Crops Analysis | March 14, 2022

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Corn ­

Price action: Old-crop corn futures finished in the lower end of today’s range, with the May contract down 14 1/4 cents to $7.48 1/4. December corn closed midrange, down 2 3/4 cents to $6.52 1/2.

Fundamental analysis: Corn futures were initially pressured by sharp losses in the wheat market overnight. But as wheat rebounded well off its intraday lows, corn failed to follow. Instead, corn was pressured by profit-taking and corrective selling, largely due to sharp pressure on crude oil futures and overall weakness in the commodity sector. Corn firmed in the face of the sharp plunge in wheat last week and likely will need the wheat market to stabilize to avoid additional pressure.

Weekly corn export inspections declined to 45.1 million bu. in the week ended March 10, down from 62.3 million bu. the previous week. Corn inspections are running 14.2% behind year-ago and will need to average 46.1 million bu. the remainder of the marketing year to hit USDA’s export target of 2.5 billion bu., which was revised up 75 million bu. last week. There is a lot of Ukrainian corn shipments that are offline due to the war that will need to be covered by other countries, including the United States.

Technical analysis: May corn futures continue to hold in the recent consolidation range outlined by the March 4 contract high $7.82 3/4 and the March 8 low at $7.28 3/4. An upside breakout would have bulls targeting the 2013 high of $8.00 on the continuation chart. A downside breakout from the short-term range would make the 20-day moving average at $7.04 1/4 bears’ target, followed by the psychological $7.00 mark.

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 fell 5 1/2 cents to $16.70 1/2, the contract’s lowest settlement since $16.59 1/2 on March 7. May soymeal rose $7.20 to $484.30 per ton, a lifetime-high close for the contract. May soyoil fell 208 points to 73.95 cents per pound.

Fundamental analysis: Soybean futures erased overnight gains and ended lower, pressured by spillover weakness from wheat and crude oil markets. Price gains overnight stemmed from reports Argentina halted export sales registrations for soyoil and meal, which could tighten oilseed supplies already squeezed by drought. The move stops sales and export of the 2021-22 crop, but physical shipments have not started because no harvesting has taken place.

A strong recent export pace continued to underpin soybean futures, though USDA did not announce any daily sales today. USDA reported 772,719 MT (28.4 million bu.) of soybeans were inspected for export during the week ended March 10, up from 768,674 MT the previous week. Inspections are running 21% behind year-ago, compared to 21.6% behind last week. After last week’s upward revision, USDA forecasts U.S. soybean exports will decline 7.6% from last year.

Large speculators have trimmed bullish bets in the soybean market in recent weeks. According to CFTC data, the managed money net long in soybean futures and options fell for the second straight week, dropping 4,007 contracts during the week ending March 8 to 171,714 contracts.

Technical analysis: Soybean futures extended a sideways consolidation pattern that’s held for most of the past two weeks, which indicates market bulls have lost some momentum. May futures remain in a three-month uptrend, but are showing signs of exhaustion, and prices will need to make an extended push above resistance around $17.00 to generate fresh buying interest. For soybean bulls, near-term upside objectives include closing May futures above last week’s high at $17.34 and solid resistance at the contract high of $17.59 1/4, posted Feb. 24. For bears, downside objectives include closing May futures below the 20-day moving average at $16.49 1/2 and last week’s low at $16.34 1/2, along with key support at $15.79.

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.

 

Wheat

Price action: May SRW wheat rose 10 1/4 cents to $10.96 1/4. May HRW wheat rose 10 3/4 cents to $11.00. May spring wheat futures ended unchanged at $10.70 1/4.

Fundamental analysis: Wheat futures gained on short covering that lifted HRW futures by the close, but SRW futures fell in part due to spillover from sharp declines in the crude oil market, which briefly dipped under $100 a barrel. Ongoing concern over disruptions to global wheat trade from the Russia-Ukraine war limited selling interest, but prospects of a ceasefire emerged overnight, pressuring futures. Russia is reportedly gradually resuming wheat exports from its Black Sea ports, and may suspend exports of wheat and other grains starting tomorrow until June 30. The continued closure of Ukraine’s ports and worries about the upcoming planting season for Ukraine grain crops during a war will likely keep wheat futures elevated, even if price do not revisit the recent highs.

USDA today reported 282,344 MT of U.S. wheat inspected for export during the week ended March 10, down from 403,187 MMT the previous week. Inspections are running 16.5% behind year-ago. The strong U.S. dollar is helping to keep U.S. wheat uncompetitive on most world markets. We expect the greenback to remain strong in the coming months. If corn and soybean futures can continue price uptrends and reach new for-the-move highs, or even sustain their present lofty levels, a floor would likely be put in under wheat futures.

Technical analysis: Recent price action strongly suggests major market tops are in place in the wheat futures. SRW winter wheat bulls have lost their near-term technical advantage. SRW bulls' next upside objective is closing May futures above solid resistance at $12.00. Bears' next downside objective is closing May below solid support at $10.00. First resistance is seen at today’s high of $11.48 3/4, then $11.75. First support is seen at today’s low of $10.64, then last week’s low of $10.43 1/4.

HRW bulls' next upside objective is closing May futures above solid resistance at $12.00. Bears' next downside objective is closing May below solid support at $10.00. First resistance is seen at today’s high of $11.38 1/4, then $11.51. First support is seen at $10.75, then $10.50.

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.

 

Cotton

Price action: May cotton futures fell 226 points to 118.77 cents per pound.

Fundamental analysis: Cotton futures fell sharply amid pressure from a broad selloff in commodity markets and concern over renew Covid lockdowns in China, which raised concern over demand. In China, one of the biggest consumers of U.S. cotton, financial hubs such as Shanghai and Shenzhen, have been locked down as COVID-19 cases surge there.

Crude oil futures fell sharply on prospects for ceasefire talks between Russia and Ukraine, which have been at war for almost three weeks. Oil prices fell over 6% to the lowest in nearly two weeks, with Nymex crude briefly dipping below $100 a barrel, amid ideas diplomatic efforts between Ukraine and Russia could halt the fighting. Lower oil prices make polyester, a substitute for cotton, less expensive.

Large speculators reduced their bullish bets in the cotton market for the fifth consecutive week. The managed money net long in cotton futures and options totaled 70,206 contracts as of March 8, down 4283 contracts from the previous week and the smallest net long since Dec. 14, according to CFTC data.

Technical analysis: Cotton futures bulls are losing upside momentum, with prices extending a choppy downtrend the past two weeks. Upside objectives for bulls include closing May futures above solid resistance at 122.00 cents. For bears, downside objectives include closing May below last week’s low at $115.37 cents and solid support at 112.50 cents. Initial resistance is seen at Friday’s high of 121.73 cents. Significant support comes in at the 100-day moving average of 113.86 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.

 

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