Crops Analysis | February 12, 2024
Price action: March corn rose 1 1/2 cents to $4.30 1/2, a near mid-range close.
Fundamental analysis: Corn futures touched a fresh contract low following the open this morning, though short covering efforts lifted the grain and soy complexes throughout the session. An increase in Brazil’s safrinha corn production forecast also hovered over prices amid AgRural’s 5 MMT bump to 91.2 MMT. The consultancy cited evidence of farmers planting an area larger than initially estimated as the underlying factor for the increased production estimate. Meanwhile, recent hot, dry weather in Argentina has eased, as World Weather Inc. notes lacking heat along with favorable soil moisture and a few rounds of rain should allow crops to develop favorably in much of the country during the next two weeks, while breaks between rounds of rain allow fieldwork to advance. The forecaster notes west-central into southern, central and eastern Buenos Aires will be driest through the next ten days with soil moisture likely adequate in supporting crop development.
Earlier today, USDA released its weekly export inspection data, which showed inspections of 880,074 MT (34.6 million bu.) for the week ended Feb. 8. Inspections rose 234,580 MT from the previous week and were near the upper end of the pre-report range of 425,000 to 950,000 MT. Marketing year to date corn export inspections are exceeding the seasonal pace needed to hit USDA’s target by 13 million bu., up from 11 million bu. the previous week.
Technical analysis: March corn traded in a narrow 5-cent range but ended the session slightly higher for the first session in five. Initial support will serve at today’s low of $4.27 3/4, then at $4.25 3/4, $4.22 1/2 and $4.17. From there support will serve around $4.515 and $4.00. Conversely, initial resistance stands at $4.34 1/2, then at the 10- and 20-day moving averages of $4.39 1/4 and $4.42 1/2. From there resistance serves at the 40-, 100- and 200-day moving averages of $4.55 1/4, $4.78 ¼ and $5.02 3/4.
What to do: Get current with advised sales.
Hedgers: You should be 50% sold in the cash market on 2023-crop.
Cash-only marketers: You should be 35% sold on 2023-crop production.
Price action: March soybeans surged 9 1/2 cents to $11.93, closing nearer session highs. March soymeal closed $2.1 higher to $348.90, after trading as high as $355.9. March soyoil dropped 36 points to 46.90 cents.
Fundamental analysis: Soybeans made up all of Friday’s losses but continued to struggle against initial resistance. Exporters have seemingly focused on soybeans the last couple of weeks with inspections pacing far above the current pace needed to hit the USDA export estimate (which was revised lower last week). As some additional concerns have been raised in South America, it would not take much of a shift in demand to the U.S. for exports to exceed USDA’s expectations. USDA reported soybean export inspections of 1.33 MMT (48.7 million bu.), which were down 424,378 MT from last week’s figure, which was revised higher, but near the top-end of the pre-report range of 600,000 MT to 1.45 MMT.
Brazil continues to rapidly harvest soybeans, with harvest reaching 23% complete as of last Thursday, according to AgRural, the second fastest pace on record behind 26% in 2018-19. The agency noted with more than half of the crop harvested in Mato Grosso, the attention is now turning to conditions in southern Brazil. World Weather Inc. notes that southern Brazil dried out over the weekend, though rain today that continues through Thursday will give the crop a significant boost, as well as restore soil moisture. The coming week will bring a healthy mix of rain and sunshine, with another bout of drying in the middle to latter part of next week, says the forecaster. The northern portion of Brazil should see healthy growing conditions over then next week as well, with recent moisture carrying the crop through expected dryness this week.
Technical analysis: March soybeans saw corrective gains and continue to base largely sideways, but lack of followthrough to the upside continues to render the technical advantage to the bears. Bulls are seeking a daily close above the 10-day moving average at $11.97 3/4, which capped gains today, backed by the psychological $12.00 mark, then the 20-day moving average at $12.13 1/2. Meanwhile, support stands at $11.89, $11.83 1/2, though bears are looking for a break below last week’s for-the-move low at $11.79 1/4.
March soybean meal traded in a wide range, posting large midsession gains before eventually closing nearer session lows, but still higher on the day. Bulls are eyeing a close above the 10-day moving average, currently at $353.70, to signal a potential low could be in place, though resistance at that mark capped gains today. Further resistance stands at $358.80 then $361.00. Support stands at $346.80 then last week’s for-the-move low at $341.00.
March bean oil saw continued profit-taking from recent dip buyers, though losses were kept in line by moving average support. Bulls are eyeing resistance at 47.30 cents, with backing from the 40-day moving average at 47.80 cents. Support stands at 46.91, which prices closed on today, then the 10-day moving average at 46.68 cents. Further selling targets staunch support at 46.00 cents.
