Corn
Price action: March corn futures rose 3 1/4 cents to $4.85 1/4 and near mid-range.
Fundamental analysis: The corn market bulls benefitted today from better risk appetite in the general marketplace as the U.S. stock indexes saw decent rebounds from Monday’s sharp sell offs. Good gains in winter wheat futures markets also supported buying interest in corn. The corn market bulls on this day mostly ignored the bearish outside-market element that saw solid gains in the U.S. dollar index. Look for corn traders to continue to monitor the U.S. stock market and to scrutinize Wednesday afternoon’s Federal Reserve monetary policy meeting results.
USDA this morning reported a daily U.S. corn sale of 132,000 MT to South Korea for the 2024-25 marketing year.
World Weather Inc. today said crop stress in dry Argentina corn regions “will continue for many east-central and southeastern production areas over the coming week with some partial relief possible late next week and into the following weekend.” Brazil crop areas experienced a good mix of rain and sunshine during the weekend through Monday, with some field conditions improving enough for a little crop maturation, said the forecaster. Pro Farmer South American crop consultant Michael Cordonnier lowered his Argentine corn crop estimate by 1 MMT, to 47 MMT, and maintained his Brazilian crop estimate at 125 MMT. He has neutral to lower bias toward both crops going forward.
Technical analysis: The corn futures bulls have the firm overall near-term technical advantage. A two-month-old price uptrend is in place on the daily bar chart. The next upside price objective for the bulls is to close March prices above solid chart resistance at $5.00. The next downside target for the bears is closing prices below chart support at $4.70. First resistance is seen at $4.90 and then at the January high of $4.94 1/2. First support is seen at today’s low of $4.81 and then at this week’s low of $4.77 3/4.
What to do: Get current with advised sales.
Hedgers: You should be 50% sold in the cash market on 2024-crop in the cash market. You should also have 10% of expected 2025-crop production sold for harvest delivery.
Cash-only marketers: You should be 50% sold in the cash market on 2024-crop. You should also have 10% of expected 2025-crop production sold for harvest delivery.
Soybeans
Price action: March soybeans were unchanged at $10.45 and ended low-range. March soymeal rose 80 cents to $301.60. March soyoil rose 13 points to 45.13 cents.
Fundamental analysis: Soybean futures held an inside range, with resistance at the 10-day moving average curbing buyer interest, though it stands to reason that the observance of the Lunar New Year in China, which began today and lasts through Feb. 4, was and will be a limiting factor for the soy complex. Meanwhile, weather in South America continues to prove somewhat concerning, with crop stress to persist in many areas of east-central and southeastern production areas of Argentina over the coming week, though “some” partial relief is possible late next week and into the following weekend, notes World Weather Inc. In Brazil, some areas have seen improving conditions for crop maturation and harvest, though rain is expected to be frequent over the next two weeks from Mato Grosso to Sao Paulo and western, central and southern Minas Gerais, where concerns will increase over soybean quality declines and harvest progress.
South American crop consultant Dr. Michael Cordonnier lowered his Argentine soybean estimate by 2 MMT, to 49 MMT amid hot, dry conditions. He indicated a neutral to lower bias going forward, noting much more rainfall will be needed to fully replenish soils and support crop growth. Cordonnier maintained his Brazilian soybean forecast of 170 MMT, with a neutral bias going forward, stating “there needs to be more yield reports before we decide if the estimate moves higher or lower.
Technical analysis: March soybeans continued to face resistance at the 10-day moving average of $10.47 3/4, which is backed by resistance at $10.50 1/2, $10.56 1/4 $10.61 1/2 and the 200-day moving average of $10.73 3/4. While bulls continue to hold the near-term technical advantage, with sights set on a breach of $11.00, though the 200-day moving average will likely continue to prove difficult to overcome. Conversely, bears will continue to seek a close below $10.18 1/2, though support is layered at $10.39 1/2, $10.34 1/4, then at the 20- and 100-day moving averages of $10.27 1/2 and$10.22 1/4.
What to do: Get current with advised sales.
Hedgers: You should be 40% priced in the cash market on 2024-crop production.
Cash-only marketers: You should be 40% priced on 2024-crop production.
