Crops Analysis | February 27, 2024
Price action: May corn futures closed up 2 cents at $4.23 1/2 today and near mid-range.
Fundamental analysis: The corn futures market today saw tepid short covering in a bear market. Good gains in winter wheat futures prices also supported light buying interest in corn. A weaker U.S. dollar index and higher crude oil prices also lent support to corn. April crude oil futures today closed at the highest level since early November.
Pro Farmer South American crop consultant Michael Cordonnier kept his Brazilian and Argentine corn estimates unchanged at 112 MMT and 54 MMT, respectively. He has a neutral-to-lower bias going forward. World Weather Inc. today said “there is still not much reason for market concern about Brazil or Argentina weather. There is still some limited moisture in parts of Mato Grosso do Sul, western Parana and western Sao Paulo locations and that could lead to some moisture stress later in March, but for now the situation is great for…first season corn maturation and harvesting as well as safrinha corn planting. Greater rain will be needed in these areas later in March and April to protect production. Rain is advertised to increase in the second week of the outlook in the drier areas,” said the forecaster.
Technical analysis: The corn futures bears still have the solid overall near-term technical advantage. There are still no strong, early clues to suggest a market bottom is close at hand. Prices are in a four-month-old downtrend on the daily bar chart. The next upside price objective for the bulls is to close May prices above solid chart resistance at $4.40. The next downside target for the bears is closing prices below chart support at $4.00. First resistance is seen at today’s high of $4.26 1/2 and then at $4.30. First support is at $4.20 and then at $4.15.
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: May soybeans fell 4 3/4 cents to $11.40 and closed at a contract low close. May soymeal hit a new contract low and fell $3.70 to $324.90. Both markets ended near session lows. May soyoil rose 51 points to 45.53 cents, a near mid-range close.
Fundamental analysis: Soybeans gave up overnight gains amid a meal led sell off. The first daily sale since Feb. 1, totaling 123,000 MT to unknown destinations for 2023-24 did little to excite the market as reports of favorable late-season weather in Argentina largely hovered over the market. Meanwhile, Brazil and Paraguay will see a good mix of rain and sunshine during the next two weeks with breaks between rounds of rain likely adequate to allow for fieldwork to advance while the rain maintains favorable conditions for summer crops.
South American crop consultant Dr. Michael Cordonnier left his Brazil and Argentine soybean production estimates unchanged at 145 MMT and 50 MMT, respectively. Cordonnier noted rainfall in Brazil last week favored the northern part of the country with less rain in far southern Brazil. In Argentina, he indicated one third of the early planted soybeans are filling pods and 20% of the late planted soybeans are setting pods, with no reports of harvest action, though yields of the early planted soybeans are expected to be negatively impacted by previous hot, dry conditions. He maintains a neutral to lower bias toward both crops.
Technical analysis: March soybeans ended the session near the session low after facing resistance at the 10-day moving average of $11.63 3/4. An extension lower will continue to face initial support at $11.35 1/2, then at $11.25 3/4 and again at $11.18 and $11.00. The 10-day moving average will continue to serve up resistance, as it has since mid-December, and is backed by resistance at the 20- and 40-day moving averages of $11.85 1/4 and $12.16 1/4.
May meal ended the session below support at $325.70 as bears continue to firmly grasp the near-term technical advantage. Initial support will now serve at $322.90, then at $320.20. Conversely, initial resistance will stand at today’s failed support area, then at $328.40, $331.20 and the 10-day moving average of $333.90.
May soyoil notched gains for the second straight session, though technical pressure at the 10- and 20-day moving averages of 45.86 and 46.29 cents continues to limit dampen upward momentum. Additional resistance stands at the 40-day moving average of 47.23 cents, then at the 100-day moving average of 49.53 cents. Initial support lies at Monday’s close of 45.02 cents, then at 44.44 cents, 43.86 cents and 43.46 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: May SRW futures rallied 9 1/2 cents to $5.84 1/4 but closed over a nickel off session highs. May HRW futures rose 9 1/4 cents to $5.85 3/4, settling nearer session highs. May spring wheat rose 9 1/2 cents to $6.62 1/4.
Fundamental analysis: Wheat futures posted gains for the second consecutive session though sellers actively took advantage of the bounce. Corrective buying was seen across the grain and soy markets today, though each finished the day well off session highs. Followthrough selling Wednesday would confirm the short-term nature of the recent bounce, but prices closing above the 10-day moving average indicates some resilience. News this morning of estimated record shipments of wheat out of Russia continues to prove the challenge for U.S. origin wheat in the world market. SovEcon estimates February exports at 3.8 MMT, well up from the average at 3.0 MMT and above the previously monthly record set in February 2021 at 3.6 MMT. Russian and French wheat are now prices roughly on par, both cheaper than U.S. origin grain, though the U.S. grain is higher quality.
State-level winter wheat crop conditions ratings released on Monday signaled more general improvement in the HRW crop over the past month. When the state crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the crop improved 4.9 points from the end of January to 350.2 and was 26.9 points above USDA’s final national rating at the end of November. Warm temperatures continue to bring the winter wheat crop out of dormancy across the Plains. The next ten days trend fairly dry, with a storm system that could produce some shower activity next Sunday through Monday, though most of the moisture will miss the high Plains where moisture is needed most, World Weather Inc says. Drastically swinging temperatures could induce some crop stress this week, though where temperatures turn the coldest, snow cover continues to protect the crop, which should minimize winterkill.
Technical analysis: May SRW futures showed impressive relative strength as corn and soybeans fell under selling pressure. While bears continue to hold the technical advantage, bulls have challenged the downtrend line stemming from the late December highs, the first step in overcoming the overarching bearish trend. Resistance stems from said trendline at $5.90, which coincides with today’s high. That is reinforced by the 20-day moving average at $5.87 3/4. Bulls are ultimately targeting a close above the 40-day moving average at $5.97 3/4. Support stands at the 10-day moving average at $5.80 1/4, backed by $5.71 then $5.65 1/2.
May HRW futures saw impressive strength today as well. Bears continue to hold the technical advantage. Resistance stands at the 20-day moving average at $5.90 1/2 with backing from the psychological $6.00 mark, then the 40-day moving average at $6.05 1/4. Support comes in at $5.80 1/2, $5.65 1/2, then $5.61 1/2.
What to do: Get current with advised sales.
Hedgers: You should be 70% priced in the cash market on 2023-crop. You should be 20% forward priced for harvest delivery on expected 2024-crop production.
Cash-only marketers: You should be 70% priced on 2023-crop. You should be 20% forward priced for harvest delivery on expected 2024-crop production.
Price action: May cotton rose the daily limit of 400 points to 98.80 cents, a contract high close.
Fundamental analysis: Cotton futures surged the limit to the highest level in more than year amid technical buying and snug supplies. The natural fiber largely ignored weakness in equities, while a rally in crude oil futures to a near four-month high bolstered gains.
World Weather Inc. reports weather is expected to improve in northern Argentina later this week as significant rain evolves, while cotton in Brazil will remain favorably rated with the best crop conditions in Mato Grosso. The forester notes some areas in Bahia, Brazil are a little wet, but crop improvement will occur when drier weather evolves. Meanwhile cotton prospects in the U.S. are still good.
Technical analysis: May soybeans settled up the limit, edging above resistance at 95.63 cents, 96.45 cents and 98.02 cents, with little resistance serving until 100.00 cents. Meanwhile, solid technical support continues to prop up the natural fiber, with the 10-day moving average of 94.26 cents providing notable support since late December.
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.
