Crops Analysis | April 18, 2022
Price action: Corn futures finished high-range, with the May contract up 23 cents to $8.13 1/4, the highest nearby closing price since August 2012. New-crop December gained 14 1/2 cents to $7.49 3/4.
Fundamental analysis: Corn futures rode the wave of strength in commodities coming out of the extended holiday weekend. Fundamental support came from global supply concerns, surging inflation and worries about a slow start to the U.S. planting season. Combined with chart-based support, that fueled an active wave of fund-led buying. Bulls have strong momentum and money flow will remain an important factor in near-term price direction.
USDA’s weekly corn export inspections totaled 1.139 MMT (44.8 million bu.), which lowered the required pace to hit USDA’s export forecast to 42.7 million bu. over the remainder of the marketing year. Given major supply disruptions of corn coming out of Ukraine, export demand for U.S. corn is likely to remain strong.
Corn planting delays will continue across the Corn Belt due to cold, damp soils. While air temps are expected to warm up, soil temperatures are still too cold in many areas and multiple rain events are expected across the Corn Belt, Delta and Southeast over the next two weeks.
Technical analysis: May corn futures reached $8.16 3/4, the highest intraday price for a front-month contract since September 2012. Bulls’ target is the all-time high of $8.43 3/4, posted in August 2012. Above that, resistance would come at psychological levels, starting at $8.50 and then every 25 cents higher. The $8.00 mark is now initial support, followed by the contract’s March high at $7.82 3/4. The May 2021 high on the continuation chart at $7.75 will provide additional support.
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: July soybeans rose 28 cents to $16.93 1/4, the contract’s highest closing price since March 23. November soybeans rose 19 1/2 cents to $15.21, a lifetime-high close for the contract. July soymeal rose $4.60 to $460.30 per ton and July soyoil rose 120 points to 78.09 cents per pound.
Fundamental analysis: Nearby soybeans surged to the highest levels in over three weeks on support from rallies in grains, crude oil and Malaysian palm oil. Strong domestic crush and export demand also underpinned the soy complex. U.S. soybean crushing rose in March to a record high for that month, while stocks of soybean oil fell to the lowest since November, according to National Oilseed Processors Association (NOPA) data released last Friday when markets were closed. NOPA members crushed 181.759 million bushels of soybeans last month, up 10% from February and up 2.1% from March 2021. On Friday, USDA announced daily soybean sales to China of 121,000 MT for 2021-22 and 540,000 MT for 2022-23, along with 177,000 MT to “unknown destinations” for 2021-22.
USDA reported 972,509 MT (35.7 million bu.) of soybeans inspected for export during the week ended April 14, up from 818,689 MT the previous week. Expectations ranged from 500,000 MT to 1.15 MMT. Inspections are running 16.8% behind year-ago, compared to 18.3% last week. USDA’s 2021-22 export forecast of 2.115 billion bu. is 6.5% below 2020-21.
USDA’s crop progress report this afternoon is expected to show soybean planting at 2% complete as of yesterday. The soy planting figure will be the USDA’s first for 2022.
Technical analysis: Bullish momentum in the soy complex strengthened as July soybeans closed well above major moving averages and July soyoil posted a lifetime-high close. July soybeans extended a two-week rally and reached $17.00, the contract’s highest intraday price since $17.08 on March 24. A push above today’s high would have bulls targeting the contract high of $17.41, posted Feb. 24. Based on the continuation chart, further resistance is seen at $17.65, a 9 1/2-year high reached in late February. Initial support is at the 10-, 20- and 40-day moving averages from $16.41 to $16.46.
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 24 1/4 cents to $11.28 3/4 and July HRW wheat rose 31 3/4 cents to $11.89, with both hitting six-week highs. July spring wheat rose 31 1/4 cents to $11.78.
Fundamental analysis: Wheat futures climbed as corn prices rallied above $8.00 amid an accelerating “inflation trade” that’s also lifted crude oil, natural gas and cotton. Adverse weather in key U.S. growing regions also supported wheat futures. Overnight temperatures in some SRW states may drop below freezing, while concerns have grown over weather-delayed spring wheat seeding. World Weather Inc. reported a second wave of significant snow fell across the far northern U.S. Plains and a part of southeastern Canada’s Prairies during the weekend after a blizzard hit the region last week. The moisture will eventually be welcome for the spring and summer crops, but the deep snowpack and expected additional precipitation coming will likely promote later-than- normal planting.
USDA reported 432,253 MT of U.S. wheat inspected for export during the week ended April 14, up from 419,185 MT the previous week and in line with market expectations.
USDA’s weekly crop progress report this afternoon is expected to show 33% of the U.S. winter wheat crop in good to excellent condition, according to a Reuters survey. That would be up 1 percentage point from last week but still among the poorest ratings on record for this time of year.
Technical analysis: Winter wheat bulls have the firm overall near-term technical advantage and have momentum. SRW bulls' next upside price objective is closing July prices above solid technical resistance at $12.00. The bears' next downside objective is closing prices below solid technical support at $10.25. First resistance is seen at today’s high of $11.43 and then at $11.50. First support is seen at today’s low of $11.09 1/4 and then at $11.00.
HRW bulls' next upside price objective is closing July prices above solid technical resistance at the March high of $12.59. The bears' next downside objective is closing prices below solid technical support at $10.60. First resistance is seen at $12.00 and then at $12.15. First support is seen at today’s low of $11.60 and then at $11.50.
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 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: July cotton gained 254 points to 143.25 cents per pound, a lifetime-high close for the contract. December futures rose 99 points to 123.47 cents.
Fundamental analysis: Cotton futures are near the highest levels in over a decade on support from broad-based rallies across commodity markets, including crude oil and grains. Corn futures jumped to 10-year highs amid ongoing concern over supply disruptions from the war in Ukraine, while natural gas touched a 13-year high. Drought in key U.S. cotton production areas, such as West Texas, also supported futures, though some moisture relief may be coming. The Southern Plains may see a “restricted rainfall pattern” during the next two weeks, World Weather said. “Many cotton areas will need greater rain to improve conditions for planting and crop development with a couple rounds of showers that will bring enough rain to temporarily improve soil moisture,” the forecaster said.
Large speculators reduced their net long position in cotton futures and options during the week ended April 12, the first weekly decline in the past four weeks, data from the Commodity Futures Trading Commission showed.
Technical analysis: May cotton futures surged to contract high close today. July futures traded inside the previous session’s range and failed to take out the contract high of 144.78 cents posted last Thursday. The contract high marks initial resistance, with further resistance seen around 150.00 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.
