Crops Analysis | February 15, 2023
Corn
Price action: March corn futures fell 6 cents to $6.76 1/4, near the session low.
Fundamental analysis: After testing the $6.85-$6.88 3/4 resistance area the last few sessions, bears were able to follow through to the downside in today’s price action. The U.S dollar index rose to levels not seen since the first week of January, further pressuring corn prices.
USDA reported a daily sale of 213,370 MT to Mexico this morning. This follows the recent dispute over GMO corn over the last several days, which resulted in Mexico allowing imports for GMO corn for animal feed and industrial use.
The forecast for Argentina remains dry for southern regions through the end of the month, according to World Weather Inc. Northern Argentina is projected to receive some timely rainfall to improve minor grain production areas. Mato Grasso, Brazil has seen favorable weather for soybean harvesting and field work, allowing double crop Safrinha corn planting to be done. This favorable weather window is expected to close as heavy rain is expected this weekend into next week.
Weekly USDA export sales will be released tomorrow, with traders expecting the range to be between 600,000 MT and 1.2 MMT. Export sales last week were reported at 1.16 MMT, near the top of pre-report estimates.
Technical analysis: March corn has continued its recent trend of testing resistance then coming down and making a higher low. Bulls want to limit downside to $6.70 and above to keep this trend in place. The recent range is a high at $6.88 3/4 and a recent low at $6.69 1/4. Price action has been tightening since early December and the current range of a mere 19 cents is bound to break out one way or the other before too long. Bulls want to defend support at $6.73, $6.69 1/4, or more downside is likely. Bears want to continue to defend resistance at $6.85, $6.88 3/4, and force a lower high if prices do rebound here in the coming days.
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: March soybeans fell 11 3/4 cents to $15.25 3/4, ending the session below the 10-day moving average, while Mach meal futures dropped $9.90 to $491.10 and March soyoil rose 84 points to 61.24 cents.
Fundamental analysis: Soybean futures extended the overnight trend lower early in the session, with pressure largely stemming from a rising U.S. dollar following stronger-than-expected Consumer Price Index data released early Tuesday. Though a midmorning rally in soyoil lifted soybeans off their lows following the National Oilseed Processors Association’s (NOPA) release of January data, which was shy of market expectations. Although U.S. soybean crush rose for the first time in three months, with soyoil supplies rising for a fourth consecutive month, NOPA reported crush among NOPA members at 179.007 million bushels in January, missing the pre-report average estimate of 181.7 million bushels. Soyoil supplies as of Jan. 31 rose to 1.829 billion pounds, a 2.1% increase from 1.791 million pounds at the end of December but proved short of the average pre-report estimate of 1.906 billion pounds and 9.7% below the year-ago figure of 2.026 billion pounds.
Traders continue to evaluate South American weather conditions and production potentials amid varying forecasts. World Weather Inc. notes Mato Grasso, Brazil will experience increasing rainfall frequency coverage and intensity this weekend into next week, slowing fieldwork and raising a new wave of concern over safrinha corn production potentials. Conversely, the forecaster continues to predict southern Argentina will finish out the month of February drier than usual with crop moisture stress still pressuring production potentials. However, northern Argentina is expected to receive some timey rainfall during the next two weeks to improve minor grain and oilseed production areas.
USDA will release weekly export sales early Thursday, with pre-report estimates suggesting a range of sales between 400,000 and 800,000 MT. Net sales of 459,443 MT were reported for the previous week, indicating a slightly softer tone as Brazil harvest efforts increase.
Technical analysis: March soybeans traded a 20 1/2 cent range, falling below the 10- and 20-day moving averages of $15.29 and $15.20 3/4, though a close was held above the 20-day where further attempts to the downside will continue to face support. Additional support lies at the 40-day moving average of $15.09 and $14.78 1/4. Conversely, initial resistance continues to stand at $15.43 3/4, as well as $15.50 1/4 and $15.55 3/4. Despite today’s turn lower, bulls continue to firmly grasp the near-term technical advantage.
March meal futures traded an $11.30 range, breaching the 10-day moving average of $493.20 in the process. Persisting downside efforts will face support first at the 20-day moving average of $483.10, then at the 40-day moving average $473.70. A turn higher, will encounter resistance at $504.90, $508.90 and $511.60.
