Crops Analysis | June 13, 2022
Price action: Corn futures finished weaker but well-off session lows. July corn dropped 4 cents to $7.69 1/4. December corn weakened a penny to $7.21 1/2.
Fundamental analysis: Corn futures were unable to sustain overnight price strength during daytime trade amid heavy spillover from the soy complex and outside markets. But corn’s ability to rebound well off today’s lows suggests traders aren’t too keen on aggressively pressing the market lower. That’s likely due to the heat wave that’s forecast for the next two weeks across the Corn Belt. There’s likely enough soil moisture to limit crop stress amid the above-normal temps, but rains will be needed in some areas by late this month/early July.
Weekly corn export inspections totaled 1.200 MMT (47.2 million bu.). The strong weekly performance combined with USDA’s 50-million-bu. cut to corn exports in last Friday’s report lowers the average weekly pace needed to hit the 2.45 billion bu. forecast to 30.5 million bushels. Later today, USDA is expected to report the U.S. corn crop at 73% in either “good” or “excellent” condition as of Sunday, unchanged from a week earlier, based on a Reuters survey of analysts.
Technical analysis: December corn futures are near the middle of the broad range from the June 1 low of $6.82 to last month’s contract high at $7.66 1/4. Initial support is the 10-day moving average at $7.08, which stopped today’s price slide, followed by the May low at $7.03 3/4 and the psychology $7.00 mark. The 50- and 40-day moving averages around $7.27 1/2 and $7.30 1/2, respectively, are 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 have 50% of expected 2022-crop forward-sold for harvest delivery.
Price action: July soybeans fell 38 cents to $17.07 1/2, while November futures tumbled 34 1/2 cents $15.33 3/4, the contract’s lowest close in a week. July soymeal fell $14 to $415.10 per ton and July soyoil fell 130 points to 79.51 cents per pound, near a two-week low.
Near-term demand fundamentals remain price-supportive. USDA reported 605,129 MT (22.2 million bu.) of soybeans inspected for export during the week ended June 9, up sharply from 365,455 MT the previous week. Expectations ranged from 275,000 to 675,000 MT. Inspections are now running 11.5% behind year-ago, down from a 12.4% deficit a week ago. USDA’s 2021-22 export forecast of 2.170 billion bu. is 4.0% below 2020-21. The average pace needed to hit that level is 21.3 million bu. per week.
Technical analysis: Despite today’s sharp losses, technical damage to the July soybean chart appears limited with the five-week uptrend still intact. The market remains above most moving averages and other key support levels, though a followthrough push tomorrow under the 20-day moving average near today’s low at $17.02 could have bears targeting the 40-day moving average at about $16.81. Critical support comes in around $16.50, a level July futures have held above for the past few weeks. Key upside levels include the June 9 contract high at $17.84.
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 be 50% forward-priced on expected 2022-crop for harvest delivery.
Cash-only marketers: You should be 85% sold on 2021-crop. You should be 50% forward-priced on expected 2022-crop for harvest delivery.
Price action: July SRW wheat rose 1/4 cent to $10.71. July HRW wheat fell 3/4 cent to $11.61 3/4. July spring wheat rose 1/4 cent to $12.21 3/4.
Fundamental analysis: Wheat futures were pressured by broad-based selling across commodities today but held up relatively well, even with the U.S. dollar index hitting a 20-year high. Still, the weak corn and bean markets did limit buying interest in wheat markets, and follow-through selling in corn and beans on Tuesday would continue to squelch the wheat market bulls. Traders are watching weather in European wheat regions. Spain and France see the hottest temperatures in decades for this time of year, while Italian wheat production is expected to fall by 15% due to drought.
USDA this morning reported 388,847 MT of U.S. wheat inspected for export during the week ended June 9, up from 355,340 MT the previous week. This afternoon’s weekly USDA crop progress report is expected to show spring wheat planted at 90% compared to 82% last week and 97% last year. Spring wheat condition is seen by USDA at 62% good to excellent compared to 37% in the same category last year. Winter wheat condition is seen at 31% good to excellent compared to 30% last week and 48% one year ago at this time. Winter wheat harvested is forecast by USDA at 15% complete compared to 5% last week and 4% last year at this time.
Technical analysis: Winter wheat bulls have a slight near-term technical advantage. SRW bulls' next upside objective is closing July futures above solid resistance at $11.57 1/4. Bears' next downside objective is closing prices below solid support at the June low of $10.27 1/4. First resistance is seen at today’s high of $10.98, then last week’s high of $11.08 3/4. First support is seen at $10.50, then $10.27 1/4.
HRW bulls' next upside objective is closing July prices above solid resistance at $12.50. Bears' next downside objective is closing prices below solid technical support at the June low of $11.12 1/2. First resistance is seen at the June high of $11.84 3/4 and then at $12.00. First support is seen at today’s low of $11.46 1/2 and then at $11.25.
What to do: Get current with advised sales.
Hedgers: You should be 100% sold on 2021-crop in the cash market and have 65% of 2022-crop sold in the cash market. You should also have 10% of expected 2023-crop production sold for harvest delivery next year.
Cash-only marketers: You should be 100% sold on 2021-crop and 65% priced on 2022-crop production. You should also have 10% of expected 2023-crop production sold for harvest delivery next year.
Price action: July cotton rose 60 points to 145.66 cents per pound, while December futures rose 45 points to 122.81 cents.
Fundamental analysis: Cotton futures ended mostly higher after rebounding from initial losses driven by a steep tumble in the U.S. stock market and a surge in the U.S. dollar. The U.S. dollar index extended last week’s rally to a fresh 20-year high, stirring concern over weaker global demand for dollar-based commodities such as cotton. Grain markets also fell.
Cotton remains supported by a tightening global supply outlook and concern heat and dryness will stunt early crop development in key production areas, such as West Texas. Hot, dry weather “will be most common through the next two weeks and dryland areas in West Texas and elsewhere will see steadily declining conditions as the soil dries out while temperatures are hot enough that irrigation will struggle to keep up with evaporative moisture losses,” World Weather said today. “Portions of the Panhandle and parts of southwestern Oklahoma received enough rain last week that cotton may develop favorably for a while longer before the soil becomes too dry to support additional development.”
Technical analysis: Bulls continue to hold a near-term technical advantage in cotton as July futures held up well despite heavy selling across many other commodities today. Initial support in July futures is seen at the 40- and 20-day moving averages at 142.89 cents and 142.39 cents, respectively, with further support at the 50-day moving average at 141.26 cents. Initial resistance is seen at last week’s high of 147.70 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.
