Crops Analysis | April 1, 2024
Price action: May corn fell 6 1/2 cents to $4.35 1/2, closing nearer the session low.
Fundamental analysis: Corn futures gave up a portion of Friday’s gains though increasing crude oil strength eased selling a bit, while a surging U.S. dollar cast a shadow over commodities. Meanwhile, traders continued to mull over USDA’s stocks and prospective planting data, which showed March 1 stocks below trade expectations, but up 13% from March 2023 and U.S. producers intend to plant 4.61 million-less corn acres than last year.
Additional price pressure stemmed from weekend rains in areas of center-west and center-sough Brazil, which improved soil moisture from Mato Grosso to Goias, northern Sao Paulo and Minas Gerais. However, World Weather reports Parana and Paraguay still need rain, and some is expected this weekend into next week. Despite all the advertised rain, subsoil moisture is unlikely to be seriously improved in Mato Grosso do Sul, western or northern Parana or parts of Paraguay, leaving need for more moisture, according to the forecaster.
USDA’s weekly export inspections data showed solid corn inspections of 1.432 MMT (56.4 million bu.) during the week ended March 28, which rose 176,370 MT from the previous week and were above the expected pre-report range of 800,000 MT to 1.375 MMT. Marketing-year to date corn inspections exceed the seasonal pace required to USDA’s target by 45 million bu.
This afternoon, USDA will release its Grain Crushings Report, which is expected to show corn-for-ethanol use totaled 440.5 million bu. in February. If realized, it would be a 1.9 million bu. (1.0%) increase from January and 41.7 million bu. (10.5%) above last year. See report results in our Evening Report.
The government will publish its Crop Progress Report of the season this afternoon, with traders expecting the government to report 2% of the U.S. corn crop was planted as of Sunday, according to a
Reuters poll.
Technical analysis: May corn held an inside day but ended the session below the 10- and 20-day moving averages, each trading around $4.36 1/2. The 40-day moving average, currently trading around $4.35 1/2 is serving as a key pivot point for nearby futures, with a close held right around the level. An extension lower will face additional support at $4.29 1/4, then at $4.16 1/2 and the Feb. 26 low of $4.08 3/4. Conversely, initial resistance will serve at the 10- and 20-day moving averages, then at $4.51 1/4 and the 100-day moving average of $4.63 1/2.
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 settled 5 3/4 cents lower to $11.85 3/4, closing nearer session lows. May meal futures dropped $4.30 to $333.40, settling nearer session lows. May bean oil futures rose 29 points to 48.24 cents.
Fundamental analysis: Soybean futures showed relative strength overnight but failed to overcome weakness seen in the corn market today. USDA is expected to show February soybean crush at 196.7 million bu., based on a Bloomberg survey. If realized, it would be up 1.9 million bu. (1.0%) from January and 19.8 million bu. (11.2%) above February 2023. Crush is expected to show a record daily pace. Soyoil stocks are seen as rising to the highest mark since May of last year, as use for renewable fuels slowed below the 1.0-billion-pound mark for the first time since May of last year in January. Meal stocks tightened in January as use was high, which drove crush to a record pace. Whether stocks remain tight will be key, as tight stocks have encouraged crushings.
USDA reported export inspections of 414,484 MT (15.2 million bu.), which were down 370,632 MT from the previous week and below the pre-report range of 500,000 to 900,000 MT. Inspections continue to pace above the historic pace needed to hit the current USDA export estimate. Inspections seem to be falling, as is the seasonal norm for this time of year.
Rain fell from north-central Cordoba and southeastern Santiago del Estero to Entre Rios and northern Buenos Aires during the holiday weekend, though most of the driest areas in the west and north of Argentina were left dry, according to World Weather Inc. Fieldwork should continue to advance well overall in the next couple of weeks, with some interruptions from rain in northern, central and eastern areas in the latter half of this week, the forecaster says.
Technical analysis: May soybeans closed lower for the fourth consecutive session despite gapping higher last night. A modest uptrend remains in place on the daily bar chart though momentum is shifting to the bears. Bulls are seeking to reclaim resistance at $11.89 1/2, which is backed by the 40-day moving average at $11.95 3/4, then the psychological $12.00 mark. Meanwhile, support stands at $11.81, Thursday’s low of $11.77, then $11.65 3/4.
