Crops Analysis | September 6, 2022
Price action: December corn futures rose 10 1/4 cents to $6.76, the contract’s highest closing price since Aug. 30
Fundamental analysis: Corn futures rose a second consecutive session as a reduced yield outlook stemming from extreme heat earlier this summer continued to support prices. Rains fell over much of the Midwest over the long holiday weekend, but the western Corn Belt was dry, and any additional moisture likely will arrive too late to help many fields. “Dry weather in the western Corn Belt is not a good way to end the growing season,” Crop Consultant Michael Cordonnier said in a report. “The dry conditions will speed up the corn dry down, but it could also cut short the grain filling process.”
USDA’s weekly crop condition ratings later today are expected to reflect further deterioration. The corn crop’s combined good-to-excellent rating is expected to drop to 53% as of Sunday from 54% a week earlier, based on a Reuters survey of analysts. Corn condition ratings have been on a steady decline for nearly two months, bolstering ideas the crop will fall short of yield expectations earlier this summer. Also today, USDA reported 518,373 MT (20.4 million bu.) of corn inspected for export during the week ended Sept. 1, down from 689,451 MT the previous week and at the low end of trade expectations ranging from 500,000 to 825,000 MT.
Technical analysis: Corn futures bulls hold a near-term technical advantage, with the December contract in a six-week uptrend and closing today above the 100-day moving average, currently $6.73 3/4, for the first time since June 22. Bulls likely need to produce followthrough strength this week to extend the uptrend and are likely targeting the two-month high of $6.83 3/4 posted Aug. 29. A close above that level may have bulls targeting $7.00 and the June high of $7.49 1/4. Initial support is seen at the 10-day moving average of $6.65 1/2 and last week’s low at $6.54.
What to do: Get current with advised sales. Wait to make additional 2022-crop sales.
Hedgers: You are 100% sold in the cash market on 2021-crop. You should have 50% of expected 2022-crop forward-sold for harvest delivery.
Cash-only marketers: You are 100% sold on 2021-crop. You should have 50% of expected 2022-crop forward-sold for harvest delivery.
Price action: November soybeans fell 21 3/4 cents to $13.98 3/4. December soymeal fell $10.90 to $406.80. December soyoil dropped 297 points at 63.28 cents and hit a five-week low.
Fundamental analysis: Soy complex futures were pressured by mostly favorable Midwest weather and strength in the U.S. dollar. Further pressure stemmed from Argentina raising the exchange rate for its soybean exports in a bid to increase shipments. That prompted a large increase in soy futures trading volume at the Rosario futures exchange, which suggests farmer selling in Argentina increased markedly on the exchange rate news. Earlier today, USDA reported 495,845 MT of soybeans inspected for export during the week ended Sept. 1, up from 439,811 MT the previous week and at the low end of trade expectations.
Traders will closely examine this afternoon’s weekly USDA crop progress reports. The trade expects the U.S. soybean crop, as of Sunday, to be in 57% good to excellent condition, unchanged from last week and compares with a 57% reading at the same time last year.
Technical analysis: Soybean bulls and bears are on a level overall near-term technical playing field. The next near-term upside technical objective for the soybean bulls is closing November prices above solid resistance at $14.50. The next downside price objective for the bears is closing prices below solid technical support at the August low of $13.56. First resistance is seen at today’s high of $14.23 and then at $14.33. First support is seen at last week’s low of $13.90 and then at $13.76.
Soybean meal bulls have the overall near-term technical advantage but are fading now after a gap-lower trade on the daily bar chart in December futures today. The next upside price objective for the meal bulls is to produce a close in December futures above solid technical resistance at $425.00. The next downside price objective for the bears is closing prices below solid technical support at $395.00. First resistance comes in at today’s high of $413.00 and then at $418.00. First support is seen at today’s low of $404.30 and then at $400.00.
In soyoil, bulls and bears are on a level near-term technical playing field. The next upside price objective for the bean oil bulls is pushing and closing December prices above solid technical resistance at the August high of 68.16 cents. Bean oil bears' next downside technical price objective is pushing and closing prices below solid technical support at 60.00 cents. First resistance is seen at 65.00 cents and then at 66.00 cents. First support is seen at today’s low of 63.00 cents and then at 62.00 cents.
