and settled at $7.83 1/4. Spring wheat futures saw the most extensive selling of the wheat complex, falling 23 1/2 cents to $8.13.
Fundamental analysis: Wheat futures remain under pressure amid continuing worries of the overall health of financial markets as another U.S. bank is failing and the government is unwilling to intervene. Prices were also weighed down by rains over the region where drought is the worst in the western Plains. Rainfall is likely to improve winter wheat crop conditions which are currently at historic lows. Precip is forecast to continue over the next week, according to World Weather Inc.
Russian officials continue to insist that not enough is being done to remove restrictions on Russian grain and fertilizer. Russian Foreign Minister Sergei Lavrov stated Moscow has seen “practically no result” from a pact with the UN aimed to help their export of agricultural products. They warn that an extension of the Black Seas Grain Initiative is unlikely unless barriers are removed. The current deal is set to expire May 18. This could help bolster wheat prices over the next month, but this period is seasonally bearish and prices have resisted many bullish factors over the last several years and still sold off, including poor conditions and late planting.
The USDA announced export sales tomorrow. Analysts expect wheat sales from 75,000 MT to 400,000 MT for the 2022-23 marketing year and sales of zero to 225,000 MT for the 2023-24 marketing year.
Technical analysis: July SRW futures saw continued selling today to a new-move low. Price is now back to July 2021 prices and the corn-wheat spread continues to narrow, indicating wheat is too cheap or corn is too expensive. Bears continue to sit in the driver’s seat as a downtrend is in place on the daily bar chart, although some near-term strength can be expected as futures are quickly becoming oversold. Bulls ultimately want a close over solid $7.00 resistance indicating a potential bottom could be in place. Additional resistance will come in at $6.70 3/4, the April 14 low, with $6.65 on the way. Bears want to take out today’s low of $6.41 before targeting psychological support at $6.25 and supported May futures today.
July HRW futures closed lower for the seventh session in a row as price has retraced nearly all the gains made off the March low. Futures have quickly become oversold and a near-term bounce can be expected, but the advantage lies in the bear’s court. Bears are ultimately targeting the March 10 low at $7.63 3/4 with additional support just below today’s low at $7.80 3/4. Bulls want a retracement of today’s move targeting initial resistance at $8.00 followed by the 40-day moving average at $8.35.
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: July cotton fell 26 points to 78.36 cents, near the session low and at a four-week low close.
Fundamental analysis: It was another “risk-off” trading day in the general marketplace today, amid more U.S. banking worries and a wobbly U.S. stock market. There are growing concerns that a U.S. economic recession is on the horizon, and that has prompted worries about less consumer demand for apparel in the coming months.
There is also bearish talk in the marketplace that significant rainfall in the southwest Plains states and west Texas will prompt more cotton acres to be planted in that region.
Traders are awaiting Thursday morning’s weekly USDA export sales report, following last week’s disappointing U.S. sales numbers. Some are wondering if this week’s report could see a big cancellation by China, following China’s big cancellation of a previous U.S. corn purchase that was reported earlier this week.
Technical analysis: Cotton futures bears have the firm 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 82.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at the March low of 76.34 cents. First resistance is seen at 80.00 cents and then at Tuesday’s high of 81.16 cents. First support is seen at this week’s low of 77.68 cents and then at 76.34 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.
