Crops Analysis | November 21, 2022

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Corn

Price action: December corn fell 8 1/4 cents to $6.59 1/2, nearer the session low, while March corn fell 6 1/2 cents to $6.63 1/2, a one-week low.

Fundamental analysis: Corn futures came under pressure overnight as the U.S. dollar strengthened sharply and rising Covid cases in China stoked concern over demand. China’s new Covid cases are nearing a peak hit in April amid flare-ups around the country, including in Beijing. Beijing's most populous district urged residents to stay at home today, while at least one district in Guangzhou was locked down for five days. Slumping crude oil also weighed on grain futures, with front-month crude dropping near $75 before trimming losses.

Earlier today, USDA reported corn inspected for export during the week ended Nov. 17 at 495,395 MT (19.5 million bu.), down from 535,416 MT last week and around the middle of trade expectations ranging from 235,000 to 700,000 MT. Inspections are running 30% behind a year-ago, compared to 29.5% behind last week. USDA will update harvest progress later today. Based on a Reuters poll, USDA is expected to peg the U.S. corn harvest at 97% complete as of Nov. 20, up from 93% a week earlier.

Technical analysis: December corn traded a 9 1/2 cent range, edging below the 10-day moving average near $6.62 1/2. Corn holds a neutral to slightly bearish near-term technical posture and will continue to find support at $6.56 3/4 along with solid support at the 100-day moving average near $6.50 3/4. A breach of the 100-day will likely signal heavier selling towards $6.25. Conversely, attempts higher will encounter resistance at the 10-day moving average, as well as at $6.71 3/4, and the 40-day moving average near $6.78 1/4.

What to do: Get current with advised sales. Wait to make additional 2022-crop sales.

Hedgers: You should have 50% of 2022-crop sold in the cash market.  

Cash-only marketers: You should have 50% of 2022-crop sold.

 

Soybeans

Price action: January soybeans rose 8 1/2 cents to $14.36 3/4, after dropping as low as $14.17 3/4 earlier today. January soymeal rose $1.90 to $408.00. January soyoil rose 12 points to 70.73 cents after recovering from a four-week low.

Fundamental analysis: Soybean futures erased overnight declines to end higher as firm demand fundamentals and continued dryness in Argentina encouraged buyers. Earlier today, USDA reported soybeans inspected for export during the week ended Nov. 17 at 2.329 MMT (85.6 million bu.), up from 1.964 MT the previous week and at the high end of trade expectations ranging from 1.0 to 2.5 MMT. U.S. soybeans are seeing strong demand in recent weeks with the export window still open before South American supplies become available as soon as late December. Soybean inspections have been above typical seasonal levels, around 77.7 million bushels, in four of the past five weeks

Traders continue to monitor weather and crop progress in South America. About 80% of Brazil’s soybean crop has been planted, up from 69% a week ago but still behind last year, when an estimated 86% of the crop had been sown at this juncture, consultancy AgRural said. Timely rainfall is expected for most of Brazil’s grain and oilseed areas during the coming two weeks, with alternating periods of rain and sunshine and seasonable temperatures, World Weather Inc. said. In Argentina, rain over the weekend “was welcome, but it fell in a classic La Nina manner, leaving eastern areas dry or mostly dry,” World Weather said. Net drying over the next week to ten days “will not fix any of the nation’s moisture deficits, which may lead to greater plant stress and delays to crop emergence and establishment in the driest areas,” the forecaster said.

Technical analysis: Soybean futures shifted to neutral to slightly bullish near-term technical posture, with the January contract up nearly 20 cents the past two sessions and closing above the 20- and 50-day moving averages of $14.31 1/2 and $14.21 1/4, respectively. Further gains Tuesday may compel bulls to target the 200-day moving average of $14.48 1/4, along with last week’s high of $14.64 3/4 and the high for November at $14.69. Initial support comes in at the 40- and 100-day moving averages, which converge around $14.12 to $14.12 1/2. A push under last week’s low of $14.06 3/4 may have bulls targeting $14.00 and the November low at $13.97 3/4.

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

Hedgers: You should be 60% sold in the cash market on 2022-crop production.

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

 

Wheat

Price action: March SRW wheat fell 3 3/4 cents to $8.18 1/4, the contract’s lowest close since Sept. 1. March HRW wheat fell 1 cent to $9.22 3/4, cutting losses after dropping to a two-month low earlier. March spring wheat fell 5 cents to $9.53 3/4.

Fundamental analysis: Winter wheat futures extended last week’s slide as a surging dollar fueled pessimism over export demand, while easing supply concerns following the extension of the Ukraine export also weighed on prices. Export numbers today suggested a slightly pick-up in demand, but U.S. wheat remains uncompetitively prices on the global market. USDA reported wheat inspected for export during the week ended Nov. 17 at 279,904 MT (10.3 million bu.), up from 170,424 MT last week and at the high end of trade expectations ranging from 75,000 to 300,000 MT. Shipments are running 2.2% behind a year-ago, compared with 4.0% behind a year-ago last week. USDA will update winter wheat crop condition ratings after today’s close. Traders expect winter wheat to be rated 33% “good” or “excellent,” up from 32% a week earlier.

Little moisture relief is ahead in the U.S. HRW belt, World Weather said. Limited precipitation is expected to continue at least the next seven days. This is not as much of an issue as it was earlier due to crops being dormant or semi-dormant. However, greater moisture would be beneficial for use in the upcoming year.

Technical analysis: Winter wheat bears have a firm near-term technical advantage, with prices in six-week downtrends on the daily bar charts. SRW bulls' next upside objective is closing March futures above solid resistance at $9.00. Bears' next downside objective is closing prices below solid support at the August low of $7.60 1/4. First resistance is seen at $8.25 and then at $8.40. First support is seen at today’s low of $8.04 1/2 and then at $8.00. 

HRW bulls' next upside objective is closing March futures above solid resistance at $10.00. Bears' next downside objective is closing prices below solid support at $9.00. First resistance is seen at $9.40 and then at $9.50. First support is seen at today’s low of $9.11 1/2 and then at $9.00.

What to do: Wait on an extended price rally to increase cash sales.

Hedgers: 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 the initial daily limit of 400 points to 81.16 cents, the contract’s lowest closing price since Nov. 2. March cotton fell 400 points to 79.78 cents.

Fundamental analysis: Cotton took significant pressure as the dollar strengthened a third straight session and crude oil price tumbled to the lowest level since late January. Concerns demand could be crimped were fueled by rising Covid cases in China, with 26,824 new cases reported Sunday, near the country’s daily infection peak in April. Businesses and schools are being closed in hard-hit districts, along with tightening rules for anyone entering the city as infections ticked higher in Beijing and nationally.

Disappointing U.S. export sales continue to burden over the market. While China’s imports during October were more than double last year’s at 130,000 MT, the country’s imports are still behind the previous year’s pace by nearly 20%, at 1.59 MMT.

Technical analysis: December cotton fell below its recent sideways range, taking a technically bearish turn and suggesting the potential to fill the gap between 75.00 and 78.40 and for an attempt towards the Oct. low of 70.21. Upside potential will find resistance at 82.54, along with the 20-day moving average near 82.58, and 83.85.

What to do: Wait on an extended corrective rebound to get current with advised 2022-crop sales.

Hedgers: You should be 70% sold in the cash market on 2022-crop production.

Cash-only marketers: You should be 70% sold on 2022-crop production.

 

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