Crops Analysis | April 26, 2024
Price action: July corn futures fell 2 cents on the session to $4.50 but firmed 7 cents on the week.
5-day outlook: Corn futures struggled to piggyback gains seen in the winter wheat markets, though still closed near this week’s highs. May futures’ options expired today, which likely muted the price response in May corn futures, as prices remained largely pegged to $4.40. Winter wheat futures have quickly become overbought, surging each day this week and leading the grain and soy complex higher. Healthy rallies see each product take turns leading one another higher, this rally has not seen that, leaving the door open for weakness across the market once wheat faces any significant selling pressure. While prices closed nearer weekly highs, prices remain in a largely sideways technical pattern that had limited both gains and losses for over two months. Bulls need to actively follow through to the upside early next week or another reversal lower is likely. Floods delaying planting could spark some gains if current forecasts hold true.
30-day outlook: Traders will closely watch the forecast and planting progress over the coming month. Planting thus far this spring has gone on without a hitch, though heavy rains that began in the last day will persist into next week and are expected to cause flooding and planting delays. At this juncture, though, delays are not expected to have any significant impact. If planting continues to go well, it would not be unexpected to see planted acres come in ahead of the intentions reported in the USDA Prospective Plantings Report in March. If additional rain comes and planting delays are more widespread, bulls could see a sustained upside push as prevent plant acres increase, though current rains will be long-term beneficial for yield, which will ultimately drag price lower as the growing season goes on. Barring any significant planting delays, prices are likely to struggle in garnering any upside momentum in the coming months.
90-day outlook: Weather patterns in the U.S. Midwest will be very close to the front burner of the corn market for the next few months. More years than not, some degree of a weather scare develops in the corn and soybean markets in the summertime. Better U.S. corn exports will be key for the corn market to sustain a price uptrend in the coming months. Corn export sales surged above expectations this week following disappointing numbers the last couple of weeks. USDA remains behind the ball on several use categories based on our research, though even with our optimistic demand outlook, we still see ending stocks pushing above 2.0 billion bushels, which will keep selling pressure on the market barring any significant growing season challenges.
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: July soybeans fell 2 1/2 cents to $11.77 1/4 but gained 11 1/2 cents on the week, marking the first weekly gain in six weeks. July soymeal closed $2.90 lower at $344.70 but picked up $1.50 from a week ago. July soyoil rose 11 points to 45.54 cents and gained 60 points on the week.
5-day outlook: Soybeans faced mild pressure in narrow trade to end the week as a second straight day of selling in soymeal futures cast a shadow over the complex. Meanwhile, a recovery in the U.S. dollar from a two-week low also hovered over commodities. The dollar found a bid in the wake of stronger-than-expected personal spending data for March and PCE core deflator, which is the Fed’s preferred inflation gauge.
While today’s trade could largely be attributed to profit-taking following recent short-covering gains, strong technical resistance could continue to limit bull efforts to edge higher in next week’s trade. However, a continued rally in SRW could certainly ignite further short covering in soybeans.
30-day outlook: Planting efforts across the U.S. will remain the focus over the month, which will be dictated by weather. Soybean traders may adhere to age-old mantra that rain makes grain amid forecasts of rain through May 7. While the precip will slow planting, it will restore soil moisture in many areas of the western Corn Belt, which will certainly bode the crop well during the growing season. Moreover, if weather delays producers deeper into May, it could result in an increase in soybean acres across the U.S.
90-day outlook: U.S. soybean exports have weighed heavily on prices over the past several months amid lacking global interest due to U.S. dollar strength and hefty South American supplies. Helping offset reduced exports has been strong U.S. crush as of late, though the increase pales in comparison to the dop in export business. Meanwhile, recent economic data has proven inflation will likely be an going factor, breathing life into the U.S. dollar, which will likely continue to hinder export business.
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.
Advice: We advise all wheat producers to sell another 15% of expected 2024-crop for harvest delivery to get to 35% forward-priced.
