Crops Analysis | February 15, 2024
Price action: March corn fell 6 1/2 cents to $4.17 3/4, a fresh contract low close.
Fundamental analysis: Corn futures continued to slide lower amid broad selling across the grain and soy complex despite support from a weaker U.S. dollar and returned rally in crude oil futures. Casting a deeper shadow over corn was USDA’s initial 2024-25 crop projections early this morning ahead of its annual Outlook Forum. Based on January WASDE data, USDA projects 91.0 million corn acres and harvested acres of 83.1 million, combined with a national average yield of 181.0 bu. per acre for total production of 15.040 billion bu. Meanwhile, USDA released its weekly export sales data, which showed net sales of 1.31 MMT during the week ended Feb. 8, which were up 7% from the previous week and 13% from the four-week average. Net sales were near the top end of the pre-report range from 800,000 MT to 1.5 MMT.
World Weather Inc. reports Argentina will see drier weather over the next week as will Uruguay and the southern portions of Rio Grande do Sul, Brazil. A good mix of precip and sunshine is likely thereafter in each of these areas except in northern and east-central Argentina where there may be some additional dry weather for up to ten days.
Technical analysis: March corn futures featured heavier selling into the close, forging a new contract low close below former support at $4.20 1/2. Initial support will now serve at $4.17, then $4.11 3/4 and $4.00. Conversely, initial resistance will serve at $4.20 1/2, then at $4.25 3/4, then at the 10-, 20- and 40-day moving averages of $4.32 1/4, $4.39 3/4 and $4.51 1/4.
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 soybean futures dropped 8 1/4 cents to $11.62 1/4 after marking a fresh for-the-move low. March soymeal settled $3.80 lower to $339.50, nearer session low. March soyoil slipped 35 points to 46.00 cents.
Fundamental analysis: Soybean futures continue to face steady selling pressure, hitting a three-year low on the continuation chart. USDA released its most recent projections for the 2024-25 marketing year this morning. USDA projects planted acres of 87.5 million, harvested acres at 86.6 million and a national yield of 52.0 bu. per acre, resulting in a crop of 4.505 billion bu. Total use is projected to rise as well, led by crush at 2.4 billion bu. and exports to 1.875 billion bu. leading total use to 4.4 billion bu. That pegs ending stocks at 435 million bushels (9.9% stocks:use) and a projected price at $11.20. Soybean yields have proved robust in the last several years, leading yield above trend in three of the last six years, while corn has only accomplished that feat once over the same period.
Weather is expected to remain favorable in southern Brazil with a healthy mix of rain and sunshine, aside from western and far southern Rio Grande do Sul where net drying is expected, says World Weather Inc. Fieldwork is expected to advance around the rain. Northern Brazil has bene benefiting from drier weather the last few days and rain is expected in the coming ten days, bringing welcome rain in northeast Brazil, the forecaster says.
NOPA processed 185.78 million bu. of soybeans in January, down 4.9% from December’s record of 195.328 million bu., though still a record for the month. That was below expectations of 189.928 million bu., though was just above our estimate of 184.5 million bu. Soyoil stocks surged above expectations of 1.409 billion lbs. to 1.507 billion lbs., though were in-line with our estimate at 1.5 billion lbs.
Technical analysis: March soybean futures scored a fresh for-the-move low though settled near mid-range as dip buyers entered the market. Bears continue to hold full control of the technical advantage. Bulls are ultimately seeking to close prices above the 10-day moving average, currently at $11.86 3/4, to signal a potential low could be in place. Additional resistance lies on the way at $11.83 1/2, $11.79 1/2 and $11.70 1/2. Meanwhile, support stands at $11.60 1/4, then the psychological $11.50 mark. Soybean futures generally spend very little time in the $11.00 handle, which likely leads to excessive volatility while prices are there.
March soybean meal fell for the third consecutive session as bears continue to have full control of the technical advantage. Bulls are seeking to overcome resistance at $341.0, backed by $343.3 then the 10-day moving average at $348.5. Trendline support, currently at $338.0, capped most losses today and remains initial support. Further support stands at $335.0, then $330.0.
