Crops Analysis | March 13, 2024
Price action: May corn fell 1/2 cent to $4.41 1/4, a near mid-range close.
Fundamental analysis: Corn futures continued to edge sideways, limited by technical resistance at the 40-day moving average. Meanwhile, outside markets supported price action as nearby crude oil futures surged above $79 per barrel in the wake of a drop in U.S. crude inventories, combined with a potential supply disruption following Ukrainian attacks on Russian refineries and signs of strong demand. Lending additional support was a weaker U.S. dollar following two straight days of gains.
Earlier today, the Energy Information Administration reported ethanol production averaged 1.024 million barrels per day (bpd) during the week ended March 8, down 33,000 bpd (3.1%) from the previous week but 1.0% above year-ago. Ethanol stocks dropped 269,000 barrels to 25.782 million barrels, down 2.3% from last year at this time.
In Brazil, a poor distribution of rain from Mato Grosso do Sul and northwestern Parana into southern Minas Gerais during the coming ten days may stress some safrinha corn, according to World Weather Inc. The forecaster reports northern and eastern Mato Grosso and southwestern Mato Grosso do Sul along with southern Goias are most important for the nation’s production and their moisture profile I a little better than the areas noted above, though some moisture crop stress is expected to continue with some relief after March 21.
USDA will release its Weekly Export Sales report tomorrow prior to the open. Traders are expecting net U.S. corn sales to range from 800,000 MT to 1.4 MMT during the week ended March 7. Last week, net sales of 1.11 MMT were reported for the previous week.
Technical analysis: May corn made a run at the 40-day moving average for the third straight session, though bulls were unable to succeed in forging a close above the level and will continue to serve as initial resistance. Bulls’ next area of resistance stands at the 50-day moving average of $4.47 1/4, then at $4.52 1/4 and the 100-day moving average of $4.71 3/4. Conversely, initial support lies at $4.38 1/4, then at the 10- and 20-day moving averages of $4.33 3/4 and $4.29 3/4, then at 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 soybeans closed up 3/4 cent at $11.96 3/4, near the session high and hitting a four-week high. May soybean meal fell $2.80 at $336.40 and near mid-range. May bean oil closed up 75 points at 48.57 cents, nearer the session high and closed at a two-month-high close.
Fundamental analysis: Selling interest in the soy complex futures waned as the session progressed as the key outside markets were friendly today, including higher crude oil prices, a weaker U.S. dollar index and a “risk-on” day in the general marketplace. Spreaders were likely buying soybean oil and selling soybean meal futures today.
Focus is still on South American soybean production potential following Tuesday’s numbers from Brazil’s Conab. Brazilian grain exporters association Anec increased its forecasts for the country’s soybean and soymeal exports in March.
World Weather Inc. today said it sees “a poor distribution of rain from Mato Grosso do Sul and northwestern Parana into southern Minas Gerais, Brazil during the coming week to 10 days.” Northern and eastern Mato Grosso and southwestern Mato Grosso do Sul along with southern Goias “are most important for the nation’s production, and their moisture profile is a little better than the areas noted above.” Some crop moisture stress is expected to continue with some relief coming after March 21, said the forecaster. Meantime, Argentina rainfall should be abundant over the next 10 days and the moisture “should be good for late-season crops,” said World Weather.
Thursday morning’s weekly USDA export sales report is expected to show U.S. soybean sales of 250,000 to 800,000 MT in the 2023-24 marketing year, and sales of zero to 50,000 MT in the 2024-25 marketing year.
Technical analysis: The soybean bears have the overall near-term technical advantage. However, a 3.5-month-old downtrend on the daily bar chart has been at least temporarily negated. The next near-term upside technical objective for the soybean bulls is closing May prices above solid resistance at $12.50. The next downside price objective for the bears is closing prices below solid technical support at the contract low of $11.28 1/2. First resistance is seen at $12.00 and then at $12.20. First support is seen at this week’s low of $11.75 and then at $11.60.
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 May futures above solid technical resistance at $350.00. The next downside price objective for the bears is closing prices below solid technical support at the contract low of $323.20. First resistance comes in at today’s high of $339.40 and then at this week’s high of $343.00. First support is seen at $330.00 and then at $325.40.