Price action: July SRW wheat futures rose 1 3/4 cents to $6.22 1/4 and nearer the session low. Prices hit a three-month high today and for the week, July SRW gained 55 1/2 cents. July HRW wheat futures rallied 13 3/4 cents to $6.54 1/4, nearer the session high and hit a four-month high today. For the week, July HRW rose 71 1/4 cents. July spring wheat futures rose 5 1/4 cents to $7.03 1/2 and gained 51 cents on the week.
5-day outlook: The wheat market bulls had a very good week this week, including technically bullish weekly high closes. That sets the stage for follow-through technical buying next week. However, SRW and HRW futures markets are short-term overdone on the upside and due for routine corrective pullbacks that could well occur next week. Solid gains in the U.S. dollar index today, if extended next week, could also limit buying interest in the wheat futures markets.
30-day outlook: Wheat traders and producers will continue to keep a close eye on weather patterns in wheat country in the coming weeks. World Weather Inc. today said North America weather “continues to cycle through a repeating weather pattern and that may culminate in the return of colder than usual temperatures for a few days late next week and into the following weekend. Frost and freezes may accompany the cool off for the northern Plains and Midwest, although the colder conditions do not look very threatening to crops at this point in time.” Wheat is not far enough along in the Midwest or northern Plains to be permanently damaged by cold weather and there is not much spring crop that has been planted and is up enough to be seriously harmed if it does get cold, said the forecaster. “Nonetheless, the event will be worth watching just simply from a cyclical perspective. More stormy weather like that of this weekend may occur again May 9-10 with one more surge of cold weather expected May 10-12.”
90-day outlook: Spring wheat futures have lagged price gains in winter wheat markets. Such likely reflects more favorable weather over the Northern Plains, as well as expected increases in spring wheat and durum plantings. Look for the winter and spring wheat futures markets to continue to pay close attention to the corn futures market in the coming weeks. Sustained price strength in wheat likely won’t occur unless the corn market rallies, too.
What to do: Get current with advised sales.
Hedgers: NEW ADVICE -- Sell another 15% of expected 2024-crop for harvest delivery to get to 35% forward-priced. You should be 90% sold in the cash market on 2023-crop.
Cash-only marketers: NEW ADVICE -- Sell another 15% of expected 2024-crop for harvest delivery to get to 35% forward-priced. You should be 90% sold on 2023-crop.
Price action: July cotton fell 18 points to 80.90 cents and gave up 12 points on the week.
5-day outlook: Cotton futures ended the week in narrow, subdued trade as technical resistance continues to drive price action, while outside market pressure provided no favors. The U.S. dollar gained traction today following stronger-than-expected economic news which indicated interest rates will likely continue to linger higher for longer amid persisting inflation. Next week’s trade will likely continue to edge sideways to lower, driven by technical pressure, though consolidative trade since last week’s low indicates a more notable move will occur at some point in the near future.
30-day outlook: USDA reported cotton plantings as of April 21 were 11% complete, which were in line with the five-year average, though traders will continue to focus on weather as it will largely determine progress henceforth. World Weather Inc. notes West Texas will be dry biased through mid-week next week, but the potential for rain will increase again. Rainfall is not advertised much in the coming days in South Texas and the Texas Coastal Bend, though some light showers will occur. Meanwhile, southeastern states and far wester cotton areas will be without much significant rain for a while, with the Delta to see waves of rain especially in the northwestern half of the region.
90-day outlook: The recent downturn in cotton prices has spurred some export business as of late, though lingering U.S. dollar strength could continue to dampen sales abroad. Earlier this week, USDA reported net sales of 177,100 RB of upland cotton during the week ended April 18, which were up 21% from the previous week and 73% from the four-week average. Top purchasers during the week included China, Pakistan and Vietnam. Meanwhile, exports totaled 261,700 RB during the week and were down 2% from the previous week and 18% from the four-week average. Top destinations were China, Pakistan and Turkey.
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.
