Crops Analysis | June 15, 2022
Price action: July corn futures rose 5 3/4 cents to $7.74, the contract’s highest closing price since May 27. December futures fell 1/4 cent to $7.21.
“Warm to hot temperatures through the middle of next week will cause some stress to crops, while a restricted rainfall pattern and rapid drying is expected the next two weeks,” World Weather said. “Although the topsoil will quickly dry down during the next two weeks, subsoil moisture will adequately support crop development and most crops should remain favorably rated during the period.”
USDA’s weekly export sales report is expected to show net U.S. corn sales at 100,000 to 500,000 MT for the 2021-22 marketing year and 50,000 to 400,000 MT for 2022-23.
Technical analysis: Nearby corn futures technicals strengthened with today’s firm close in the July contract, though prices ended near the middle of the past week’s trading range. Absent a break above key resistance levels, such as last week’s highs, the market may see continued sideways consolidation for the near-term. July futures’ upside recently has been capped by the 40-day moving average, currently $7.80, along with last week’s high at $7.82 3/4. Near-term support is seen at this week’s low of $7.58 1/2 and the 10-day moving average at $7.57 3/4.
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 4 3/4 cents to $16.93 3/4, the contract’s lowest closing price since June 1. November soybeans fell 1 3/4 cents to $15.23 1/2. July soymeal rose $6.50 to $417.50 per ton. July soyoil fell 61 points to 77.67 cents.
Fundamental analysis: Nearby soybean futures settled at a two-week low after USDA early today reported a cancellation of a 100,000-MT export sale to “unknown destinations,” though prices rebounded to end near the middle of the day’s range. Near-term demand fundamentals, such as crushing activity, remain firm. The National Oilseed Processors Association (NOPA) today said its members, which account for about 95% of soybeans processed in the U.S., crushed 171.077 million bu. of soybeans last month, up 4.6% from the same month in 2021 and the largest May crush on record for NOPA members. May crush fell slightly short of expectations around 171.552 million bu.
Thursday’s weekly USDA export sales report is expected to show net U.S. soybean sales of 100,000 to 500,000 MT for 2021-22 and sales of 100,00 to 600,000 MT for 2022-23.
Technical analysis: Soybean bulls have a solid near-term technical advantage but have faded a bit and need to show fresh power soon. The next near-term upside technical objective for bulls is closing July futures above the contract high of $17.84. The next downside price objective for the bears is closing prices below solid technical support at $16.50. First resistance is seen at today’s high of $17.05 and then at Tuesday’s high of $17.28 1/4. First support is seen at today’s low of $16.97 and then at $16.75.
Soymeal bulls have the slight overall near-term technical advantage. The next upside price objective for the meal bulls is to produce a close in July futures above solid technical resistance at the June high of $424.80. The next downside price objective for the bears is closing prices below solid technical support at the June low of $404.00. First resistance comes in at Tuesday’s high of $420.20 and then at $425.00. First support is seen at today’s low of $408.00 and then at $404.00.
Soyoil bulls have the firm overall near-term technical advantage but have faded lately. The next upside price objective for the bean oil bulls is pushing and closing July prices above solid technical resistance at the June high of 83.44 cents. Bean oil bears' next downside technical price objective is pushing and closing prices below solid technical support at 75.00 cents. First resistance is seen at Tuesday’s high of 80.07 cents and then at this week’s high of 81.07 cents. First support is seen at today’s low of 78.01 cents and then at 77.00 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 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 fell 1/4 cent to $10.50. July HRW wheat fell 9 cents to $11.33 1/4. July spring wheat fell 7 1/4 cents to $12.01 1/4.
Fundamental analysis: Choppy, sideways trading continued in wheat futures, with accelerating harvest pressure helping send July HRW futures near a two-week low. A strong U.S. dollar is also weighing on prices. The wheat markets will continue to look to corn and soybeans for direction, but those two markets have recently shown signs of fading upside. Thursday’s USDA export sales report is expected to show net U.S. wheat sales of 200,000 to 600,000 MT.
Extreme heat continued in the U.S. Plains today, pushing temperatures near 100 degrees Fahrenheit in some areas. “Net drying and hot temperatures in the first week of the outlook will lead to a gradual increase in summer crop stress,” World Weather said. “Conditions will be supportive of fieldwork advancement and of filling and maturing winter crops though.”
HRW 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 the June low of $11.12 1/2. First resistance is seen at $11.50 and then at the June high of $11.84 3/4. First support is seen at today’s low of $11.25 3/4 and then at $11.12 1/2.
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 fell 30 points to 143.18 cents per pound, while December futures fell 273 points to 117.92 cents.
Fundamental analysis: Weakness in crude oil weighed on cotton futures, and while renewed firmness in equity indexes and midsession weakness in the value of the U.S. dollar should have spurred the fiber market to higher levels, we believe persistent fears of a forthcoming recession continued weighing on the apparel outlook and on the potential price upside of cotton. The Federal Reserve boosted its benchmark funds rate by 0.75 basis points today, which spurred fresh buying of the U.S. dollar and brought the greenback up from midsession lows.
The market will be awaiting tomorrow’s early USDA Export Sales report with considerable interest, especially after May weakness spurred strong export numbers on the last two reports. The weak prices that prevailed during the week ended June 8 suggest the forthcoming results will also prove supportive, but that certainly isn’t assured. Unfortunately, sustained worries about an economic recession, especially with the Fed seeming set to continue boosting interest rates aggressively, may cap rally efforts in cotton futures.
Technical analysis: Bears again failed to force a close below the July contract’s 40-day moving average near 143.01. Initial support extends from that point down to the contract’s 10- and 20-day moving averages near 141.93 and 141.77, respectively. A breakdown below the latter point would have bears targeting last week’s low at 136.10, then the June 2 low of 134.12 and later the psychological 130.00 level. Today’s high marks initial resistance at 145.45, with additional resistance likely at last Friday’s top at 147.70. A close above that level would open the door to a test of the May 17 high at 151.95, then the May 4 peak at 155.95.
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.
