Crops Analysis | April 18, 2024
Price action: May corn fell 3 1/2 cents to $4.26 3/4 and marked the lowest close since April 2.
Fundamental analysis: Corn futures continued to face pressure, extending losses for the fourth straight session, as spillover weakness stemmed from the soy complex. Persisting strength in the U.S. dollar also curbed buyers’ appetites for commodities due to reduced competitiveness on the global marketplace. Meanwhile, USDA’s weekly export sales data failed to offer any solid favors to the corn market this morning, with net sales during the week ended April 11 totaling 501,200 MT, up 54% from the previous week but down 45% from the four-week average. Net sales for the week were near the low-end of pre-report expectations, ranging from 300,000 MT to 900,000 MT.
However, USDA’s attaché in Argentina reported cuts to the country’s corn production forecast earlier today, which could heighten traders’ attention in the coming weeks amid impacts from corn stunt disease across the country. The attaché’s revised peg of 51 MMT reflected a 4% reduction in harvested acreage due to the disease and is down from January’s forecast of 57 MMT. The post noted “This is an evolving disease, and its final damage will be known once the last fields are harvested in late June.”
U.S. planting efforts are likely to continue at a decent clip over the next two weeks, according to World Weather Inc., despite a few rounds of rain. Though the forecaster notes cool temps Friday into Sunday will slow drying rates and the resumption of fieldwork in wetter areas.
Technical analysis: May corn closed at the lowest level in more than two weeks, with a close held below support at $4.28 3/4 and $4.27 1/2. Continued selling efforts will now face initial support at $4.25 1/4, then at the Feb. 26 low of $4.08 3/4. Corrective buying, however, will now face initial resistance at today’s failed support levels, then at the 10-, 40- and 20-day moving averages, each trading around $4.32. The next level of resistance stands at the 100-day moving average of $4.55.
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 15 1/4 cents to $11.34 1/4, a contract-low close. May meal futures sunk 70 cents to $338.0, near the mid-point of today’s session. May bean oil futures plunged 88 points to 44.12 cents.
Fundamental analysis: The soybean complex continues to fall under heavy selling pressure despite improving export sales, as soybeans negated all of Wednesday’s rally and sunk to the lowest mark since February. USDA reported export sales of 485,795 MT (17.85 million bu.) for the week ended April 11, the most since the week ended March 14. A bountiful crop out of Brazil seems to continue to weigh heavily on the market. The recent U.S. dollar rally has quickly mispriced U.S. soybeans from the world market. Over the last four months, the Brazilian real relative to the dollar has declined 9.1%. From the perspective of the Brazilian soybean farmer, it is as if U.S. soybean prices are about $1.00 per bushel higher than today’s close, simply due to the exchange rate working in their favor. The volatility seen in the dollar has given other top exporters opportunities to take advantage of relatively higher prices seen in the U.S.
Planting conditions remain largely favorable for much of the Midwest in the coming weeks. Temperatures are forecast to trend cooler over the coming week and then warmer in the second week of the outlook. World Weather Inc notes that rain is expected to fall more frequently and abundantly in the second week of the outlook, with most of the precip occurring after April 26. Still, increasing rain is not likely to be heavy enough to cause lasting delays to field work.
Technical analysis: May soybean futures trended lower throughout today’s session with little relief from selling pressure. Bears continue to hold the near-term technical advantage. Initial resistance stands at $11.40, a level that capped nearly all of the downside in February and is backed by $11.45 then the psychological $11.50 mark. Continued strength would find resistance at the 10-day moving average, currently at $11.59 1/2. Support comes in at $11.34 then the Feb. 29 low of $11.28 1/2. That is backed by the psychological $11.25 mark.
May meal futures saw relative strength, though still closed modestly lower on the session. Bulls are seeking to hold the uptrend stemming from the late-March lows. Resistance stands at $339.0, the 40-day moving average, which has capped the upside the last three sessions. Strength above that mark finds resistance at last Friday’s close of $344.4. Initial support stems from the 20-day moving average at $336.7, with backing from $335.0, then $330.9.
