Crops Analysis | March 18, 2024
Price action: May corn fell 3/4 cents to $4.36, notching a near mid-range close.
Fundamental analysis: Corn futures began the week rather undecidedly, despite solid gains in SRW wheat and crude oil futures, as technical resistance continues to limit buying efforts. Extended U.S. dollar gains also pressured commodities, though USDA’s weekly export inspection data continued to prove supportive. During the week ended March 14, weekly corn inspections totaled 1.239 MMT (48.8 million bu.), which were up 72,668 MT from the previous week and near the upper end of the pre-report range of 900,000 MT to 1.25 MMT. At this point in the marketing year, weekly corn inspections exceed the seasonal pace needed to USDA’s target by 34 million bu., up from 28 million the previous week. Moreover, the four-week rolling average for corn export inspections in 45.8 million bu.
World Weather Inc. notes safrinha corn areas in central and southern Mato Grosso do Sul and central and northern Paraguay will see little rain into Wednesday and stress to the crop should rise as temps will often be hot and soil moisture is already short. However, important rain will fall Thursday into Friday and much of the region will receive enough rain to temporarily improve conditions for crops. A drier pattern will resume Saturday through April 1, drying out the soil while stress to safrinha corn increases. Meanwhile, safrinha corn areas in western and central Mato Grosso and northern Mato Grosso do Sul have short soil moisture and need soaking rains during the next few weeks.
Technical analysis: Corn futures continued to face resistance at the 40-day moving average of $4.40, though support remained at the 10-day moving average of $4.36 1/4. A move above the 40-day, however, will face additional resistance at $4.44 1/2, then at $4.50 and the 100-day moving average of $4.69 1/4. Below the 10-day, additional support lies at the 20-day moving average of $4.30 1/2, then at $4.25 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 10 1/2 cents to $11.87 3/4, settling near session lows. May meal futures dropped $2.80 to $331.90. May bean oil futures plunged 72 points to 48.70 cents, settling nearer session lows.
Fundamental analysis: Soybeans continue to trade largely sideways, consolidating for an upcoming move. May futures held above Friday’s low and below Thursday’s high, continuing to pivot around the 40-day moving average. Soybeans favored the downside despite an overall “risk on” attitude in the general marketplace, as U.S. equites continue to trade near record highs and front-month crude oil futures are trading at the highest level since early November 2023.
USDA reported soybean export inspections of 686,181 MT (25.2 million bu.) this morning, which continue to pace above the necessary pace to hit the current USDA export estimate. Still, outstanding sales for soybeans continue to limit optimism on the export front, as demand for shipments continues to be robust. AgRural noted that Brazil’s soybean harvest has reached 63% completed as of last Thursday, up 8% over the previous week and above 62% on the same day last year.
Heavy rain fell on parts of Entre Rios and Corrientes during the weekend causing potential flooding, while beneficial rain fell on some of the drier areas in northwestern Argentina as well, World Weather Inc notes. Additional precip is expected to fall this week from central and norther Santa Fe into Entre Rios, Corrientes and central and eastern Chaco, the forecaster notes. Overall, Argentina is expected to see largely favorable conditions over the coming weeks, with dry conditions maintaining enough soil moisture to continue to support the crop.
Technical analysis: May soybean futures struggled to show strength to start the week despite strong corrective gains seen in the wheat complex. A downtrend persists on the daily bar chart, though bulls have recently challenged the bears’ hold on the technical advantage. Bulls are seeking to reclaim resistance at the 40-day moving average, currently at $11.95 1/4. That is quickly backed by psychological $12.00 resistance, then last week’s high of $12.17 1/2. Further selling encounters support at $11.83, the 10-day moving average, then $11.75.
May meal futures favored the downside today as well, resuming the recent downtrend. Bulls are seeking to overcome resistance at the 10-day moving average, currently at $335.00. Further resistance stands at $337.50, which capped gains today, then $343.60. Support stands at $329.90 then $325.50, with bears ultimately targeting support at $323.20.
May bean oil futures led the soy complex lower today, though continue to show relative strength on the longer-term charts. Prices fell below the 100-day moving average at 48.92 cents, marking that as initial resistance. Further resistance stands at the psychological 50.00 cent mark. Meanwhile, support comes in at 48.39 cents, then the 10-day moving average at 47.63 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 rose 14 cents 1/4 to $5.42 3/4 and near the session high. May HRW wheat closed up 7 1/2 cents at $5.73 3/4 and nearer the session high. May spring wheat futures rallied 4 1/4 cents to $6.50 3/4.
Fundamental analysis: Short covering and perceived bargain hunting were featured in the winter wheat futures markets today, following recent selling pressure. Buying interest was also spurred by weekend Russia attacks on Ukrainian Black Sea ports. Reports said Russian air attacks damaged agricultural operations and destroyed several industrial buildings in the Black Sea port of Odesa and the port city of Mykolaiv.
Weather also leans a bit bullish for wheat futures. World Weather Inc. today said that in HRW country, shower activity in the first week of the outlook “will provide some beneficial, needed moisture to the region, though much more will be needed, especially in western production areas.” A big surge of unusually cold air is expected next week, and this will likely burn back some early winter wheat growth and temporarily cool soil temperatures, said the forecaster. In the northern Plains, significant snow is expected in parts of the region the first week of the outlook. The greatest snow is likely to occur from Montana through South Dakota and southern North Dakota and into central and southern Minnesota. This will provide much-needed moisture when it melts, said World Weather.
USDA this morning reported somewhat disappointing U.S. wheat export inspections of 302,302 MT, which fell 164,665 MT from the previous week and were at the low end of market expectations.
Technical analysis: Winter wheat futures bears still have the overall near-term technical advantage. SRW 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 last week’s high of $5.56 and then at $5.70. First support is seen at today’s low of $5.27 and then at the contract low of $5.23 1/2.
HRW bears also have the overall near-term technical advantage. However, recent sideways price action begins to 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 $6.20. 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 $5.86 3/4 and then at $6.00. First support is seen at today’s low of $5.63 1/2 and then at $5.51 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 63 points to 94.57 cents, marking a low-range close.
Fundamental analysis: Cotton futures notched mild gains to begin the week as some upbeat economic data from China lent support, while U.S. dollar gains crimped buying. Better-than-expected factory output and retail sales data from China during the January-February period inspired some cotton buying. Meanwhile, news that Iraq will reduce its crude exports in the coming months to compensate for exceeding its OPEC+ quota since January pushed front month crude oil to a five-month high, lending additional support to the natural fiber.
World Weather Inc. notes West Texas rainfall during the weekend was welcome and, although too light in the west, will help improve the Low Plains and Rolling Plains with planting moisture later this spring. The remainder of Texas will get some moisture in the coming week along with the Delta and southeastern states to maintain moist field conditions and continue some concern over slow planting this spring. The forecaster indicates cotton in South America is developing relatively well and rain coming to Mato Grosso and immediate neighboring areas this week should translate into better plant development conditions.
Technical analysis: Gains in May cotton continue to be limited by the 20- and 10-day moving averages of 95.53 and 95.90 cents, while initial support remains at 93.28 cents. Little resistance serves above the 20- and 10-day moving averages until the Feb. 28 high of 103.80 cents. Conversely, initial support is backed by the 40-day moving average of 92.21 cents, with further support at the 100-day moving average of 86.01 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.
