Crops Analysis | March 11, 2024
Price action: May corn rose 2 cents to $4.41 3/4, notching the highest close in nearly a month.
Fundamental analysis: Corn futures shook off overnight and early session weakness in step with SRW wheat futures, which signaled buyers in the wake of carving a fresh contract low. Meanwhile, outside market pressure limited a more prolific move in corn, as did persisting pressure across the soy complex, with soymeal casting a shadow throughout the session. However, USDA’s weekly export inspection data continued to prove steady for corn, with inspections totaling 1.122 MMT (44.2 million bu.) during the week ended March 7, which were down 24,170 MT from the previous week but near the top end of the pre-report range of 685,000 MT to 1.25 MMT.
While planting efforts across the U.S. will soon develop, traders will continue to monitor weather in South America amid an expanding drier bias. World Weather Inc. reports the drier weather outlook for areas from Mato Grosso do Sul to Sao Paulo and northwestern Parana during the next ten days will reign some market worry about safrinha corn production potential as crop moisture stress will be on the rise into late month. The forecaster also indicated temps in southern Brazil, Paraguay and northern Argentina will be above to well above normal over the next ten days, keeping evaporation rates strong between rain events.
Technical analysis: May corn notched a close higher for the fourth straight session, which included a test of the 40-day moving average, currently at $4.42 1/4, for the first time in nearly three months, while notable support served at the 10- and 20-day moving averages of $4.31 and $4.30 1/4, respectively. An extension above the 40-day will find additional resistance at $4.45 1/2, then at $4.51 1/4 and the 100- and 200-day moving averages of $4.73 1/4 and $5.01 1/4. Conversely, near-term overbought conditions could lure corrective selling efforts, which would face additional support at $4.25 1/2 and the Feb. 26 low of $4.08 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: May soybean futures fell 4 3/4 cents to $11.79 1/4, settling nearer session lows. May meal futures dropped $4.20 to $337.20, near session lows. May bean oil futures rose 47 points to 46.64 cents.
Fundamental analysis: Soybeans quickly reversed overnight losses mid-morning but struggled to maintain gains, chopping near unchanged for the latter portion of today’s session. Inspections this morning showed a dramatic drop from a week ago, as USDA reported export inspections of 706,334 MT (26.0 million bu.) during the week ended Mar. 7. Still, inspections for week-ago were revised significantly higher at 1.16 MMT (42.6 million bu.). The recent dip in inspections is more in line with historical averages. Inspections are pacing ahead of the seasonal paced needed to hit USDA’s export estimate of 1.72 billion bu., though sales leave more to be desired and Brazil has already begun exporting this year’s crop. Brazil’s soybean harvest reached 55% completed as of last Thursday, according to AgRural. That remains ahead of last year’s 53% on this date, though the pace has slowed due to rainy weather in areas with mature soybeans left to harvest.
This weekend saw rainfall across much of southern Argentina, though amounts were frequently light, World Weather Inc reports. East-central Argentina is expected to experience waves of moderate to heavy rain in the next ten days, which could lead to eventual flooding. The impact to soybeans is expected to be light, but some crop damage is possible. Aside from some dry pockets in southwestern Argentina, most of the nation is expected to receive rainfall over the next couple of weeks, minimizing crop stress.
Technical analysis: May soybean futures saw action on both sides of unchanged before closing lower on the day. Still, bulls are challenging bear’s control of the technical advantage. Additional resistance stands at $11.95 1/4, the 40-day moving average, with further buying targeting the psychological $12.00 mark, then $12.08 1/4. Meanwhile, support comes in at $11.69 1/2, the 20-day moving average, which is backed by $11.55.
May meal futures drug the soy complex lower today. Bulls are challenging bear’s hold on the technical advantage. Resistance stands at $$341.40, backed by the 40-day moving average at $345.90, then the psychological $350.00 mark. Meanwhile, further selling sees support at $336.80, $333.50, then $329.90.
May bean oil futures showed relative strength today, as bulls continue to attempt to carve out a low on the daily chart. Resistance stands at the 40-day moving average at 46.65 cents, which capped gains the last two sessions. Further resistance stands at 47.40 cents. Meanwhile, bulls are seeking to hold support at 45.94 cents, 45.69 cents, then 45.00 cents, which has acted as stiff support for the last two weeks.
