Crops Analysis | April 25, 2022
Price action: Corn futures settled near session highs. July corn firmed 9 cents to $7.98. December corn rose 9 1/2 cents to $7.34.
Fundamental analysis: Today’s strong close in the corn market was impressive in the face of heavy spillover from the soy complex and active risk aversion in outside markets. The high-range closes suggest bulls will make a run at uncovering followthrough buying during Tuesday’s session. But some of the outside pressure likely needs to ease or corn could face corrective selling.
Weekly USDA corn export inspections were strong at 1.65 MMT (65.0 million bu.), which was well above the top end of trade expectations. That lowers the average pace needed the remainder of the marketing year to hit USDA’s export forecast to 41.4 million bu. per week. While corn export inspections are running 15.8% behind year-ago compared with USDA’s forecast for a 9.2% decline, we remain confident exports will remain strong given a lack of shipments from Ukraine.
Also supportive will be the slower-than-normal corn planting pace. With the calendar soon to flip to May, further delays will start to spark concerns not all intended corn acres may get planted – and March intentions were already much lower than anticipated.
Technical analysis: July corn futures dropped below the 10-day moving average intra-day and rebounded to close above it. The 10-day moving average near $7.89 is support on a closing basis, with additional near-term support at last week’s low of $7.80 1/2. Violation of that level would make the 20-day moving average at $7.62 1/2 next support. Last week’s contract high at $8.14 is near-term resistance.
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.
Fundamental analysis: Nearby soybean futures settled at the lowest prices in over a week but recovered much of an early slump after soyoil and palm oil markets rebounded and China purchased more U.S. soybeans. Indonesia’s agriculture ministry said today that crude palm oil shipments would be excluded from a planned palm oil export ban. The ban will cover refined, bleached and deodorized palm olein. Initial reports of the ban late Friday sent soyoil futures to a record high and, combined with disruptions from the Russia/Ukraine war, underscored tight global supplies of vegetable oils.
USDA reported daily soybean sales of 330,000 MT for delivery to China, 66,000 MT for delivery during the 2021-22 marketing year and 264,000 MT for delivery during the 2022-23 marketing year. Another 204,000 MT of soybean sales were reported during the reporting period to China for 2022-23. Today’s sales marked China’s first USDA-reported daily purchases since April 15, when the country bought a total of 389,000 MT (on April 19, USDA reported a sale of 123,650 MT to “unknown destinations”).
Also today, USDA reported 602,178 MT (22.1 million bu.) of soybeans inspected for export during the week ended April 21, down from 1.004 MMT the previous week. Inspections are running 16.0% behind year-ago, compared to 16.8% last week. USDA’s 2021-22 export forecast of 2.115 billion bu. is 6.5% below 2020-21. The average weekly pace needed to hit USDA’s forecast is 18.3 million bushels.
Technical analysis: July soybeans appeared to break a three-week uptrend early today, but chart damage may be limited with prices still closing above 20-, 40- and 50-day moving averages. July futures fell as low as $16.56 1/2, the contract’s lowest intraday price since $16.56 on April 14, before rebounding. Along with today’s low, other initial support comes in around the 40- and 20-day moving averages at $16.51 and $16.49 3/4, respectively. Upside targets include the psychologically key $17.00 level and last week’s high at $17.34.
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 2 3/4 cents to $10.72 1/2. July HRW wheat rose 3 1/2 cents to $11.53. July spring wheat rose 14 3/4 cents to $11.77 1/2.
Fundamental analysis: Despite declines in the SRW market, wheat market bulls posted a relatively strong performance today in light of sharp declines in crude oil and the U.S. dollar’s rally to two-year highs. China over the weekend locked down more cities, including much of Beijing, stirring demand concern across global commodity markets. But grain markets’ resilience signaled underlying strength that may keep funds adding to long exposure.
USDA’s weekly crop progress report is expected to show U.S. winter wheat crop at 30% “good” or “excellent,” unchanged from last week but well under 49% a year ago. U.S. spring wheat is expected to be 12% planted compared to 28% last year. Rains over the weekend in U.S. HRW wheat regions was not enough to seriously change crop or field conditions, World Weather Inc. said today. Warm weather returning to the region this week will dry the soils quickly. The Plains will continue to see below-normal rainfall for the next 10 days, said World Weather.
USDA reported 287,997 MT of U.S. wheat inspected for export during the week ended April 21, down from 446,225 MT the previous week. Inspections are still running just ahead of the pace to meet USDA’s export projections.
Technical analysis: SRW wheat bulls have a near-term technical advantage but have faded recently. SRW bulls' next upside objective is closing July futures above solid resistance at the April high of $11.43 1/2. Bears' next downside objective is closing prices below solid support at $10.00. First resistance is seen at today’s high of $10.89 1/2, then $11.00. First support is seen at today’s low of $10.55 3/4, then $10.50.
HRW bulls have a stronger near-term technical advantage, with the next upside objective 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 $11.63 3/4, then $11.80. First support is seen at last week’s low of $11.33 3/4, then $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 futures fell 44 points to 135.41 per pound, the lowest settlement since April 11 but 308 points off today’s low.
Fundamental analysis: Cotton futures ended at a two-week low amid demand concerns stemming from strength in the U.S. dollar and rising Covid cases in China, a top customer for U.S. cotton. The U.S. dollar index reached the highest level since March 2020, stirring ideas that already-sliding U.S. cotton exports may be further crimped. China reported 20,261 new coronavirus cases for April 24, China's National Health Commission said, while mass COVID-19 testing of all residents in Beijing began today, prompting fears of a Shanghai-style lockdown after dozens of cases in the capital in recent days, Reuters reported. Sharply lower crude oil futures also weighed on cotton prices.
USDA will update weekly planting progress later today. As of April 17, the U.S. cotton crop was 10% planted, near the five-year average at 9%.
Technical analysis: Cotton futures further eroded today as the July contract ended lower for the fourth session in the past five but the market’s late resurgence suggests broader commodity market bullishness may keep a floor under prices. July cotton closed below the 20-day moving average for the first time since March 15. Key support is seen at the April low of 130.25 cents. If the market can hold above this month’s lows, bulls may attempt a run at the contract high of 144.78 cents posted April 14.
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.