What to do: Get current with advised sales.
Hedgers: You should be 55% priced in the cash market on 2023-crop production. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Cash-only marketers: You should be 50% priced on 2023-crop production. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Price action: March SRW wheat closed up 3/4 cent at $5.97 1/2. March HRW wheat closed down 2 3/4 cents at $5.98 3/4. Prices closed nearer their mid-ranges. March spring wheat futures fell 1 3/4 cents to $6.82 1/2.
Fundamental analysis: The winter wheat futures market spent another session languishing in choppy and sideways trading at lower price levels. Corn futures hit another contract low today, which continues to keep the wheat market bulls very tentative. This year’s good gains in the U.S. dollar index are also a bearish “outside market” element for the wheat futures.
World Weather Inc. today said that in U.S. HRW country, little precipitation is expected in the next seven days. However, greater moisture is likely in the second week of the outlook. Some snow is expected Thursday into Friday, especially in the northern half of the region. Temperatures the next two weeks will be variable, with “enough cold air to put more of a limit on early season greening that has been occurring in southeastern production areas.” Meantime, in the northern Plains, recent snow has helped expand snow cover in the region some. However, greater snow cover is needed to fully protect crops from potential significant cold later this month. Temperatures are already expected to drop below zero in large portions of the region as soon as later this week, said the forecaster.
USDA this morning reported decent U.S. wheat export inspections of 407,476 MT, which were up 111,936 MT from the previous week and toward the upper end of market expectations. USDA’s annual Ag Outlook Conference on Thursday and Friday will provide new balance sheet numbers for the grains.
Technical analysis: Winter wheat futures bears have the overall near-term technical advantage. However, trading has been sideways and choppy for the past month, which may be “basing” action that puts in market bottoms soon. SRW bulls' next upside price objective is closing March prices above solid chart resistance at $6.25. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.56 1/4. First resistance is seen at $6.11 1/2 and then at $6.17 1/4. First support is seen at last week’s low of $5.83 3/4 and then at the January low of $5.73 1/4. The HRW bulls' next upside price objective is closing March prices above solid technical resistance at the January high of $6.41. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.86 3/4. First resistance is seen at $6.19 and then at $6.34 1/2. First support is seen at last week’s low of $5.94 3/4 and then at $5.86 3/4.
What to do: Get current with advised sales.
Hedgers: You should be 60% priced in the cash market for 2023-crop. You should also have 10% of expected 2024-crop production sold for harvest delivery next year.
Cash-only marketers: You should be 60% priced for 2023-crop. You should also have 10% of expected 2024-crop production sold for harvest delivery next year.
Advice: We advise cotton hedgers and cash-only marketers to sell another 10% of 2023-crop in the cash market to get to 80% priced.
Price action: March cotton fell 125 points to 90.53 cents, but still ended high-range. December cotton rose 8 points to 83.30 cents and closed higher for the eleventh straight session.
Fundamental analysis: March cotton futures edged lower for the first session in five amid mild profit-taking in the wake of last week’s strong gains. Meanwhile, a continued bull run in equities lent support to the natural fiber and limited selling, along with solid technical support. However, as the week progresses, near-term overbought conditions and China’s observance of its Lunar New Year holiday this week may see a continued pullback in lighter volume and extended profit-taking.
World Weather Inc. reports cotton in Brazil is rated well with little change likely over the next two weeks, while Argentine crops will improve with rain later this week and from that which has already occurred. In the U.S., West Texas received rain over the weekend, which was welcome and good for spring planting moisture, according to the forecaster. Precip expected in the Blacklands, Coastal Bend and South Texas periodically into the end of the month will also be good for spring planting. The Delta is still quite wet and expected to remain that way while the southeastern states and far west are getting timely precip to support planting in March and April.
Technical analysis: March cotton held an inside day as Friday’s high of 92.00 cents serves as initial resistance for bulls, while support at Friday’s close of 91.28 cents curbed selling efforts. However, a move higher will face additional resistance at 93.00 cents, then at 94.22 and 96.44 cents. Additional profit-taking efforts will find bears facing support at the 10-day moving average of 87.73 cents, then at the 20- 100- and 40-day moving averages of 85.80, 83.44 and 83.03 cents.
What to do: Get current with advised sales.
Hedgers: NEW ADVICE -- Sell another 10% of 2023-crop in the cash market to get to 80% priced. You should have 10% of expected 2024-crop production sold for harvest delivery.
Cash-only marketers: NEW ADVICE -- Sell another 10% of 2023-crop to get to 80% priced. You should have 10% of expected 2024-crop production sold for harvest delivery.
