Market Briefs | May 1, 2024

PUBLISHED May 1, 2024

Corn prices have experienced minor increases recently, largely influenced by wheat prices. Nonetheless, prices appear to be stabilizing once more as market concerns about weather diminish. Dec24 corn has dipped below the critical support level of its 20-day moving average of $4.67. Although there are still chances of rain in key corn-growing regions, potentially slowing planting progress in the short term, dry conditions in the Eastern Corn Belt could facilitate enough planting to counteract delays in the west. As of Sunday, U.S. planting progress reached 27%, surpassing both last year’s 23% and the five-year average of 22%. Additionally, 7% of the crop has emerged, slightly above recent trends.

Similar to corn, Nov24 soybean prices recently saw some gains before retracting this week. They have now dropped below both the 20 and 50-day moving averages, which served as crucial support levels. Looking at the chart, the next support level for Nov24 would likely be around $11.50. The recent downward pressure may stem from the swift resolution of Argentina’s two-day port workers’ strike. As the world’s largest soymeal exporter, Argentina’s strike threatened to disrupt global trade flows, potentially boosting U.S. soymeal exports had it persisted. As of Sunday, U.S. planting progress reached 18% completion, surpassing last year’s 16% and the five-year average of 10%. Arkansas leads among the 18 reporting states, with 56% completion, ahead of 40% last year and the five-year average of 23%.

Recent weeks saw nearby wheat prices reaching overbought levels, halting their upward trajectory. After peaking at $6.04 last week, the May contract retreated below $6. Support is anticipated around the 20-day moving average at $5.65, with last week’s high serving as resistance. This downward movement is mainly attributed to the overbought status and alleviated weather concerns in the Black Sea and the U.S. plains, at least for now. Winter wheat conditions experienced a 1% decline, with 49% of the nation’s crop rated as good to excellent. Arkansas maintains strong conditions, with 66% of its winter wheat rated as good to excellent, and only 4% categorized as poor.

Cotton futures have been under significant pressure and the charts have taken on an extremely bearish appearance. July futures set a new 10-month low on Tuesday. The next level of support is 77.60 cents. New crop December has fallen to 5-month lows and has support below 77 cents. Weaker crude oil prices and a stronger dollar have hurt export demand for cotton. Planting is just beginning across most of the cotton belt, with 15% of the crop in the ground. Arkansas farmers have planted 14%, well ahead of the 5-year average of 6%. While it is very early, conditions are favorable for a good crop. Good moisture levels prevail across the southeast, while west Texas isn’t as dry as the past few years have been.

Rice planting is already starting to wind down, well ahead of the usual pace. Arkansas farmers have planted 83% of the crop, compared to a 5-year average of 43% for the same week. 54% of the crop has emerged, while the 5-year average is 19%. Nationwide, 72% of the crop is in the ground, while the previous 5-year average is 46%. Old crop futures are trading near contract-high levels, below support at the high of $19.61. Impressive export demand and a disappointing South American harvest are supporting factors. New crop September is also trending higher, but the market is muted compared with old crop. The upside is limited by the brisk pace with which the crop is progressing and the potential for a large crop. September has found resistance at $15.30 and needs to close above that level to suggest further upside is possible. 

Live cattle futures gapped higher last week on strong cash cattle prices and a monthly Cattle-on-Feed report. Both March placements and the April 1 U.S. feedlot inventory were below pre-report estimates. The total inventory was 11.821 million head, up 174,000 head from the year ago total but below most expectations. March placements were only 87.7% of the year ago total. However, the market has taken a downturn this week after USDA announced it would be testing ground beef for bird flu virus remnants in states where infected dairy cows have been found. Packer margins are in the red, limiting cash bids. 

Hog futures have been trending higher as fundamental factors have supported the market. The monthly Cold Storage report pegged March 30 frozen stocks down 13.1% from the year ago total. Hog supplies are showing signs of a seasonal tightening but remain larger than last year. The June chart is looking toppy as up-trending support has been broken. A close below support at $101 would confirm the top and suggest further losses are possible.