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 wheat closed up 9 1/2 cents at $5.47 1/4 and nearer the session high. Prices hit another contract low early on. May HRW wheat closed up 10 cents at $5.98 3/4, nearer the session high and hit a three-week high. May spring wheat futures rallied 7 1/4 cents to $6.70.
Fundamental analysis: The wheat futures markets today saw some more short covering and perceived bargain hunting. The wheat markets were also supported by more gains in the corn futures market today. There are now solid, early technical clues the corn market has put in at least a near-term price bottom. That’s also good news for the wheat market bulls. HRW futures are also showing early signs of a near-term market low being in place.
Impressive for SRW bulls is that prices rallied by the close following a third straight day of U.S. sales cancellations from China. Private exporters reported cancellations of 264,000 MT of SRW wheat for delivery to China during 2023-24, bringing total cancellations to 504,000 MT. USDA also today reported weekly U.S. wheat export inspections of 402,874 MMT, which were down 44,576 MT from the previous week but within the pre-report range of expectations.
Statistics Canada reported total wheat seeding intentions of 27.0 million acres, above expectations of 26.7 million acres and in-line with last year’s plantings.
World Weather Inc. today said that in U.S. HRW country a storm system will impact the region Wednesday into Friday. This has potential to promote some meaningful moisture in western production areas that greatly need more for spring in order to support crops. Both rain and snow will be involved. Meantime, in the northern Plains, a lack precipitation will continue in the first week of the outlook. However, completely dry conditions are not expected. Waves of colder air are expected during the second week of the outlook which could help lead to some increase in snow.
Technical analysis: SRW wheat bears still have the solid overall near-term technical advantage. Prices are in a three-month-old downtrend on the daily bar chart. SRW bulls' next upside price objective is closing May prices above solid chart resistance at $5.80. The bears' next downside objective is closing prices below solid technical support at $5.00. First resistance is seen at $5.51 1/2 and then at last week’s high of $5.68. First support is seen at today’s contract low of $5.23 1/2 and then at $5.15.
While HRW bears also have the overall near-term technical advantage, recent price gains suggest a near-term market bottom is in place. The HRW bulls' next upside price objective is closing May prices above solid technical resistance at $6.38 1/2. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.51 1/2. First resistance is seen at $6.15 and then at $6.25. First support is seen at $5.85 and then at today’s low of $5.73 1/4.
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 fell 22 points to 95.06 cents, with a close below the 20-day moving average for the first time since Jan. 2.
Fundamental analysis: Cotton futures attempted to regain a portion of last week’s losses, but remained limited by technical resistance, while outside markets lent little support. Equities faced mild pressure as the marketplace prepares for tomorrow’s Consumer Price Index (CPI) reading for February, which will provide a bit more insight into U.S. inflation and ultimately when the Fed will begin to cut rates. Traders are expecting the CPI will rise 3.7% year-over-year, versus a rise of 3.9% in the January report.
Meanwhile, traders are likely still processing Friday’s supply and demand data, which showed a lower production and ending stocks from last month as well as bigger global consumption, with increases mainly for China and India.
World Weather Inc. reports there is not much change in U.S. weather, although wet weather in the U.S. Delta and southeastern states may lead to some concern about delayed planting later this month. South Texas and Mexico planting is advancing although rain is needed. West Texas will eventually need a little moisture, too, along with the southwestern states. Meanwhile, crops in Brazil and Argentina are mostly doing well with little change likely, according to the forecaster.
Technical analysis: May cotton slipped below the 20-day moving average of 95.19 cents, giving bears a bit more technical traction towards a move towards the 40-day moving average of 90.79 cents, with interim support serving at 93.21 and 91.13 cents. From there, support lies at 86.99 cents, which is backed by the 100-day moving average of 85.62 cents. Conversely, initial resistance will now serve at the 20-day moving average, then at the 10-day moving average of 96.86 cents, and again at 99.43 cents, then at the Feb. 28 high of 103.80 cents.
What to do: Get current with advised sales.
Hedgers: You should be 90% sold in the cash market on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.
Cash-only marketers: You should be 90% sold on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.
