Crops Analysis | April 21, 2022
Price action: July corn futures fell 14 3/4 cents to $7.95 1/4, the contract’s lowest settlement in a week. December corn fell 9 3/4 cents to $7.38 3/4.
Fundamental analysis: Nearby corn futures extended overnight declines and closed below $8.00 for the first day since April 14 after weekly USDA export sales fell short of expectations, stirring concern that high prices are crimping demand. USDA reported net U.S. corn sales for 2021-22 totaling 879,200 MT during the week ended April 14, down 34% from the previous week and down 6% from the average for the previous four weeks. China bought a net 675,200 MT, including decreases of 5,600 MT. Net weekly sales for 2022-23 totaled 389,600 MT, led by China at 340,000 MT.
Sales fell short of trade expectations, which ranged from 950,000 to 1.5 MMT for 2021-22 and 400,000 to 800,000 MT for 2022-23. However, a recent pick-up in demand has help this year’s export pace narrow the gap with 2020-21. Export commitments are 16% behind year-ago, compared to 17% behind last week. USDA projects exports in 2021-22 at 2.500 billion bu., 9.2% below 2020-21.
Also today, the International Grains Council forecast global corn production would fall by 13 MMT in the 2022-23 season to 1.197 billion MT, reflecting smaller crops in Ukraine and the United States. The inter-governmental body, in its first full assessment of the 2022-23 season, forecast Ukraine's corn crop falling to 18.6 MMT, down from 41.9 MMT last year.
Technical analysis: Corn futures bulls hold a near-term technical advantage but momentum has stalled slightly with the market failing to generate a test of the contract highs posted earlier this week. July futures still ended above most key short- and medium-term moving averages and dropped out of overbought conditions today, with the Relative Strength Index ending just under 66.
Upside objectives for bulls including closing July futures above the $8.14 contract high and longer-term resistance at the record high of $8.43 3/4, based on nearby futures. Downside targets for bears include closing prices below support at $7.50. Initial resistance comes in around yesterday’s low at $7.92 and the 10-day moving average at $7.81 1/2.
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 2 1/2 cents to $17.19 1/2, a lifetime-high close for the contract, while May soybeans rose 1 1/2 cents to $17.48 1/4, the highest close for a nearby contract since August 2012. July soybean meal fell $2.40 to $463.90. July soyoil rose 89 points to 79.64 cents per pound, a lifetime-high close.
Fundamental analysis: Soybeans futures posted modest gains despite a slump in corn and wheat, suggesting the soy complex still retains bullish near-term fundamental and technical underpinnings. Soybean prices gained support from strong weekly U.S. export sales. Net weekly soybean sales of 460,200 MT for 2021-22 were down 16% from the previous week and down 39% from the four-week average. However, net sales for 2022-23 were up a solid 1.24 MMT, led by demand from China. Only 20% of China’s soybean needs for June-September have been booked, Reuters reported.
Tight global vegetable oil supplies continue to support soyoil futures. Palm oil demand is expected to continue to rise in coming months, driven by a widening discount to rival vegetable oils. The war in Ukraine, a leading sunflower oil producer, has disrupted supplies. Look for soybean, meal and bean oil futures prices to remain elevated for at least the next several weeks due to the Russia/Ukraine war, rising inflation and weather uncertainties surrounding the U.S. soybean growing season.
Technical analysis: Soybean futures bulls have a solid near-term technical advantage. The next near-term upside objective for soybean bulls is closing July futures above solid resistance at the contract high of $17.41. The next downside objective for bears is closing prices below solid support at $16.50. First resistance is seen at today’s high of $17.23 1/2, then at $17.41. First support is seen at $17.00, then at Wednesday’s low of $16.88 1/4.
Soybean meal bulls have a firm near-term technical advantage. The next upside objective is to close July futures above solid resistance at the contract high of $484.60. The next downside objective for bears is closing prices below solid support at the April low of $441.10. First resistance comes in at today’s high of $467.48, then at $472.50. First support is seen at today’s low of $460.50, then at this week’s low of $452.80.
