Crops Analysis | April 11, 2022
Price action: Corn futures ended mixed, with the old-crop contracts mildly weaker and new-crop slightly firmer. May corn dropped 4 1/4 cents to $7.64 1/2 and the July contract slipped two cents to $7.58 3/4. December corn firmed 2 cents to $7.18.
Fundamental analysis: Corn futures initially traded higher on support from strong gains in the wheat market. But heavy selling in soybeans pulled corn well off its overnight highs. Amid the strong diverging influences, bulls unwound bull spreads, with new-crop contracts helped by concerns about cool, wet weather across the Corn Belt limiting April field work.
USDA announced a daily corn sale of 1.02 MMT to China, with two-thirds for old-crop delivery and one-third for 2022-23. China and other global buyers are trying to replace Ukrainian supplies, which are only trickling out of the country amid the closure of seaports due to Russia’s invasion.
Weekly corn export inspections totaled 1.419 MMT (55.9 million bu.), which lowers the required pace to hit USDA’s export forecast of 2.55 billion bushels. USDA made no change to its old-crop corn export forecast last Friday, but we anticipate it will increase that figure in the months ahead.
Technical analysis: May corn futures reached the highest level since March 7 before retreating Initial resistance is today’s high at $7.78, followed by the March 4 contract high at $7.82 3/4. Above that, bulls would target the 2013 high of $8.00 on the continuation chart. Near-term support is the 10-day moving average at $7.50 1/2, which is near the middle of the five-week sideways range.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You should be 90% sold in the cash market on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Cash-only marketers: You should be 90% sold on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Price action: May soybeans fell 33 3/4 cents to $16.55 1/4 after reaching a two-week high at $16.97 1/4 during overnight trading. May soymeal fell $9.10 to $459.10 per ton and May soyoil fell 82 points to 74.30 cents per pound.
Fundamental analysis: Nearby soybeans led the soy complex lower as heavy selling in Nymex crude oil pressured the soy complex. Nearby crude futures fell below $95 per barrel to a six-week low on concerns Covid lockdowns in China will curb energy demand. New-crop November futures held up better but may face increasing pressure from expectations a slow start to U.S. corn planting could lead to higher soybean acres.
USDA reported 766,232 MT (28.2 million bu.) of soybeans inspected for export during the week ended April 7, up from 741,290 MT the previous week. Expectations ranged from 500,000 to 900,000 MT. The export pace narrowed the gap with last year but the increasing availability of South American supplies may cap further demand. Inspections are running 18.3% behind year-ago levels, compared to 19.2% last week. USDA’s 2021-22 export forecast of 2.115 billion bu. is 6.5% below 2020-21.
Technical analysis: The soy complex took a bearish turn as May soybeans closed under the 20-day moving average for the first time since March 28 and May soymeal posted a bearish “outside day lower” on the daily chart. Near-term support in May soybeans is seen at the 10-day and 50-day moving averages around $16.35 and $16.32 1/4, respectively. Further support comes in at the April low of $15.76 3/4. Resistance levels include today’s high at $16.97 1/4, the psychologically key $17.00 area and the late-March high of $17.36 1/2.
What to do: Get current with advised 2021- and 2022-crop sales.
Cash-only marketers: You should be 85% sold on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Price action: May SRW wheat rose 29 3/4 cents to $10.81 1/4 and hit a two-week high. May HRW wheat rose 34 3/4 cents to $11.41 1/2 and hit a three-week high. May spring wheat rose 14 3/4 cents to $11.42.
Fundamental analysis: The Russia-Ukraine war is in its seventh week with no signs at all of any ceasefire in the works. The high likelihood of continued grain shipment disruptions in the Black Sea region, as well as concerns regarding how much wheat will be harvested in Ukraine this year continue to bolster wheat futures prices. Drought in the U.S. Plains states is the other major bullish underlying element for the wheat markets.
USDA this morning reported 411,012 MT of wheat inspected for export during the week ended April 7, up from 318,304 MT the previous week and in line with market expectations.
USDA’s weekly crop progress report this afternoon is expected to show 30% of the U.S. winter wheat crop in good to excellent condition, steady with last week’s report and among the poorest ratings on record for this time of year. Around 70% of the U.S. winter wheat crop is in drought, the government said. World Weather today reported little meaningful precipitation is expected in hard red winter wheat country over the next seven days. Freezes will occur across a majority of the region later this week. However, World Weather said crop damage is unlikely other than some burn-back of vegetative growth.
Technical analysis: Winter wheat bulls have a near-term technical advantage. SRW bulls' next upside objective is closing May prices above solid resistance at $11.69 1/4. Bears' next downside objective is closing prices below solid support at the March low of $9.72. First resistance is seen at today’s high of $10.91 3/4 and then at $11.00. First support is seen at today’s low of $10.55 and then at $10.25.
HRW bulls' next upside objective is closing May prices above solid resistance at $12.00. Bears' next downside objective is closing prices below solid support at $10.40. First resistance is seen at today’s high of $11.57 1/4, then $11.64 1/2. First support is seen at today’s low of $11.09 1/4,then $11.00.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You should be 90% sold on 2021-crop in the cash market. You have 10% of 2021-crop hedged in July SRW futures at $8.75 1/4. You should also have 50% of expected 2022-crop forward-sold for harvest delivery.
Cash-only marketers: You should be 90% sold on 2021-crop. You should also have 50% of expected 2022-crop forward-sold for harvest delivery.
Price action: July cotton surged 239 points to 133.45 cents per pound, while December cotton rose 214 points to 117.62 cents per pound.
Fundamental analysis: Cotton futures rallied from two-week lows earlier in the day with support from a rally in wheat and other commodity markets. Dry conditions in key U.S. growing areas and a behind-schedule seeding pace also supported futures. Drought persists in the central and southern U.S. Plains, while the San Joaquin Valley and southern Arizona are expected to receive little rain over the next two weeks, World Weather Inc. said. “Windy conditions will return to West Texas Tuesday with extreme conditions likely,” World Weather said. “Dryness in West and South Texas continues to be a big concern for dryland production areas and there is not much opportunity for change in the next two weeks.” USDA will update planting progress later today. As of April 3, the U.S. cotton crop was 4% seeded, down from the 6% average for the previous five years.
Technical analysis: Cotton futures’ technical posture strengthened today as the market posted an “outside day higher” on the daily bar chart, but the market remains in a slight downtrend since late March. Support is seen around the July contract’s low today of 130.25 cents and at the 20-day moving average of 128.76 cents. Resistance comes in at last week’s high of 136.71 cents and the contract high at 137.99 cents.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You are 100% priced in the cash market on 2021-crop. You should also be 50% forward-priced for harvest delivery on expected 2022-crop production.
Cash-only marketers: You should be 90% priced on 2021-crop. You should also be 50% forward-priced for harvest delivery on expected 2022-crop production.