Soybean oil bears still have the overall near-term technical advantage. However, bulls have momentum as a downtrend line on the daily bar chart has been negated to suggest a market bottom is in place. The next upside price objective for the bean oil bulls is closing May prices above solid technical resistance at 50.00 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at the contract low of 44.18 cents. First resistance is seen at 49.00 cents and then at 50.00 cents. First support is seen at today’s low of 47.57 cents and then at this week’s low of 46.12 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 wheat closed 3 1/4 cents lower to $5.44 1/4, a mid-range close. May HRW fell 9 3/4 cents to $5.87 1/, while May HRS ended 8 1/2 cents lower at $6.63 1/2, each closing low-range.
Fundamental analysis: SRW wheat rebounded from session lows amid corrective buying efforts, though technical resistance at the 10-day moving average continued to limit a move higher. Adequate global supplies combined with waning demand are pressuring the complex as French soft wheat stocks were seen rising to a 19-year high, according to FranceAgriMer, amid slowing demand from China and competition within the European Union from Ukrainian supplies. Large inventories in France are contributing to ample global supplies, led by Russia.
World Weather Inc. reports most U.S. Midwest winter wheat is rated favorably and crop development in the Delta and southeastern states has advanced well. However, there is potential for frost and a few freezes as far south as the Tennessee River Basin next week, but no permanent crop damage is expected.
USDA will release its Weekly Export Sales Report Thursday morning, with traders expecting net U.S. wheat sales to range from reductions of 200,000 to 550,000 MT during the week ended March 7. Last week, net sales of 271,130 MT were reported for the previous week.
Technical analysis: May SRW wheat bears continue to hold the technical advantage, as the 10-day moving average of $5.48 1/2 limits a move higher. Additional resistance stands at the 20-, 40- and 100-day moving average of $5.61 1/2, $5.83 1/4 and $6.04 1/2. Conversely, initial support lies at $5.40 1/2, backed by $5.33 1/2, $5.25 3/4 and Monday’s low of $5.23 1/2.
May spring wheat faced corrective selling in the wake of recent gains, though support at the 10- and 20-day moving averages of $5.80 1/4 and $5.77 3/4 limited efforts. Additional support lies at last week’s low of $5.51 1/2. Initial resistance will continue to serve at the 40-day moving average of $5.95 3/4, then at $6.05, $6.12 3/4, $6.20 1/4 and the 100-day moving average of $6.26 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 closed down 33 points at 94.90 cents and nearer the session low.
Fundamental analysis: The cotton futures market saw some chart-based selling pressure today, but losses were limited by bullish outside-market forces that included a lower U.S. dollar index, higher crude oil prices and the U.S. stock indexes that are in a bull market run and hovering just below their recent record highs.
Cotton traders are awaiting Thursday morning’s U.S. Producer Price Index (PPI) Report for February. Tuesday’s consumer price index report for February came in slightly warmer than expectations. A warmer PPI on Thursday could pressure the U.S. stock market and in turn prompt some selling interest in cotton futures. Cotton traders will also closely examine Thursday morning’s weekly USDA export sales report.
World Weather Inc. today said spring planting delays are anticipated for a part of the Delta and southeastern states this season, “although it is unclear how significant those delays are likely to become.” Excessive moisture will prevail from the lower Delta into parts of Alabama and in a few Georgia locations during the next couple weeks. The Carolinas may become wetter in the second week of the forecast as well. South Texas and the Texas Coastal Bend region may get rain next week that will improve topsoil moisture for future planting. The Texas Blacklands will also remain favorably moist, said the forecaster.
Technical analysis: The cotton futures bulls have the overall near-term advantage amid recent choppy trading. Prices are in a 2.5-month-old uptrend on the daily bar chart. However, the recent higher volatility at higher price levels is one clue of a topping process under way in the market. The next upside price objective for the cotton bulls is to produce a close in May futures above technical resistance at the contract high of 103.80 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at last week’s low of 92.89 cents. First resistance is seen at this week’s high of 97.53 cents and then at 99.00 cents. First support is seen at this week’s low of 94.05 cents and then at 93.00 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.
