Crops Analysis | April 17, 2024
Price action: May corn fell 1 1/2 cents to $4.30, marking a low-range close.
Fundamental analysis: Corn futures continued to edge sideways in narrow, consolidative trade at mid-week, with spillover weakness stemming from SRW wheat, while corrective gains across the soy complex limited losses. Meanwhile, heavy selling continued in crude oil futures, which pushed nearby futures to a 2 1/2 week low and provided additional pressure, along with the U.S. dollar, which continues to hover around a 5 1/2-month high.
Earlier this morning, the Energy Information Administration reported weekly ethanol production for the week ended April 12 averaged 983,000 barrels per day (bpd), which was down 73,000 bpd (6.9%) from the previous week and 4.0% below year-ago. Ethanol stocks declined 128,000 barrels to 26.080 million barrels.
Rain is expected to diminish today in areas of western and southern Brazil and Paraguay that have recently seen frequent rain, according to World Weather Inc. The region will begin to dry down and bring about improved conditions for fieldwork, while soil moisture should be high enough to support much of the safrinha crop into at least early May. The forecaster notes central into northeastern Brazil will see showers into Saturday before drier weather occurs Sunday into May 1, allowing for fieldwork to advance well.
This afternoon, the Rosario Grains exchange reported expectations of a further reduction to the Argentine corn crop, which was downgraded 6.5 MMT last week due to a disease spread by leafhopper insects. Leafhoppers are insects that carry spiroplasma disease and whose population tends to spread in hot, dry conditions.
USDA will release weekly export sales data early Thursday morning, with traders expecting 2023-24 sales to range from 300,000 MT to 900,000 MT during the week ended April 11. Last week, net 2023-24 corn sales were reported at 325,500 MT for the previous week, which was a new marketing-year low.
Technical analysis: May corn held a tight range during today’s session, with resistance at the 40-, 10- and 20-day moving averages, each trading around $4.33, limiting a move to the upside. However, initial support continues to serve at $4.28 3/4, which is backed by additional support at $4.26 3/4 and $4.25 1/4. A move above initial resistance will face an additional battle at $4.34 1/4, then $4.36 1/2 and the March 28 high of $4.48.
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 rose 4 1/2 cents to $11.49 1/2, nearer the session high after hitting a five-week low early on. May soybean meal closed up $3.40 at $338.70 and near mid-range. May bean oil gained 9 points to 45.00 cents, nearer the session high and hit a six-week low early on.
Fundamental analysis: The soy complex saw some short covering today, following recent selling pressure. A lower U.S. dollar index today aided the bulls. However, a sharp drop in crude oil prices limited buying interest in the grains, as did a continued “risk-off” trader and investor mentality in the general marketplace. The general marketplace is still uneasy regarding tensions in the Middle East, particularly the present conflict between Iran and Israel.
World Weather Inc. today said some planting delays are expected in U.S. soybean production areas into May, “but overall, the outlook is mostly a normal planting potential. Fieldwork should advance fastest in the western Corn Belt,” said the forecaster. The Delta is starting to see improving field conditions after too much rain last week. A good mix of weather is expected in the southeastern states.
Thursday morning’s weekly USDA export sales report is expected to show U.S. soybean sales of 300,000 to 650,000 MT in the 2023-24 marketing year, and sales of 250,000 to 450,000 MT in the 2024-25 marketing year.
Technical analysis: The soybean bears have the firm overall near-term technical advantage. Prices are trending down on the daily bar chart again. The next near-term upside technical objective for the soybean bulls is closing May prices above solid resistance at $12.00. 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 Tuesday’s high of $11.63 and then at this week’s high of $11.76. First support is seen at today’s low of $11.41 3/4 and then at $11.28 1/2.
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 the March high of $347.60. 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 last week’s high of $345.10 and then at $347.60. First support is seen at $335.00 and then at $330.00.