March soybean oil saw selling pressure despite impressive strength in crude oil today. Bears continue to hold full control of the technical advantage. Resistance stands at 46.59 cents, the 10-day moving average, with backing from 46.90 cents, then the 40-day moving average at 47.62 cents. Support stands at 46.02 cents, 45.56 cents, then the psychological 45.00 cent mark.
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 fell 18 1/2 cents to $5.67, near the session low and hit a 2.5-month low. March HRW wheat dropped 12 cents to $5.75 3/4, nearer the session low and hit a contract low. March spring wheat futures slipped 4 1/2 cents to $6.58.
Fundamental analysis: The winter wheat futures markets were hit again today by technical speculator selling pressure amid fully bearish near-term charts. Corn futures hit another contract low and soybean futures an eight-month low today, which added to selling interest in wheat.
USDA this morning at its annual Ag Outlook Forum projected 2024-25 U.S. wheat planted acreage of 47.0 million, with harvested acres at 38.4 million. A national average yield of 49.5 bushels per acre would produce a 1.900 billion bu. crop. Carryover is projected at 769 million bushels. USDA also this morning reported U.S. wheat export sales of 349,300 MT for the week ended Feb. 8, down 8% from the previous week and 25% from the four-week average.
World Weather Inc. today said not much has changed recently in major global wheat-growing regions. “Wheat in China is still rated in good shape as is much of the crop in Europe and many areas across the United States, except possibly the northwestern Plains where winterkill may have occurred in January.” Wheat conditions in North Africa and southern Spain improved temporarily and some additional showers are expected in the next week to ten days that will add a little moisture to the region, but much more rain will still be needed. Minor northern CIS wheat areas are still vulnerable to spring flooding. None of the recent bitter cold in Russia threatened dormant winter crops because of deep snow cover in the coldest areas. Europe soil moisture is improving for spring crop development and planting, said the forecaster.
Technical analysis: Winter wheat futures bears have the solid overall near-term technical advantage. SRW and HRW prices are in nine-week-old downtrends on the daily bar charts. SRW bulls' next upside price objective is closing March prices above solid chart resistance at $6.10. 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 today’s high of $5.85 3/4 and then at $6.00. First support is seen at today’s low of $5.66 1/4 and then at $5.56 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 $5.50. First resistance is seen at $6.00 and then at $6.19. First support is seen at today’s contract low of $5.74 and then at $5.60.
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.
Price action: March cotton futures surged 115 points to 94.63 cents, the highest close in 16 months on the continuation chart.
Fundamental analysis: Cotton futures continue to show impressive strength despite floundering outside markets. USDA updated their projections for the 2024-25 marketing year this morning, pegging acres at 11.0 million, up from the average estimate of 10.7 million acres according to a Bloomberg poll. Harvested acres of 9.29 million acres and a national average yield of 827 lbs. per acre projects 2024-25 production at 16.0 million bales. Exports are expected to increase to 13.8 million bales, leading use to 15.5 million bales and carryover of 3.5 million bales (22.6% stocks: use), driving price to 80.0 cents.
Cotton prices continue to be supported by a strong equity market and softs, particularly cocoa, maintaining near recent highs. Weak export sales this morning did little to deter cotton bulls, as net sales of 165,800 bales were the lowest since the holiday weakened sales of the week ended Dec. 28. Weekly export shipments remain firm, which is price supportive as physical cotton is moved.
Technical analysis: March cotton futures surged to a fresh for-the-move high. The technical advantage continues to be owned by the bulls, whose next objective is closing prices above 95.00 cents. Further resistance stands at today’s high of 95.20 cents, then 95.50 cents. Meanwhile, bulls are seeking to hold support at 94.49 cents, 93.10 cents then 92.00 cents on corrective selling. The 10-day moving average stands at 90.58 cents, prices currently trading over 4.00 cents above that mark, point to how overbought the market currently is, which could lead to profit-taking.
What to do: Get current with advised sales.
Hedgers: You should be 80% priced in the cash market for 2023-crop production. You should have 10% of expected 2024-crop production sold for harvest delivery.
Cash-only marketers: You should be 80% priced on 2023-crop production. You should have 10% of expected 2024-crop production sold for harvest delivery.
