Crops Analysis | April 27, 2022

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Corn

Price action: July corn futures rose 10 3/4 cents to $8.12 1/4 after posting a contract high at $8.18 1/2, while May futures ended at $8.15 1/2, the highest close for a nearby contract since August 2012. December futures gained 6 cents to $7.49 1/2 and also hit a contract high.

Fundamental analysis: Corn futures gained on escalating concern that a slow planting pace will reduce U.S. yield potential. Planting as of the beginning of this week was at the slowest pace in nine years, and rain expected in early May indicates fieldwork will continue to lag. “There is still plenty of time to get planting completed in the next few weeks, but optimum planting dates may disappear if the planting delays last too much longer than the middle of May,” World Weather Inc. said today. The next 10 days “will be abundantly wet and temperatures will be mild to cool at times perpetuating the same conditions… present today.”

Weekly U.S. ethanol production increased 16,000 barrels per day (bpd) to 963,000 bpd during the week ended April 22, up 1.9% from the corresponding week last year. Ethanol stocks dropped 377,000 barrels, to 23.965 million, the lowest level since mid-January and 10% below this year’s peak in late March. Tomorrow’s weekly USDA export sales report is expected to show net U.S. corn sales of 900,000 MT to 1.6 MMT in the 2021-22 marketing year and sales of 800,000 to 1.25 million MT in the 2022-23 marketing year.

Technical analysis: The corn futures bulls have the strong overall near-term technical advantage and gained more power today. The next upside price objective for the bulls is to close July prices above solid longer-term chart resistance at the record high of $8.43 3/4. The next downside target for the bears is closing prices below chart support at $7.50. First resistance is seen at today’s high of $8.18 1/2 and then at $8.25. First support is at today’s low of $7.95 1/2 and then at last week’s low of $7.80 1/2.

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: July soybeans surged 21 cents to $16.92 3/4, the contract’s highest closing price since April 21. July soymeal rose $4.00 to $441.00, while July soyoil gained 228 points to 84.72 cents per pound, a lifetime-high close. May soyoil ended at 87.80 cents, an all-time high close for nearby futures.

Fundamental analysis: Soybean futures followed strength in soyoil, which extended a rally to contract highs on concerns Indonesia’s export ban of some palm oil products will tighten global vegoil supplies. Indonesia widened the scope of its export ban on raw materials for cooking oil to include crude and refined palm oil, the country’s chief economic minister said today. The announcement surprised the oilseed markets, after the minister Tuesday said the export ban, which took effect today, would only cover refined, bleached, and deodorized palm olein. While the official indicated the ban could be lifted after a few weeks, the prospect of reduced palm oil availability from a top producer further exacerbates market worries already elevated by reduced sunoil supplies from Ukraine.

Tomorrow’s USDA weekly export sales report is expected to show net soybean sales of 250,000 to 800,000 MT for 2021-22 and 250,000 to 750,000 MT for 2022-23. Last week, net weekly soybean sales totaled 460,200 MT for 2021-22 and 1.24 MMT for 2022-23.

Technical analysis: Soy complex technicals firmed as July soybeans closed above the 10-day moving average, currently $16.87 3/4, for the first time this week, soyoil extended a sharp rally and soymeal bounced back from an initial drop to three-month lows. Followthrough strength tomorrow may encourage soybean bulls to target last week’s high at $17.34 and the contract high of $17.41, posted Feb. 24. Further resistance is seen at $17.65, based on the soybean continuation chart. Initial support comes in at the 20- and 40-day moving averages at $16.54 1/4 and $16.53, respectively, followed by the 50-day moving average at $16.44 3/4.

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: July SRW wheat fell 3 3/4 cents to $10.91 1/4, the high end of today’s range, while July HRW wheat fell 10 1/2 cents to $11.54. July spring wheat rose 6 3/4 cents to $11.94 3/4, a lifetime-high closing price.

Fundamental analysis: Winter wheat futures declined in part on prospects for temporary moisture relief in parched HRW areas of the U.S. Plains, though the crop will continue to struggle with persistent dryness. Southwestern U.S. HRW wheat areas are forecast to get rain this weekend and may receive more later next week, World Weather said. The forecast rain “is not expected to significantly relieve drought,” World Weather said. “However, some beneficial moisture will result, especially in localized areas, which will help with unirrigated crops.”

Spring wheat futures gained on concern slow seeding will curb yield potential. In the Midwest and Northern Plains, planting prospects “remain poor,” World Weather said. “An extended period of drier and warmer weather is needed to firm up the ground and support ideal planting prospects. Rain and cool temperatures after this weekend “will continue to limit aggressive planting and fieldwork.”

Tomorrow’s USDA weekly export sales report is expected to show net U.S. wheat sales at zero to 175,000 MT for 2021-22 and 150,000 to 400,000 MT for 2022-23. Last week, USDA reported weekly sales of just 26,300 MT for 2021-22, a marketing-year low. Net sales totaled 238,400 MT for 2022-23.

Technical analysis: Winter wheat bulls’ technical advantage has faded in recent sessions with prices continuing a sideways consolidation pattern roughly between $10.50 and $11.40 in July SRW futures and $11.30 and $12.00 in July HRW futures. Initial resistance in July SRW is seen at the 10-day moving average of $10.97 and around a potential double top at last week’s highs in the $11.43 to $11.43 1/2 area. Initial support comes in at the 20-day moving average of $10.68 and Monday’s low at $10.55 3/4. A push below those levels may prompt bears to target the 50-day moving average around $10.36.

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.

 

Cotton

Price action: July cotton rallied the 500-point daily limit to 140.68 cents per pound, the highest settlement since April 18, while new-crop December futures surged 368 points to 122.39 cents.

Fundamental analysis: Cotton futures shrugged off U.S. dollar strength behind speculation India’s government is considering a short-term embargo on that country’s cotton exports at the request of the nation’s textile industry. While India is not a major exporter, it is a big cotton producer and consumer. The prospect of reduced supplies from India raises the potential for fresh cotton market gains.

Tomorrow’s weekly USDA Export Sales report will be studied closely. Three straight weeks of lackluster sales around 50,000 bales have undercut bullishness, but a return to sales in the 300,000-bale area maintained through much of winter could trigger another wave of buying. Conversely, more poor sales news could limit followthrough gains. A weekly export figure in the 400,000-bale area would likely trigger fresh buying as well.

Technical analysis: Today’s surge gave bulls the short-term technical advantage in July cotton futures. Look for initial resistance at the April 13 high of 142.17 cents per pound, then at the June 14 contract high of 144.78. There is psychological resistance at the 145.00 level and bulls will surely be targeting the 150.00 level. Look for initial support at the contract’s 10-day moving average near 138.52, then at the 20-day moving average of 136.08. A drop below that level would have bears targeting Monday’s low at 132.33, then the 40-day moving average at 129.23.

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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