March soyoil traded a 178-point range, finishing the session above 20-day moving average of $60.84. Resistance stands at 61.29, 61.93 and the 40-day moving average of 62.35. Initial support lies at 59.77, 59.13 and 58.69.
What to do: Get current with advised cash sales. Be prepared to advance sales.
Hedgers: You have 70% of 2022-crop sold in the cash market. No 2023-crop sales have been advised.
Cash-only marketers: You have 70% of 2022-crop sold. No 2023-crop sales have been advised.
Wheat
Price action: March SRW futures fell 16 3/4 to $7.69 1/4 near session lows. March HRW futures fell 11 1/2 cents to $8.94 1/2, while spring wheat fell 7 1/4 cents to $9.24 3/4.
Fundamental analysis: The wheat complex was in risk off mode throughout the session amid a strengthening U.S. dollar following stronger than expected Consumer Price Index data released early Tuesday. In general, commodities fell under pressure as a higher dollar could further crimp export prospects. However, wheat continues to hold a near-term uptrend, but resistance has proven to be formidable.
Ukraine is concerned about the interference in the Black Sea. Two of Ukraine’s ministers released a joint statement asking the United Nations and Turkey to demand the Russian Federation to stop the delays in the Black Sea grain corridor. The current deal, extended in November, runs until March 19. There is currently a backlog of ships, due to the excessive amount of time it has taken to inspect the ships heading in and out of Black Sea ports. Between this and the low water levels limiting loads, less grain is moving out of Ukraine. Despite the lack of grain movement out of Ukraine, Russia has increased it’s 2022-2023 wheat export forecast to 44.2 MMT, adding to the already record exports.
HRW areas from Colorado through Kansas and Nebraska will receive 3-7 inches of snow today, according to World Weather Inc. Some benefit is expected for the soil once the snow does eventually melt. This precipitation will help, but more is needed to continue improvements in HRW areas.
Weekly U.S. export sales for week ended Feb. 9 will be released on Thursday, with traders expecting a figure between 150,000 and 450,000 MT. USDA reported net sales of 131,389 MT for the previous week, which was well in the lower range of pre-report expectations.
Technical analysis: SRW futures finished near session lows after rejecting off the 100-day moving average and the psychological $8.00 level. Bulls want to take out the $8.00 level in the next few sessions or more downside is likely. There is support at $7.66 and $7.55. HRW losses were capped by the 100-day moving average at $8.92 2/4. This support level would need to be taken out for further downside, with further support coming in at $8.80. Bulls are aiming to take out the recent high at $9.21 2/4. Spring wheat continued yesterday’s rejection of the 100-day moving average. Bulls will want to take out that at $9.36 2/4. Support comes in at $9.16 2/4.
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 futures lost 285 points to 82.55 cents. May cotton fell 283 points to close at 82.87 cents. Prices closed near the session lows and hit four-week lows today.
Fundamental analysis: The cotton futures market was hit today by bearish outside markets that saw a sharply higher U.S. dollar index, lower crude oil prices and a wobbly U.S. stock market. A much-stronger-than-expected U.S. retail sales report for January today led to ideas the Federal Reserve will continue to ratchet up interest rates and eventually crimp consumer and commercial demand in order to further reduce inflation. That’s a bearish scenario for the cotton market. Look for cotton futures traders to continue to look to those key outside markets for price direction in the near term.
Traders are awaiting Thursday morning’s USDA weekly export sales report. U.S. cotton export sales of 262,800 bales last week reached a marketing year high.
Technical analysis: May cotton futures today saw a bearish downside breakout from the trading range of the past four weeks, giving cotton bears the overall near-term technical advantage. The next upside price objective for the cotton bulls is to produce a close in May futures above technical resistance at the January high of 89.31 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at the January low of 80.46 cents. First resistance is seen at 84.00 cents and then at 85.00 cents. First support is seen at 82.00 cents and then at 81.00 cents.
What to do: Get current with advised sales. Wait to extend 2022-crop sales.
Hedgers: You should be 70% sold in the cash market on 2022-crop production. You also should have 20% of expected 2023-crop forward sold for harvest delivery.
Cash-only marketers: You should be 70% sold on 2022-crop production. You also should have 20% of expected 2023-crop forward sold for harvest delivery.
