Crops Analysis | December 15, 2022

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Corn

Price action: March corn rose 3 cents to $6.53 1/2, near the top of today’s range.

Fundamental analysis: Corn futures ended firmer following two-sided, narrow-range trading, supported by stronger than expected export numbers. Bearish outside markets, including a stronger dollar and weaker crude oil, weighed on prices earlier in the session. USDA reported net corn sales of 958,900 MT during the week ended Dec. 8, up from 691,600 MT the previous week and above trade expectations ranging from 600,000 to 900,000 MT. Top buyers included Guatemala (196,400 MT) and Mexico (170,800 MT). USDA separately reported a daily sale of 101,600 MT of corn for delivery to Mexico during the 2022-23 marketing year. The overall export picture for corn remains bearish, however, with export commitments so far in 2022-23 lagging last year’s pace by nearly 50%.

Weather in South America remained price-supportive but not concerning enough yet to justify rallies in corn. Corn sowing in Argentina reached 47%, down from last year’s rate of 66%, according to the Rosario Grains Exchange. Argentina’s heat and dryness likely will continue to stress crops, even in areas that received rains recently, World Weather Inc. said. Brazil is faring better, with much of the country expected to continue to see “a good mix” of rain and sunshine the next two weeks and enough rain to maintain favorable conditions.

Technical analysis: March corn traded a 6 1/2-cent range, making a low just above support at $6.47 and the 10-day moving average at $6.46 1/4, where support will continue. Further support stands at $6.43 1/2 along with $6.40 3/4. Attempts higher will again encounter resistance at $6.53 ¾ as well as the 20-day moving average near $6.56 1/2, and $6.57, and again at $6.60 1/2.

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 fell 8 3/4 cents to $14.73 1/2, down about a dime so far this week. January soymeal fell $4.80 to $455.30. January soyoil rose 27 points to 63.82 cents.

Fundamental analysis: Soybeans fell as recession concerns sent crude oil and U.S. equities lower and overshadowed stronger than expected exports. USDA early today reported net weekly soybean sales totaling 2.943 MMT, up from 1.72 MMT the previous week and above expectations from 1.5 to 2.0 MMT. China led buyers at 1.253 MMT, including 197,000 MT switched from “unknown destinations.” U.S. soybean export commitments are now running 4.4% ahead of a year-ago, up from 0.3% ahead last week. Strong exports and dryness in Argentina remain price-supportive forces for soybean futures, but upside momentum has slowed this week, partly reflecting the Federal Reserve’s hawkish comments Wednesday on inflation and interest rates. Beneficial, but mostly light, rain fell Wednesday from west-central to southeastern Argentina, World Weather said. Rain during the next two weeks “should not be great enough to prevent continued increases in crop stress in much of Argentina, while warm to hot temperatures returning next week will accelerate stress to crops and may extend planting delays.”

The U.S. soybean crush dropped more than expected in November, based on National Oilseed Processors Association (NOPA) data. NOPA members crushed 179.184 million bushels of soybeans last month, down from the 184.464 million bushels processed in October and slightly below the November 2021 crush of 179.462 million bushels. NOPA's crush figure was about 2.289 million bu. below the average estimate in a Reuters survey. NOPA figures imply a full November crush of about 191 million bu., which, if confirmed, would be up slightly from 190.598 million last year. We estimate the crushing pace so far in 2022-23 is up 0.7% from the same period in 2021-22, running below USDA’s full-year estimate for a 1.9% increase.

Technical analysis: Soybean futures hold a near-term neutral-to-bullish posture even with prices settling into a sideways pattern the past week. January futures are still in an eight-week uptrend and closed above key short- and medium-term moving averages. Key upside objectives for market bulls include last week’s intraday high of $14.92 3/4. A push above that level may trigger buy stops that could help fuel a continued rally above $15.00, with additional targets including the August intraday high of $15.12 1/4 (a break above $15.00 could also unlock a wave of farmer selling). Initial support comes in at the 10-day moving average at $14.66 3/4, followed by the 20- and 200-day moving averages at $14.53 1/4 and $14.49 1/2, respectively. Further downside support lies at the 40-day moving average at $14.40.

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 rose 8 cents to $7.57 1/4. March HRW wheat gained 10 1/4 cents to $8.60 1/2. Prices closed nearer the session highs. March spring wheat rose 1 1/2 cents to $9.18 3/4.

Fundamental analysis: Wheat futures rose behind short covering and signs of improvement in export demand. USDA said net weekly U.S. wheat sales totaled 469,000 MT, up from 189,900 the previous week and above expectations ranging from 150,000 to 300,000 MT. The top buyer was “unknown destinations” at 164,000 MT. But the broader export picture remains bearish, with U.S. export commitments so far in 2022-23 now running 7.2% behind a year-ago, compared to 6.3% behind last week. Smaller crop outlooks for other top wheat countries provided some support for wheat futures. The Rosario Grain Exchange lowered its 2022-23 Argentine wheat crop forecast another 300,000 MT, to 11.5 MMT, below the 19 MMT that was expected at the start of the growing season.

Wheat futures may have difficulty sustaining gains after beneficial moisture reached parts of Plains wheat country this week, with heavy snow in the Northern and Central Plains. More snow is expected in the coming days. World Weather said there will be a growing need for greater snow cover to protect crops from threatening cold temperatures, particularly in the second week of the outlook.

Technical analysis: Winter wheat futures bears still have the solid overall near-term technical advantage, with prices in two-month-old downtrends on daily bar charts. The rebound in winter wheat futures from December lows suggests near-term market bottoms are in place. Bullish weekly high closes Friday would better suggest near-term lows are in place in the wheat futures markets. SRW bulls' next upside objective is closing March futures above solid resistance at $8.00. Bears' next downside objective is closing prices below solid support at $7.00. First resistance is seen at this week’s high of $7.69 1/4 and then at $7.80. First support is seen at today’s low of $7.45 and then at $7.35.

HRW bulls' next upside objective is closing March futures above solid resistance at $9.50. Bears' next downside objective is closing prices below solid support at the August low of $8.11 3/4. First resistance is seen at this week’s high of $8.79 1/4 and then at $9.00. First support is seen at $8.50 and then at this week’s low of $8.37 1/2.

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: March cotton fell 34 points at 81.03 cents and near mid-range.

Fundamental analysis: Nearby cotton futures eased in subdued trading, with pressure coming from a stronger U.S. dollar and weakness in U.S. equities and crude oil. China appears to be a mixed bag for the cotton market. Bulls can point to the lifting of Covid restrictions as making for a faster recovery for the world’s second-largest economy. However, cotton bears note that as restrictions are lifted, new infections are soaring, which could further crimp the Chinese economy.

USDA early today reported net weekly U.S. cotton sales of 18,600 running bales (RB) for 2022-23, down from 32,600 MT the previous week. Top buyers included South Korea (17,900 RB), China (10,900 RB) and Mexico (4,600 RB. U.S. cotton export commitments so far in 2022-23 are running 12.6% behind a year-ago, wider than the 10.2% shortfall last week. USDA forecasts total cotton exports will fall 16.2% from a year ago to 12.25 million bales in 2022-23.

Technical analysis: Cotton bears hold a near-term technical advantage with prices in a four-week downtrend on the daily bar chart. The next upside objective for bulls is to close March futures above resistance at the November high of 89.92 cents. The next downside price objective for bears is to close prices below solid support at 75.00 cents. First resistance is seen at this week’s high of 82.55 cents and then at 83.75 cents. First support is seen at 80.00 cents and then at this week’s low of 78.80 cents.

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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