Crops Analysis | February 28, 2022
Price action: May corn futures rose the daily 35-cent trading limit to end at $6.90 3/4. December futures rose 27 1/2 cents to $6.07 1/4. The daily trading limit remains at 35 cents for Tuesday.
USDA today reported 1.544 MMT (60.8 million bu.) of corn inspected for export during the week ended Feb. 24, down from 1.578 MMT the previous week. Expectations ranged from 1 MMT to 1.7 MMT. Inspections are running 11.6% behind year-ago, wider than the 10.6% gap last week. USDA projects corn exports in 2021-22 at 2.425 billion bu., 11.9% below the previous marketing year.
Large speculators increased bullish bets in the corn market for the first time in three weeks, according to the Commodity Futures Trading Commission’s Commitments of Traders report. The managed money net long in corn futures and options increased 28,922 contracts to 354,436 contracts for the week ended Feb. 22. Signs of easing in the Russia/Ukraine conflict and/or a slump in wheat could fuel a fund-driven selloff in corn.
Technical analysis: Corn futures showed signs of exhaustion after briefly rallying above $7.00 late last week before quickly pulling back. The market likely needs a continued rally in wheat for May futures to test the contract high of $7.16 1/4 posted Feb. 24. Initial support is at the 10-day moving average at $6.63 and then Friday’s low at $6.55 1/4.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You should be 90% sold in the cash market on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Cash-only marketers: You should be 90% sold on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Soybeans
Price action: May soybeans surged 52 1/2 cents to $16.36 3/4, while November futures rose 20 3/4 cents to $14.35 3/4. May soymeal firmed $3.60 to $446.30. May soyoil jumped 359 points to 72.52 cents.
Fundamental analysis: Increased anxiety over the Russia/Ukraine conflict fueled an active wave of buyer interest in the soy complex today, which was part of a broader rally commodities. Money flow and emotions tied to the war will continue to be the primary price driver. Soyoil demand will be watched closely as Ukraine in the world’s leading exporter of sunseed oils and Ukrainian ports will reportedly remain shut until the Russian invasion ends.
Soybean export inspections totaled 27 million bu. for the week ended Feb. 24, down from the previous week and year-ago. The decline lowered the weekly required pace to high USDA’s forecast to 17.6 million bushels. USDA reported daily soybean sales of 120,000 MT to unknown destinations for 2021-22 and 136,000 MT to China for 2022-23. That’s been the recent patter – old-crop sales to “unknown” and new-crop sales to China.
The Russia/Ukraine situation has shifted away from South American production forecasts, though there continue to reports of low yields in drought areas and quality problems in the wet areas of Brazil.
Technical analysis: May soybeans posted an inside day up on the daily chart, which signals how volatile price action has become. Near-term trading boundaries for the contract extend from Friday’s low at $15.79 to last Thursday’s high at $17.59 1/4. The breakout from the $1.80 1/4 range will determine if the contract has another push to the upside left or if a major top is in place. But since it’s so wide, the contract could trade within it for an extended period.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You should be 95% sold in the cash market on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Cash-only marketers: You should be 85% sold on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Price action: May SRW wheat closed up 74 1/4 cents at $9.34, while March futures settled at $9.28, the highest close for a nearby contract since $9.43 1/4 in July 2012. May HRW wheat rose 62 cents to $9.53 and the March posted the highest close for nearby futures since April 2011. May spring wheat futures rose 33 3/4 cents to $9.94.
Fundamental analysis: Wheat futures bounced back strongly after sharply lower to limit-down losses Friday. However, extreme price volatility the past few sessions may signal a final phase of the major bull market run. Look for wheat futures to continue to react to news headlines from the Russia/Ukraine war. The general market was spooked today following Russia’s weekend announcement that its nuclear forces have been put on high alert. Concerns over disrupted grain shipments out of Ukraine and Russia—both major global grain exporters—are boosting futures prices.
Egypt's state grains buyer cancelled an international tender for wheat for shipment between April 13-26 with no purchase made. An unusually low number of three trading houses reportedly participated in the tender because of the supply uncertainty amid the Russia-Ukraine conflict. USDA earlier today reported 406,138 MT of wheat (14.9 million bu.) inspected for export during the week ended Feb. 24, down from 570,859 MT the previous week. Expectations ranged from 300,000 to 625,000 MT.
U.S. winter wheat crop conditions continue to deteriorate. The drought- and winterkill-damaged HRW crop will need a cool, wet, spring to set new tillers. The spring forecast offers little hope for relief.
Technical analysis: Winter wheat bulls have a strong near-term technical advantage and gained fresh power today. SRW bulls' next upside price objective is closing May futures above solid resistance at $10.00. Bears' next downside objective is closing prices below solid support at $8.50. First resistance is seen at today’s high of $9.34 3/4, then at $9.50. First support is seen at $9.00, then at today’s low of $8.85 1/2.
HRW bulls' next upside objective is closing May futures above solid resistance at $10.00. Bears' next downside objective is closing prices below solid support at $8.75. First resistance is seen at today’s high of $9.66, then at the contract high of $9.81. First support is seen at today’s low of $9.17, then at $9.00.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You should be 90% sold on 2021-crop in the cash market. You have 10% of 2021-crop hedged in July SRW futures at $8.75 1/4. You should be 40% forward-priced for harvest delivery on expected 2022-crop production.
Cash-only marketers: You should be 90% sold on 2021-crop. You should be 40% forward-priced for harvest delivery on expected 2022-crop production.
Price action: May cotton futures rose 49 points to 119.12 cents per pound, while December futures gained 3 points to 100.36 cents.
Fundamental analysis: Cotton futures rose modestly behind a pullback in U.S. dollar strength and a rally near $100 per barrel in Nymex crude oil futures, as traders kept a close eye on the intensifying conflict between Russia and Ukraine. Cotton is not a major factor in the region of conflict, but Russia and Ukraine combined account for nearly 30% of global wheat exports. U.S. benchmark wheat futures surged over 85 cents today to settle at the highest levels since mid-2012. The U.S. dollar index rose near the 20-month highs reached late last week but faded during the U.S. trading session, encouraging buyers in cotton. Dollar strength makes dollar-denominated commodities such as cotton costlier for foreign buyers.
Large speculators cut their bullish bets in the cotton market for the third consecutive week, CFTC data showed. The managed money net long in cotton futures and options fell 3,014 contracts to 74,657 contracts in the week to Feb. 22, the lowest net long since the week ended Dec. 21, CFTC data showed.
Technical analysis: Cotton futures have turned slightly bearish following a bearish “outside day” lower on the daily chart late last week and a 2 1/2-month uptrend faltering amid growing indications a near-term top has been established. Upside objectives for bulls include closing May futures above resistance at the contract high of 125.83 cents and last week’s high at $125.13. Downside objectives for bears include closing prices below support at last week’s low of 115.86 cents and the 50-day moving average at 116.61 cents.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You are 100% priced in the cash market on 2021-crop. You should also be 50% forward-priced for harvest delivery on expected 2022-crop production.
Cash-only marketers: You should be 90% priced on 2021-crop. You should also be 50% forward-priced for harvest delivery on expected 2022-crop production.