Soyoil bulls have a strong near-term technical advantage. The next upside objective is closing July prices above solid resistance at 82.50 cents. Bears' next downside objective is closing prices below solid support at 72.50 cents. First resistance is seen at 79.00 cents, then at 80.00 cents. First support is seen at this week’s low of 76.95 cents, then at 76.00 cents.
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 fell 21 cents to $10.76 1/2, the contract’s lowest closing price since April 8. July HRW wheat fell 26 cents to $11.43 1/2. July spring wheat fell 17 3/4 cents to $11.54 1/2.
Fundamental analysis: Winter wheat futures fell to two-week lows following disappointing weekly USDA export sales data, with additional pressure coming from a strong U.S. dollar. Net weekly U.S. wheat sales plunged to 26,300 MT for 2021-22, down 73% from the previous week, down 79% from the four-week average and a marketing-year low. Net sales totaled 238,400 MT for 2022-23. U.S. wheat export commitments are running 24% behind a year-ago, wider than the 23% gap last week. USDA projects exports in 2021-22 at 785 million bu., down 21% from the previous marketing year.
U.S. winter wheat considered in drought conditions increased one point to 70% for the week ended April 19, according to the U.S. Drought Monitor. USDA rated winter wheat drought as 16% moderate, 30% severe, 21% extreme and 2% exceptional. The poor condition ratings may eventually put a floor under the wheat market and supply disruptions from the Russia/Ukraine war should also limit selling pressure for at least the near-term.
Technical analysis: Winter wheat bulls are fading and need to show fresh power soon to keep their near-term chart edge. A bearish weekly low close tomorrow would suggest a near-term market top is in place. SRW bulls' next upside objective is closing July futures above solid resistance at this week’s high of $11.43 1/2. Bears' next downside objective is closing prices below solid support at $10.00. First resistance is seen at $11.00, then at Wednesday’s high of $11.18 1/2. First support is seen at today’s low of $10.61 3/4, then at $10.50.
HRW bulls' next upside objective is closing July prices above solid resistance at the March high of $12.59. Bears' next downside objective is closing prices below solid support at $10.60. First resistance is seen at today’s high of $11.74, then at Wednesday’s high of $11.91 1/2. First support is seen at today’s low of $11.33 3/4, then at $11.20.
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 dropped 99 points to 137.89 cents. December cotton fell 84 points to 120.18 cents. Cotton futures settled near the middle of today’s ranges.
Fundamental analysis: Cotton futures were pressured by disappointing weekly export sales data. Old-crop cotton export sales totaled only 50,500 bales during the week ended April 14, the third straight weekly marketing-year low. With the 2021-22 marketing year winding down, it’s not unusual for old-crop export sales to slow. What really matters at this stage is weekly exports, which totaled 367,100 bales. With total commitments (accumulated exports + outstanding sales) at 103% of USDA’s forecast, there’s plenty of sales on the books; it’s a matter of how much gets shipped in 2021-22 and how much is carried into the new-crop marketing year. Unless there are heavy cancellations, the old-crop export situation is price-supportive. What’s more concerning is that new-crop sales totaled only 136,100 bales, which could signal elevated prices are slowing demand.
China’s strict Covid lockdowns, surging inflation and downgrades to global economic growth forecasts this week by the International Monetary Fund and World Bank are spurring longer-term demand concerns for cotton. As prices for food and fuel continue to rise, there are concerns demand for textiles could be trimmed as consumer dollars are pinched. Dollar strength could also hurt demand for U.S. cotton. The stronger the dollar, the more costly U.S. cotton becomes for global importers, who are already saddled with high prices.
Technical analysis: July cotton futures are signaling a short-term technical top, but bulls still have the solid upper hand. The contract is consolidating above the old high at 137.99 cents. If that support holds on a weekly closing basis, it would suggest this week’s pullback was nothing more than a correction to the long-term bull market and point to a likely challenge of the contract high at 144.78 cents. A weekly close below 137.99 cents would point to a near-term test of the last reaction low at 130.25 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.
