Crops Analysis | September 7, 2022
Price action: December futures fell 5 cents to $6.71, after earlier reaching $6.88, the contract’s highest intraday price since June 23.
Fundamental analysis: Corn futures faded to losses after climbing overnight amid renewed uncertainty over Ukraine’s grain supplies following reports Vladimir Putin claimed Russia and the developing world had been “cheated” by a UN-brokered Ukrainian grain export deal and vowed to look to revise its terms to limit the countries that can receive shipments. Putin said Ukrainian grain exports were not going to the world’s poorest countries as originally intended. Ukraine said Russia had no grounds to review the deal, and that the terms of the wartime agreement were being strictly observed. Later in the session, reports of a constructive meeting between UN and Russian officials over Russian grain and fertilizer exports contributed to selling pressure on corn.
Late Tuesday, USDA reported the U.S. corn crop condition at 54% “good” or “excellent” as of Sunday, unchanged from a week earlier and above analysts' expectations for a drop to 53%. The crop was rated 15% mature, slightly behind the five-year average of 18% for that date. When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 1.6 points to 340.5, the eighth straight weekly decline and 5.1% below the five-year average.
Early today, USDA reported a sale of 257,400 MT of corn for delivery to Mexico, including 226,920 MT for the 2022-23 marketing year and 30,480 MT for delivery during the 2023-24 marketing year.
Technical analysis: December corn ended near the bottom of today’s 19-cent range after earlier posting a 2 1/2-month high. The uptrend that began in late July remains intact, but the market faces longer-term resistance that may limit upside in coming weeks. December futures failed to close above resistance at $6.81 and $6.86 1/4 or the 100-day moving average around $6.73. However, the 10-day moving average at $6.67 and the $6.66 mark went untouched today and remain solid near-term support. A breakthrough this area, will have bears targeting support at $6.56 as well as the 20-day moving average at $6.46 3/4. Conversely, advances to the upside will be met with resistance at $6.96 and the psychological $7.00 mark.
What to do: Get current with advised sales. Wait to make additional 2022-crop sales.
Hedgers: You should have 50% of 2022-crop sold for harvest delivery.
Cash-only marketers: You should have 50% of 2022-crop sold for harvest delivery.
Price action: November soybeans fell 15 1/4 cents to $13.83 1/2, the contract’s lowest closing price since Aug. 16. October soymeal rose $4.40 to $415.00, while October soyoil fell122 points to 63.68 cents, near a five-week low.
Fundamental analysis: November soybeans ended at the lowest level in over three weeks amid signs of increasing supplies and slower demand, with prospects for a record U.S. crop continuing to weigh on the market. Sharp declines in crude oil, which fell to the lowest prices since January, also burdened the soy complex. China’s purchases have dropped this year, and Argentina’s recent move to boost exports by raising the exchange rate for its soybean exports signals increased competition for the U.S. crop. China imported 7.17 MMT of soybeans in August, down 9.0% from July and 24.5% less than year-ago and the smallest August import tally since 2014. Through the first eight months of this year, China imported 67.08 MMT of soybeans, down 8.6% from the same period last year.
USDA’s weekly crop condition ratings showed modest improvement in soybeans. Late Tuesday, USDA said 57% of the U.S. soybean crop was in “good” or “excellent” condition as of Sunday, unchanged from a week earlier and above expectations for a drop to 56%. Based on the Pro Farmer CCI, the soybean crop declined 2.2 points to 343.6, the fifth consecutive weekly drop and 2.4% under the five-year average.
Technical analysis: Near-term soybean technicals have turned increasingly bearish as November futures extended a two-week downtrend and posted an “outside day” lower on the daily bar chart, a potential bearish signal and would be confirmed if sustained follow-through selling develops Wednesday. November soybeans today fell as low as $13.80 3/4, slightly above support at the mid-August low of $13.76 1/2. A push under that level may compel bears to test the low for all of August at $13.56. Further downside support is seen at the July low of $12.88 1/2. Initial resistance comes in at the 40- and 50-day moving averages from $13.99 1/2 to $14.01, followed by the 20-day moving average around $14.23.
What to do: Get current with advised cash sales. Hedgers should maintain the 10% short hedge position in November futures at $14.73.
Hedgers: You should be 60% sold for harvest delivery on 2022-crop production. You also have 10% of 2022-crop production hedged in short November soybean futures at $14.73.
Cash-only marketers: You should be 60% sold for harvest delivery on 2022-crop production.
Price action: December SRW wheat rose 27 1/4 cents at $8.44 1/4, the contract’s highest closing price since July 11. December HRW wheat gained 19 1/2 cents at $9.01 1/2. December spring wheat rose 10 1/4 cents to $9.00.
Gains in spring wheat futures were muted by accelerating harvest pressure. USDA late Tuesday reported 71% of the U.S. spring wheat crop was harvested as of Sunday, up from 50% a week earlier. The winter wheat crop was 3% planted as of Sunday, on par with the average for the previous five years.
Technical analysis: Winter wheat futures today saw bullish upside “breakouts” from sideways trading ranges at lower levels on the daily charts. Bulls have also started fledgling price uptrends on the daily charts. SRW bulls' next upside price objective is closing December prices above psychological resistance at $9.00. The bears' next downside objective is closing prices below solid technical support at the September low of $7.91 1/4. First resistance is seen at today’s high of $8.73 1/2 and then at $9.00. First support is seen at $8.25 and then at $8.00.
HRW bulls' next upside objective is closing December futures above solid resistance at $10.00. The bears' next downside objective is closing prices below solid support at $8.50. First resistance is seen at today’s high of $9.34, then $9.50. First support is seen at this week’s low of $8.71 1/2, then $8.60.
What to do: Get current with advised hedges. Wait on a corrective rebound to increase cash sales.
Hedgers: You have 15% of 2022-crop hedged in short December SRW futures at $7.83. You should be 85% sold in the cash market on 2022-crop. You should be 30% forward-priced on expected 2023-crop for harvest delivery next year.
Cash-only marketers: You should be 85% sold on 2022-crop. You should also be 30% forward-priced on expected 2023-crop production for harvest delivery next year.
Price action: December cotton fell 193 points to 101.62 cents, a four-week closing low.
Fundamental analysis: Cotton futures were pressured by a strong U.S. dollar index, which posted a 20-year high for the third day in a row, and by slumping crude oil, which dropped to an eight-month low. More downbeat economic data from China also worked in favor of the cotton market bears. World Weather said drier weather in West Texas during the weekend “was welcome, and so will be the drier bias that is expected through most of this week.” Portions of the Delta and especially the southeastern states will be trending wetter this week and that may eventually raise a little concern, said the forecaster.
Technical analysis: Cotton futures bears have the overall near-term technical advantage. Today’s low-range close in cotton futures sets the stage for some follow-through technical selling Thursday. However, that scenario would then put the cotton market into short-term technically oversold territory and suggest a corrective bounce is due. The next upside price objective for the cotton bulls is to produce a close in December futures above technical resistance 110.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 100.00 cents. First resistance is seen at this week’s high of 106.00 cents and then at 107.00 cents. First support is seen at today’s low of 101.19 cents and then at 100.00 cents.
What to do: Get current with advised 2022-crop sales.
Hedgers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production.
Cash-only marketers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production.
