Crops Analysis | September 26, 2022

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Corn

Price action: December corn fell 10 1/2 cents to $6.66 1/4, the contract’s lowest closing price since Sept. 2.

Fundamental analysis: Corn futures fell for the third time in the past four sessions as a surging U.S. dollar and slumping crude oil weighed on the commodity sector. Escalating global recession fears continued to fuel a “risk-off” mentality in financial markets, sending the S&P 500 index to the lowest level in over three months. The Midwest weather outlook favors stepped-up harvest, with little rain expected the next two weeks.

USDA earlier today reported 459,420 MT (18.1 million bu.) of corn inspected for export during the week ended Sept. 22, down from 549,476 MT the previous week and short of trade expectations ranged from 500,000 to 800,000 MT. Corn inspections so far in the 2022-23 marketing year are still running 17% ahead of last year’s pace. USDA will update harvest progress today. Analysts expected the corn crop’s good-to-excellent rating to hold at 52% and harvest to be 13% complete through Sunday, based on a Reuters survey. The crop was 7% harvested as of Sept. 18.

Technical analysis: December corn traded a 13 1/2 cent range and pushed under support at $6.68. However, the contract closed above the 100-day moving average at $6.65 1/2. A breach of the 100-day moving average would likely trigger further fund sales and could send futures towards support at $6.59 1/2, as well as the 40-day moving average at $6.50 3/4. Resistance levels went untested in today’s session, however a brief break through the 20-day moving average at $6.78 1/4 did occur. Efforts to the upside will be met with resistance at the 10-day moving average at $6.81 1/2, and again at $6.86 1/2 and $6.96 1/2. Psychological resistance remains at $7.00.

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.

 

Soybeans

Price action: November soybeans fell 14 1/2 cents to $14.11 1/4, the contract’s lowest closing price since Sept. 8. December soymeal fell $5.80 to $417.50, the lowest close since Sept. 9, and December soyoil fell 122 points to 62.46 cents, near a three-week low.

Fundamental analysis: Soybean futures dropped for the fourth consecutive day and ended at the lowest levels in over two week as crude oil dropped to the lowest levels since early January amid growing concerns over the global economy. While the tight supply outlook for 2023 should provide longer-term price support, near-term fundamentals have grown increasingly bearish, with U.S. harvest pressure increasing and export demand sluggish. USDA today reported 257,547 MT (9.5 million bu.) of soybeans inspected for export during the week ended Sept. 22, down from 519,698 MT the previous week and below expectations ranging from 385,000 to 800,000 MT.

USDA is expected to report the U.S. soybean harvest at 11% complete as of Sunday, based on the Reuters survey. Harvest was 3% completed as of Sept. 18, slightly behind the 5% average for the past five years.

Technical analysis: The soy complex technical posture has turned increasingly bearish for the near-term with November soybeans nearing trendline support and closing under the 50-day moving average, currently $14.16 1/2, for the first time since Sept. 8. November soybeans fell as low as $14.08 1/4, and a drop under trendline support around $14.02 may have bears targeting the September intraday low at $13.73 and the August low at $13.56. Near-term resistance is pegged at the 100- and 10-day moving averages at $14.46 1/4 and $14.52 3/4, respectively. December soymeal’s technical posture has also turned bearish, as the contract confirmed Friday’s key reversal day lower. Initial support is seen at the 40-day moving average of $416.10 and the September intraday low at $404.30.

What to do: Get current with advised cash sales. Wait to make additional sales.

Hedgers: You should be 60% sold for harvest delivery on 2022-crop production.

Cash-only marketers: You should be 60% sold for harvest delivery on 2022-crop production.

 

Wheat

Price action: December SRW wheat fell 22 1/2 cents to $8.58. December HRW wheat dropped 21 cents to $9.29 1/2. December spring wheat fell 18 cents to $9.31 1/4.

Fundamental analysis: Grain futures came under further pressure as recession concerns and currency turmoil sent shudders through global financial markets, fueling ideas commodity demand may wane. Crude oil futures fell to a seven-month low below $77. Soft export demand also burdened wheat futures. USDA today reported 520,464 MT of U.S. wheat inspected for export during the week ended Sept. 22, down from 836,620 MT the previous week and around the middle of trade expectations.

USDA is expected to show the U.S. spring wheat crop at 98% harvested as of Sunday, compared to 100% at this time last year. Winter wheat is expected to be 33% planted, up from 21% a week ago.

Technical analysis: Winter wheat futures remain in a four-week uptrend and bulls still hold a slight near-term advantage but need to show fresh power soon. SRW bulls' next upside objective is closing December futures above solid resistance at $9.50. Bears' next downside objective is closing prices below solid support at $8.00. First resistance is seen at today’s high of $8.90 3/4 and then at $9.00. First support is seen at $8.50 and then at $8.35.

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 technical support at $8.50. First resistance is seen at $9.50 and then at today’s high of $9.61 1/2. First support is seen at $9.15 and then at $9.00.

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.

 

Cotton

Price action: December cotton fell 417 points to 88.37 cents, the contract’s lowest settlement since July 14.

Fundamental analysis: Cotton futures plummeted amid accelerating concern over a global recession and the U.S. dollar’s rally to its strongest point since May 2002. A weaker economic outlook demand signals slower demand for cotton and other agricultural commodities. Some Asian mills are reportedly reducing production of yarns by 50%. Supply concerns are also circulating as extreme weather afflicts a number of key cotton-growing regions.

As the U.S. hurricane season lingers, the Southeast could face trouble from Hurricane Ian, which is expected to bring flooding and high winds during the second half of the week. World Weather expects the storm to damage cotton quality in Georgia and northern Florida, with losses mostly due to the wind-driven rain causing the fiber to be strung out of bolls. The forecaster noted some of the crop may have boll rot as the fiber falls to the ground or gets blown out of the bolls, but much of the impact in Georgia and the Carolinas will be to the cotton fiber quality because of heavy rainfall.

Technical analysis: December cotton traded a 550-point range and broke through support at 91.22 and 89.90. Next support will be seen at 87.20, with a breach signaling bears towards the July low at 82.54. Resistance remained untested at 95.18, 97.82 as well as 99.14. The10-day moving average at 97.13 stands as initial resistance.

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

Hedgers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production. You should also have 30% of 2022-crop hedged in December futures at 99.58 cents.

Cash-only marketers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production.

 

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