May soymeal futures faced heavy selling pressure throughout the session. Bulls are seeking to overcome resistance at $337.70, the converged 10-day and 20-day moving averages. Further buying faces stiff resistance at $341.90. Support comes in at $331.90, which capped most of the downside in mid-March. Further selling finds support at $329.3, then $325.00.
May bean oil futures posted relative strength today. Prices continue to consolidate following the impressive run-up seen in the first half of March. Bulls are seeking to overcome resistance at 48.82 cents, the 100-day moving average, which capped gains today. Further buying eyes resistance at 49.42 cents. Meanwhile, selling pressure finds support at 48.13 cents, which finds backing at the 40-day moving average, currently at 47.52 cents.
What to do: Get current with advised sales.
Hedgers: You should be 65% sold in the cash market on 2023-crop. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Cash-only marketers: You should be 60% sold on 2023-crop. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Price action: May SRW wheat fell 3 1/4 cents to $5.57, a high-range close, while May HRW fell 9 3/4 cents to $5.75 1/2, closing near mid-range. May HRS fell 10 1/4 cents to $6.34 3/4, nearer session lows.
Fundamental analysis: Wheat futures faced pressure to begin the week as the marketplace continues to mull over USDA’s planting and stocks data, while U.S. dollar strength encouraged selling across commodities. Though winter wheat futures were able to end the session well of their lows.
While the government reported U.S. producers planted 47.5 million acres, reflecting a 4% drop from 2023, March 1 wheat stocks of 1.09 billion bu. rose 16% from a year ago, indicating ample supplies. However, a snippet of friendly news came when USDA reported its weekly export inspection data this morning, which showed wheat inspections during the week ended March 28 totaled 498,989 MT (18.3 million bu.), which rose 66,225 MT from the previous week and were above the pre-report range of 275,000 to 425,000 MT.
USDA will release its initial Crop Progress Report this afternoon, with traders expecting 57% of the U.S. crop to be rated “good” to “excellent” as of Sunday, according to a Reuters survey. The government rated the crop as 50% “good” to “excellent” in its final rating at the end of November ahead of winter.
Technical analysis: May SRW wheat held an inside day, spending most of the session between the 10- and 40-day moving averages of $5.50 1/2 and $5.65 1/4. A move outside of the range will face additional support at the 20-day moving average of $5.45 3/4, then at $5.33 3/4 and the March 11 low of $5.23 1/2. However, a return of last week’s buying efforts will face further resistance at $5.71, then at $5.81 3/4 and the 100-day moving average of $5.96.
May HRW ended the session below the 10- and 20-day moving averages of $5.81 1/2 and $5.80 1/2 but managed to close well off the session low. Initial support will now serve at $5.66 3/4, then at $5.57 3/4 and the March 6 low of $5.51 1/2. Corrective buying, however, will face resistance at today’s failed support levels, then at the 40-day moving average of $5.99 3/4, then at $6.03 1/4 and the 10-day moving average of $6.15 1/2.
What to do: Get current with advised sales.
Hedgers: You should be 80% 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 80% priced on 2023-crop. You should be 20% forward priced for harvest delivery on expected 2024-crop production.
Cotton
Price action: May cotton futures rallied 138 points to 92.76 cents, just shy of the session high and above the 10-day moving average.
Fundamental analysis: Cotton futures continued higher for the second consecutive session as new crop supplies look to remain tight and weakening prices have encouraged importers. Last week’s acreage report showed cotton acres as tighter than most expectations, which continues to provide underlying support for the market. Export sales for the week ended March 21 crossed above the 100,000 RB mark for the first time in five weeks as well. Even as sales lagged over the prior month, physical exports remained strong, indicating strong underlying support for cotton. That is likely to continue to provide ample support under the market in the near term. Cotton futures have also been supported by a surging crude oil market. Additional support stemmed from equity markets, which to a fresh all-time high today as well.
Technical analysis: May cotton futures posted gains for the second consecutive session. Bulls’ next objective is closing prices above resistance at 93.09 cents, which is backed by last week’s high close at 93.41 cents. Further buying targets resistance at 94.27 cents. Meanwhile, support comes in at 92.24 cents, with backing from 90.77 cents. Further selling eyes support at the psychological 90.00 cent mark.
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.
