Crops Analysis | May 3, 2022

( )

Corn

Price action: July corn futures fell 10 1/2 cents to $7.93, the contract’s lowest settlement since April 22. December corn lost 7 cents to $7.35 1/4.

Fundamental analysis: Corn futures fell under further profit-taking, as heavy fund selling yesterday likely carried over. Demand concerns burdened major commodity markets including crude oil, in part reflecting Covid shutdowns in China. Today’s low-range closes suggest followthrough selling Wednesday. Today’s weakness in the grains may have been due in part to uncertainty ahead of today’s FOMC meeting. While a 50 basis-point interest rate increase is expected, past Fed meeting conclusions and FOMC statements have produced fireworks in the financial markets.

Wet, cool weather in the Corn Belt remains concerning but may be factored into current prices. Additionally, warmer, drier weather is expected next week. World Weather Inc. expects less rain for the eastern Corn Belt starting this weekend and warmer temperatures and faster drying rates next week. No well-organized rain events are expected in the eastern Corn Belt from this Saturday through May 17. USDA reported 14% of the U.S. corn crop was planted as of Sunday, up from 7% a week earlier but still well below the 33% average for the previous five years. 

Technical analysis: Corn bulls hold a solid near-term technical advantage, with the next upside objective is closing July futures above longer-term resistance at the contract high of $8.24 1/2. For bears, the next downside target is closing prices below support at $7.80 1/2. First resistance is seen at $8.00, then today’s high of $8.13 3/4. First support is at this week’s low of $7.90 1/2, then $7.80 1/2.

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.

 

Soybeans

Price action: July soybeans fell 14 3/4 cents to $16.30 1/2, the contract’s lowest closing price since April 7. July soymeal fell $7 to $423.90 per ton, the lowest close in over three months. July soyoil rose 19 points to 80.28 cents.

Fundamental analysis: Nearby soybeans sank to a four-week low as slumping soymeal and crude oil and demand concerns revolving in part around Covid lockdowns in China spurred fund liquidation. New-crop futures took additional pressure from ideas a slow U.S. corn planting pace will lead to higher soybean acreage, which USDA has already projected at an all-time high. USDA late yesterday reported the U.S. soybean crop at 8% planted as of Sunday, meeting analysts’ expectations but below the five-year average of 13%. While crop shortfalls in South America have kept the export window for U.S. soybeans open longer than usual this year, the market likely will require fresh interest from China or other global buyers to sustain elevated prices.

Domestic crush demand remained strong in March. USDA yesterday reported a March soybean crush totaling 192.872 million bu., up 2.5% from the same month in 2021, slightly higher than trade expectations and a record for the month. Crushing during the first seven months of 2021-22 is running about 7 million bu. ahead of the monthly pace needed to achieve USDA’s full-year forecast of 2.215 billion bu.

Technical analysis: Soy complex technicals have turned increasingly bearish amid an ongoing slide in soymeal and an eroding chart for July soybeans, which closed below the 50-day moving average for the second session in a row. Further weakness in coming days will bolster beliefs that nearby futures have established at least a near-term peak and could have bears targeting the April low of $15.60 1/2 in the July contract. Further support is seen at the 100-day moving average around $15.40. Initial resistance includes 50- and 20-day moving averages at $16.51 and $16.66 3/4, respectively.

What to do: Get current with advised 2021- and 2022-crop sales.

Hedgers: You should be 95% 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 85% sold on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.

 

Wheat

Price action: July SRW wheat fell 10 cents to $10.45 1/2, the contract’s lowest closing price since April 7. July HRW wheat fell 5 1/4 cents to $10.92 3/4, also the lowest close since April 7. July spring wheat fell 12 1/4 cents to $11.55 1/2.

Fundamental analysis: Winter wheat futures tumbled to four-week lows on expectations rains in the key HRW growing region of the U.S. Plains will boost parched crops. While HRW conditions have continued to deteriorate, futures appear to have priced in a poor harvest and higher than usual acreage abandonment, while soft export demand remains a market burden. Late yesterday, USDA reported 27% of the winter wheat crop in “good” or “excellent” condition through Sunday, unchanged from the previous week's 34-year low. USDA rated 43% of the U.S. winter wheat crop in “very poor” or “poor” condition, up from 39% the week prior.

When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop dropped another 6.9 points to 253.9, which is 73.6 points below the five-year average for the beginning of May. The SRW crop inched 0.4 point higher to 351.0, though that’s still 8.8 points below the five-year average for the date. Spring wheat planting fell further behind schedule last week. USDA reported 19% of the crop was planted as of Sunday, up from 13% a week earlier but behind the 28% five-year average. North Dakota farmers had seeded only 5% of the crop.

Technical analysis: Winter wheat technicals are turning increasingly bearish with July HRW and SRW contracts in two-week downtrends and July SRW closing below the 50-day moving average for the first time since early February. Further weakness may have bears targeting the $10.00 level and the April low in July SRW at $9.82. Initial resistance is seen at the 10- and 20-day moving averages at $10.75 and $10.79 1/4, respectively. In July HRW, initial support comes in at the 50-day moving average at $10.89 1/2, which is 1/2 cent above today’s low.

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.

 

Cotton

Price action: July cotton fell 73 points to 150.08 cents per pound after earlier posted a contract high at 152.90 cents. New-crop December fell 1 point to 126.18 cents.

Fundamental analysis: Nearby cotton futures fell as slumping prices for crude oil and grains overshadowed firm demand fundamentals. USDA’s weekly Crop Progress report yielded few surprises, with the 15-state planting pace at 16% complete, one percentage point ahead of the five-year norm. Texas plantings were 20% complete, up just 1 percentage point from the week prior but still 3 percentage points ahead of the five-year average. The Southwest drought seemingly favors speedy Texas plantings, but dryness bodes poorly for fall yields.

Ultimately, the cotton market is being significantly affected by outside markets, with this week’s early equity market firmness, dollar values near 20-year highs and fluctuating crude oil prices exerting the greatest influence. Concerns about stagflation seem likely to work against bullish moves, as would sustained dollar strength and/or stock market losses. But having crude oil continue leading the commodity complex higher could directly support cotton as well.

Technical analysis: Bulls still hold the short-term technical advantage in July cotton futures. The contract posted a fresh high at 152.90 today, but couldn’t sustain the move. That high now represents initial resistance, with potential backing at 155.00, then 160.00. Bulls are likely targeting the 175.00 level at this juncture. Today’s low at 148.30 marks initial support, with backing likely to emerge at yesterday’s low of 145.00. A drop below that level would have bears targeting the 10-day moving average near 142.19, then the 140.00 level.

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.

 

Latest News

H&P Report negative compared to pre-report expectations
H&P Report negative compared to pre-report expectations

Nearly every category topped the average pre-report estimates.

After the Bell | March 28, 2024
After the Bell | March 28, 2024

After the Bell | March 28, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

PF Report Reaction: Bullish USDA data for corn
PF Report Reaction: Bullish USDA data for corn

Corn planting intentions and March 1 stocks came in lower than expected.

Report Snapshot: USDA shows lighter-than-expected corn acres and stocks
Report Snapshot: USDA shows lighter-than-expected corn acres and stocks

USDA reported corn acres of 90.036 million acres for 2024 and March 1 stocks of 8.347 billion bu., both well below trade estimates. Soybean acres were slightly lower than expectations, while stocks were higher.