Wheat
Price action: March SRW futures rallied 9 3/4 cents to $5.45 1/4 and closed nearer session highs. March HRW futures climbed 7 3/4 cents to $5.61 and closed nearer session highs. March HRS futures rose 12 cents to $5.97 3/4.
Fundamental analysis: Wheat futures led strength today as prices rebounded from Monday’s weakness. Bulls were likely encouraged by strength seen in the corn and soy complex, as each rebounded from weakness on Monday that had some market watchers concerned that a market top could be close at hand. The wheat-corn spread continues to trade at historically tight levels, which points to the potential for extended corrective buying in the wheat market in the medium-term. Bulls were likely encouraged by strength in wheat today despite a stronger U.S. dollar index, which was up over 600 points today. The dollar index has been trending lower since Jan. 14, which could entice importers to purchase more U.S. origin wheat. Most of the weakness in the dollar occurred before the most recent export sales report from USDA, so Thursday’s report should give a look into whether or not that has occurred recently.
Winter crops in the lower Danube River Basin, which includes eastern Ukraine and Russia’s southern Region, were not well established as dryness dominated the planting season, says World Weather Inc. The area does not have substantial snow cover, but threatening cold is not expected anytime soon, the forecaster says.
Technical analysis: Winter wheat bulls have been encouraged by a series of higher lows on the daily bar chart, the first sign a market bottom could be in place. March SRW bulls are looking to challenge resistance at $5.50 which is reinforced by stiff resistance at $5.58 3/4. Support comes in at $5.37 1/2, while additional selling targets yesterday’s low of $5.32.
March HRW futures continue in a modest uptrend on the daily bar chart. Bulls are looking to challenge resistance at $5.68 1/2 before tackling the 100-day moving average at $5.73 1/4. Tentative support lies at $5.59 1/4 with additional selling looking to tackle support at $5.50.
What to Do: Get current with advised sales.
Hedgers: You should be 70% sold in the cash market for 2024 crop. You should have 20% forward sold for harvest delivery in 2025.
Cash-only marketers: You should be 70% sold for the 2024 crop. You should also be 20% sold for harvest delivery for expected 2025-crop.
Cotton
Price action: March cotton fell 29 points to 66.98 cents, closing near the session low.
Fundamental analysis: A subdued tone continues to linger across the cotton market, with technical resistance forging sideways consolidation. However, the recent contract low and technically oversold conditions are limiting a move lower for the time being. Returned U.S. dollar strength also weighed on the natural fiber. Meanwhile, the Federal Reserve is widely expected to hold U.S. interest rates steady at the FOMC meeting that began this morning and concludes Wednesday afternoon, though the wording and tone of the FOMC statement from Fed Chair Jerome Powell will be closely analyzed by the marketplace.
As spring inches nearer, traders will begin to closely monitor weather in key cotton growing areas of the U.S., with a current focus on safrinha plantings in Brazil, which are largely delayed by a stretch of wet conditions. World Weather Inc. notes rain will be needed during the second half of winter and early spring in the southwestern desert region, southern California and both South and West Texas to ensure favorable soil moisture for spring planting. A few areas in the southeastern U.S. are still drier than usual and are in need of rain as well. The U.S. Delta will be the wettest for a while, along with areas of the interior southeast. The forecaster reports there is some potential for a little moisture in West Texas during mid- to late week this week, although it will be brief and light.
Technical analysis: March cotton futures continue to consolidate mostly between support at 66.93 cents and resistance at the 10-day moving average of 68.52 cents. Bears continue to firmly grasp the near-term technical advantage, though the Jan. 13 low of 66.60 cents has proven to be solid support thus far. Bears will need to edge back above 70.00 cents in order to regain technical momentum, though an earnest move above the area could prove futile, with additional resistance standing at the 20- and 40-day moving averages, currently trading at 70.78 cents and 72.00 cents. Meanwhile, bears are looking to breach 65.00 cents, with interim support serving at 66.59 cents and 86.97 cents.
What to do: Get current with advised sales and hedges.
Hedgers: You should be 35% sold in the cash market on 2024-crop.
Cash-only marketers: You should be 35% sold on 2024-crop.