May bean oil futures led the soy complex lower as prices are quickly becoming oversold. Bulls are seeking to overcome initial resistance at 45.00 cents, which is backed by the 10-day moving average at 45.94 cents. Meanwhile, continued selling pressure finds support at 44.02 cents, 43.57 cents, then 41.70 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 1/4 cent to $5.36 3/4 and nearer the session low. Prices hit a four-week low today. May HRW wheat gained 4 1/2 cents to $5.77 1/4 and near mid-range. May spring wheat futures rallied 5 1/2 cents to $6.38 3/4.
Fundamental analysis: The winter wheat futures markets saw some tepid short covering today, but gains were limited by weaker corn and soybean futures prices. A firmer U.S. dollar index today also worked against the wheat market bulls.
More U.S. wheat export sales cancellations from China in today’s USDA weekly export sales report further squelched the wheat bulls. The agency reported U.S. wheat sales reductions of 93,600 MT for 2023-24 during the week ended April 11 and net sales of 222,000 MT for 2024-25. Net sales reductions of 123,700 MT were reported for China.
The International Grains Council has lowered its global 2024-25 wheat outlook by 1 MMT, to 798 MMT. However, the forecast is still above the previous season’s 789 MMT.
World Weather Inc. today reported that in HRW wheat country, dryness in the region is still most significant and concerning in eastern Colorado, the western half of Kansas, the Oklahoma Panhandle, and far southwestern Nebraska. Shower activity will help promote some rise in topsoil moisture in these areas in the first week of the outlook and unusually cool weather will limit evaporation rates. “However, a greater rain event is needed.” Rainfall will likely increase in the second week of the outlook, especially in eastern production areas, and this additional rain will be beneficial, said the forecaster. However, western areas will still be in need of more precipitation. Meantime, in the northern Plains, below average temperatures will occur with limited shower activity in the first week of the outlook. Not much change in topsoil moisture is expected and the need for greater precipitation will continue mainly in eastern Montana and northwestern North Dakota, said World Weather.
Technical analysis: Winter wheat futures bears have the firm overall near-term technical advantage. SRW bulls' next upside price objective is closing May prices above solid chart resistance at the April high of $5.74 3/4. The bears' next downside objective is closing prices below solid technical support at the contract low of $5.23 1/2. First resistance is seen at Wednesday’s high of $5.55 and then at $5.62 1/2. First support is seen at $5.30 and then at $5.23 1/2.
Recent sideways price action in HRW better suggests a near-term market bottom is in place. The HRW bulls' next upside price objective is closing May prices above solid technical resistance at the March high of $6.05 1/4. 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 this week’s high of $5.91 1/2 and then at $6.00. First support is seen at this week’s low of $5.72 1/4 and then at the April low of $5.60 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.
Price action: May cotton futures plunged 146 points to 78.10 cents and settled nearer session lows. Most active July futures fell 72 cents to 80.61 cents.
Fundamental analysis: Cotton futures continue to face stiff selling pressure, closing at the lowest mark since November on the continuation chart. Prices have closed higher just twice in the last two weeks. Prices continue to fall despite improving export sales, as seen in this morning’s report. Export sales for the week ended April 11 improved to 148,800 bales, up significantly from 89,500 bales last week and 56% above the four-week average. China was the top purchaser and retains about a quarter of all current outstanding sales. Funds continue to reduce their long position, continuing to drive prices lower, despite stabilization seen in the crude oil and stock market today, both of which have been under heavy selling pressure recently. Heightened concerns over persistent inflation leading interest rates higher for longer has apparently cast a shadow over expectations for cotton’s future. High interest rates have already shown concerning effects over the U.K, which slipped into a recession at the end of last year. Those concerns have likely spread to other economies, leading to pessimism in the commodity marketplace as a whole as high interest rates are likely to dampen economic growth.
Technical analysis: May cotton futures continue to march lower on the daily bar chart and remain severely oversold. Bears have full control of the near-term technical advantage, though some corrective buying is possible in the next few days. Bulls are seeking to overcome resistance at 79.50 cents before tackling the psychological 80.00 cent mark. Further strength will find stiff resistance at the 10-day moving average, currently at 82.94 cents. Support stands at today’s low of 77.41 cents then 76.91 cents, with little backing until the psychological 75.00 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.
