Crops Analysis | April 13, 2022
Price action: May corn futures rose 7 1/4 cents to $7.83 1/2, a lifetime-high settlement for the contract for the second day in a row. December corn rose 4 3/4 cents to $7.35 3/4 after reaching $7.37 1/2, a contract high for the fourth consecutive day.
Fundamental analysis: Overnight losses and profit taking turned into a buying opportunity today for the corn market bulls. A strong rally in the crude oil market this week and a weaker U.S. dollar index today worked in favor of the corn market bulls at mid-week. Other supportive factors included the Biden administration opening more availability of E15 gasoline this summer. U.S. ethanol production averaged 995,000 barrels per day (BPD) during the week ended April 8, down 8,000 bpd from the previous week but 5.7% above the comparable week last year. Ethanol stocks were down a sharp 1.1 million barrels at 24.803 million barrels.
Tomorrow’s weekly USDA export sales report is expected to show net U.S. corn sales of 850,000 to 1.7 MMT in the current marketing year and sales of 300,000 to 800,000 MT in the 2022-23 marketing year. Recent strong U.S. export sales data is also keeping corn futures prices at historically high levels.
Technical analysis: Corn bulls have the strong near-term technical advantage. The next upside price objective for the bulls is to close May prices above solid longer-term resistance at $8.00. The next downside target for the bears is closing May prices below support at $7.50. First resistance is seen at $7.90, then at $8.00. First support is at $7.70, then at this week’s low of $7.62.
What to do: Get current with advised 2021- and 2022-crop sales.
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.
Price action: May soybeans rose 5 3/4 cents to $16.76, while November soybeans fell 1 1/4 cent to $15.05 3/4. May soymeal fell $2.70 to $458.20, while May soyoil rose 268 points to 78.11 cents per pound, a lifetime-high close for the contract.
Fundamental analysis: Soybeans rebounded from early declines with support from strength in corn and wheat markets, while nearby soyoil surged behind strength in crude oil and palm oil and general concern over tight global vegetable oil supplies as the Russia/Ukraine war drags on. New-crop November soybeans were under pressure as a slow start to U.S. corn planting raises prospects for higher bean acreage.
Also today, China imported 6.4 MMT of soybeans in March, down 18.3% from last year, as poor crush margins and delays in shipments from Brazil slowed arrivals. Through the first three months of the year, China’s soybean imports stood at 20.3 MMT, down 4.2% from the same period last year. Brazil's soybean exports may reach 12.023 MMT in April, according to Anec, up 906,000 MT versus the agency's previous forecast.
UDSA tomorrow is expected to report net weekly U.S. soybean sales from 300,000 MT to 1.0 MMT for 2021-22 and sales of 100,000 to 500,000 MT for 2022-23. Last week, USDA reported net sales for 2021-22 totaling 800,700 MT, down 39% from the previous week and down 38% from the prior four-week average.
Technical analysis: Nearby soybeans’ technical performance strengthened slightly today but prices remain inside the narrow range from the past week. The market likely requires extended gains in corn and/or wheat, along with crude oil, to take out yesterday’s high at $16.97 1/2 and spark sustained buying interest. Near-term support in May soybeans is seen at the 10-day and 50-day moving averages around $16.39 and $16.38 1/2, respectively. Further support comes in at the April low of $15.76 3/4. Further resistance includes the psychologically important $17.00 area and the late-March high of $17.36 1/2.
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: July SRW wheat rose 8 3/4 cents to $11.21 1/4, the contract’s highest closing price since $11.27 1/2 on March 15. July HRW rose 11 1/4 cents to $11.78, the contract’s highest close since March 8. July spring wheat rose 3 cents to $11.59.
Fundamental analysis: Winter wheat futures rose for the fourth consecutive day, rebounding from overnight losses and climbing to the highest levels in four weeks or more amid ongoing concerns over supply disruptions from the Russia/Ukraine war and drought-stressed crops in the U.S. Plains. Little to no precipitation is expected in the HRW region over the next seven days, with the exception of the eastern fringes of the region where some occasional showers and thunderstorms will occur, World Weather Inc. said. “Wheat conditions in the southern U.S. Plains will remain poor,” World Weather said.
Also, France’s ag ministry lowered its forecast for French 2021-22 wheat exports outside the European Union by 200,000 MT to 9.5 MMT. The reduction partly reversed a 3-MMT upward revision to the ministry’s forecast last month, when it anticipated France would replace some Black Sea trade disrupted by Russia's invasion of Ukraine.
USDA tomorrow is expected to report net weekly U.S. wheat sales of 100,000 to 250,000 MT for the 2021-22 marketing year and 100,000 to 400,000 MT for 2022-23. Last week, weekly sales totaled 156,300 MT for 2021-22, up 65% from the previous week but down 11% from the prior four-week average.
Technical analysis: Winter wheat bulls gained further strength as prices climbed closer to the intraday highs from late March and SRW futures extended a strong uptrend that began at the outset of April. SRW bulls' objectives including closing July futures above resistance around the late-March high of $11.39 3/4 and the March 9 high of $11.94. Initial support is seen at the 20-day and 10-day moving averages at $10.57 1/4 and $10.48 3/4, respectively. Further support is seen at last week’s low of $9.85.
July SRW wheat is trading within yesterday’s range after posting a three-week intraday high at $11.25 yesterday. A push above yesterday’s high may have bulls targeting the late March high around $11.40.
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 also have 50% of expected 2022-crop forward-sold for harvest delivery.
Cash-only marketers: You should be 90% sold on 2021-crop. You should also have 50% of expected 2022-crop forward-sold for harvest delivery.
Price action: Cotton futures settled high-range with strong gains. May cotton surged 426 points to 142.77 cents, July cotton rallied 406 points to 141.51 cents and December cotton rallied 215 points to 122.18 cents.
Fundamental analysis: It took cotton bulls a while to get going, but once they gained footing, gains sharply extended as buy stops were triggered. Much of the price support came from outside markets as crude oil rallied, as did the stock market, while the U.S. dollar fell sharply.
While funds have rolled many of their long positions in May cotton to the July or December contracts, there’s still buyer interest in the front-month contract. Because of the unusually wide spread, new-crop December futures have little choice but to actively follow when old-crop contracts surge. Even so, the July/December spread widened almost 200 points today.
Much of the focus Thursday will be on outside markets as traders wrap up the shortened week ahead of the extended holiday weekend. Fundament focus will be on USDA’s weekly export sales data, with particular attention on 2021-22 exports.
Technical analysis: May cotton futures surged to contract high at 143.38 cents, the highest price since July 2011, when prices were sharply retreating from their all-time high earlier that year. Next solid resistance doesn’t come until the 157.00-cent to 162.00-cent area on the continuation chart, though psychological resistance is at 145.00 cents and every 500 points higher. Consecutive higher closes above the old contract high at 141.80 cents posted in late March would turn that level into solid support.
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.