What to do: Get current with advised cash sales. Hedgers should maintain the 10% short hedge position in November futures at $14.73.
Cash-only marketers: You are 100% sold on 2021-crop. You should be 60% forward-sold for harvest delivery on expected 2022-crop production.
Price action: December SRW wheat rose 6 cents to $8.17, near the top of today’s range. December HRW wheat rose 4 1/4 cents to $8.82. December spring wheat fell 1/4 cent to $8.89 3/4.
Fundamental analysis: Winter wheat ended higher following two-sided trade, as strength in the corn market helped overshadow the U.S. dollar’s jump to a fresh 20-year high and prospects for stronger global production. Concerns over persistent dryness in the Plains as the winter wheat planting season gets underway also supported futures. Very limited rain expected for the week ahead in the Central and Southern U.S. Plains “will be a concern for early wheat planting,” World Weather said. “There is some ground moisture in parts of the Texas Panhandle and Oklahoma that will help… however, more rain is needed (and) this could become a bigger issue if dryness persists through September and into October.”
Spring wheat futures ended lower amid pressure from the accelerating U.S. harvest. The spring wheat crop is expected to be 67% harvested as of Sunday, up from 50% a week earlier, based on a Reuters survey. USDA will update harvest progress later today.
USDA reported 477,657 MT (17.6 million bu.) of wheat inspected for export during the week ended Sept. 1, down from 631,326 MT the previous week and at the low end of trade expectations ranging from 400,000 to 625,000 MT. Shipments are running 15.3% behind year-ago, compared with 19.2% behind year-ago last week.
Technical analysis: Winter wheat near-term technicals are largely neutral with December SRW ending today slightly above the mid-point of the trading range of the past two weeks. Sideways trade may continue barring a substantial breakout above or below the recent range. December SRW pushed slightly above the 50-day moving average of $8.23 3/4 but failed to generate meaningful followthrough buying. Key near-term resistance includes last week’s high at $8.49. Initial support is seen at last week’s low at $7.91 1/4.
What to do: Get current with advised hedges. Wait on a corrective rebound to increase cash sales.
Hedgers: You have 15% of 2022-crop hedged in short December SRW futures at $7.83. You should be 85% sold in the cash market on 2022-crop. You should be 30% forward-priced on expected 2023-crop for harvest delivery next year.
Cash-only marketers: You should be 85% sold on 2022-crop. You should also be 30% forward-priced on expected 2023-crop production for harvest delivery next year.
Price action: December cotton rose 34 points to 103.55 after dropping to a three-week low earlier in the session.
Fundamental analysis: December cotton gapped higher at the start of overnight trading as the market bounced back from sharp declines late last week reflecting global recession concerns. Crude oil likely provided a bit of early support as OPEC+ agreed to cut oil production for the first time in over a year and Russia announced that they will not restart the flow of gas to Germany as planned. The cartel’s decision to cut oil production by 100,000 barrels per day was compelled by recession fears and anticipation of Iranian coming to market in the event of a revived nuclear deal. OPEC+ noted that it would be prepared to hold an emergency meeting in the event oil prices took an additional dive.
West Texas had welcome drier conditions over the weekend and holds a drier bias most of this week, while portions of the Delta and especially the southeastern states will be trending wetter, which may raise concern over crop quality, World Weather said. Weekend rains were significant with heavy rainfall reported in portions of Alabama, Georgia, Tennessee and from Louisiana into eastern Texas, with some significant rains also occurring in south-central Missouri to central Arkansas.
Technical analysis: December cotton traded a 317-point range, finishing at the low end of the range and indicating a pause after serious near-term chart damage occurred last week. A push toward the 40-day moving average around 101.76 cents appears imminent, but the technically significant level will ultimately act as support. Further downside efforts will be met at 99.55 cents and then again at 95.89 cents. Efforts to the upside will be met with resistance at 105.04 cents and then 106.87 cents. The 10-day moving average at 111.58 cents, 20-day moving average at 110.79 cents and 100-day moving average at 111.12 cents present significant upside resistance for bulls.
What to do: Get current with advised 2022-crop sales. Our next upside sales target is the 105.00-cent to 110.00-cent range in December cotton futures.
Hedgers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production.
Cash-only marketers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production.