Soybean oil bears have the solid overall near-term technical advantage. 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 February low of 44.18 cents. First resistance is seen at Tuesday’s high of 45.44 cents and then at this week’s high of 46.32 cents. First support is seen at today’s low of 44.56 cents and then at 44.18 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 closed 12 3/4 cents lower to $5.37, while May HRW dove 14 3/4 cents to $5.72 3/4, each closing near the session low. May HRS futures fell 5 cents to $6.33 1/4.
Fundamental analysis: SRW wheat futures faced heavier selling to a one-month low today as technical pressure combined with a strong U.S. dollar weighed on prices. Abundant global supplies continue to favor bears, while a strong dollar reduces the competitiveness of U.S. supplies on the global marketplace.
However, traders will continue to monitor HRW wheat areas which continue to face persisting dryness. World Weather Inc. reports dryness is most significant and concerning in eastern Colorado, the western half of Kansas, the Oklahoma panhandle and far southwestern Nebraska. Shower activity will help increase topsoil moisture a bit in these areas in the next week, while unusually cool weather will limit evaporation. However, a greater rain event will be needed, with rainfall forecast to increase towards the end of the month. Meanwhile, the forecaster reports unusually cold temps will occur in the northern Plains, with limited shower activity over the next week. Not much change in topsoil moisture is expected and the need for greater precip continues mainly in eastern Montana and northwestern North Dakota. Soft wheat in the Midwest continues to be rated favorably, with little changes expected.
USDA will release its Weekly Export Sales Report early Thursday morning, with traders expecting 2023-24 sales to range from reductions of 100,000 MT to 200,000 MT and 2024-25 sales between 150,000 MT and 400,000 MT during the week ended April 11.
Technical analysis: May SRW bears garnered momentum today, with a close held below initial support at $5.42 1/2 for the first time in over a month. Initial support will now serve at $5.35 1/4, then at $5.28 and the March 11 low of $5.23 1/2. Corrective buying efforts, however, will face resistance at today’s failed support level, then at $5.50 and the 20-, 40- and 10-day moving averages of $5.53 1/2, $5.54 1/4 and $5.55 1/2.
May HRW futures closed below the 10-, 20- and 40-day moving averages of $5.83 1/2, $5.81 3/4 and $5.79 3/4, giving bears an increased technical posture. Initial support will now serve at $5.73, then at $5.67 1/4 and the March 6 low of $5.51 1/2. Conversely, buying efforts will now face initial resistance at today’s failed support levels, then at $5.93 1/4 and the 100-day moving average of $6.07 1/4.
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.
Price action: May cotton fell 173 points to 79.56 cents and near the session low. Prices hit a four-month low.
Fundamental analysis: Technical selling was featured again today in the cotton futures market, as the charts remain overall bearish. The market is short-term oversold, technically, and due for a corrective, short-covering bounce very soon. A big drop in crude oil prices today also encouraged selling interest in cotton futures.
The general marketplace is still in a “risk-off” mode at mid-week, what with Iran and Israel recently seeing military conflict. Israel has vowed to retaliate after last week’s missile and drone barrage launched by Iran and its allies. That’s also keeping a lid on buying interest in cotton futures.
World Weather Inc. today said rain coming to West Texas “looks good for this weekend and some computer forecast models have suggested some follow-up rain will be possible next week. South Texas, the Texas Coastal Bend and eastern Mexico are also expected to get some needed moisture in the coming week to 10 days. The U.S. Delta will likely dry out a bit until the weekend, when rain is possible once again and the southeastern states will see a good mix of rain and sunshine.”
Cotton traders are awaiting Thursday morning’s weekly USDA export sales report, with bulls hoping for improved numbers from recent reporting weeks.
Technical analysis: The bears have the solid overall near-term technical advantage. Prices are in a steep six-week-old downtrend on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in May futures above technical resistance at 85.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at the November 2023 low of 78.91 cents. First resistance is seen at today’s high of 81.94 cents and then at 83.00 cents. First support is seen at 78.91 cents and then at 78.00 cents. Wyckoff's Market Rating: 1.5.
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.
