Crops Analysis | September 14, 2022

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Corn

Price action: December futures fell 10 1/2 cents to $6.82 1/4, the contract’s lowest close since Sept. 8.

Fundamental analysis: Corn futures fell a second day behind corrective selling after the market rallied within 1/2 cent of $7.00 following USDA’s lower than expected production and supply updates Monday. Looming harvest pressure and increasing concerns over potential rail shutdowns as early as Friday also weighed on the market. Some U.S. railroads will start halting grain shipments Thursday, a day ahead of a potential work stoppage, Reuters reported, citing an agricultural association and grain cooperatives. Railroads have until a minute after midnight Friday to reach tentative deals with holdout unions representing about 60,000 workers.

Also today, the Energy Information Administration repored U.S. ethanol production at an average of 963,000 barrels per day (bpd) during the week ended Sept. 9, down 26,000 bpd from the previous week but up 2.8% from the corresponding week last year.  Ethanol stocks dropped 295,000 barrels to 22.843 million barrels. USDA is expected to resume the release of weekly export sales data Thursday. Net corn sales for the most-recent reporting week are expected to range between 300,000 and 900,000 MT. The USDA has not published its weekly export sales report since a technical glitch Aug. 25.

Technical analysis: December futures traded an 11 1/4-cent range, testing support levels at $6.87 3/4 and $6.83, ultimately ending near the session low as bears gained a near-term technical advantage. A continuation lower will find support at the 10-day moving average near $6.76 1/2 as well as the 100-day moving average at $6.70 1/4 and again at the 20-day moving average near $6.61 1/2. Upside attempts will be met with resistance at $6.93 and again at $6.97 3/4 with solid psychological resistance at $7.00.

What to do: Get current with advised sales. Wait to make additional 2022-crop sales.

Hedgers: You should have 50% of 2022-crop sold for harvest delivery.  

Cash-only marketers: You should have 50% of 2022-crop sold for harvest delivery.

 

Soybeans

Advice: We advise soybean hedgers to exit the 10% hedge in November soybean futures. Our exit was $14.68 1/2 for a 4 1/2 cent gain.

Price action: November soybeans fell 23 2/3 cents to $14.55, 2 1/2 cents above today’s low. December soymeal fell 70 cents to $423.10, while December soyoil fell 186 points to 64.87 cents.

Fundamental analysis: Soybean futures fell a second straight day as the market extended a profit-taking pullback from a climb to 2 1/2-month highs earlier this week. Nearby soymeal gained slightly behind spreading against soyoil. Lower than expected USDA crop production and stocks data released Monday remains a bullish factor, but the U.S. is also facing stepped-up longer-term competition from other top oilseed producers. Argentine farmers have sold 15.2% of the country's 44 MMT 2021-22 soybean crop in the seven days since the government implemented a more favorable exchange rate for exports, Reuters reported today. Until last month, Argentine producers were holding onto more soybeans than usual due to the country’s uncertain economic environment.

Also today, Statistics Canada said it expected the country’s canola production to rise 39% in 2022 to 19.1 MMT. Outside markets such as crude oil may influence the soy complex as traders await early results from the U.S. harvest. Crude oil rose over $1 today after the International Energy Agency (IEA) said it expects a stumbling Chinese economy to reduce oil demand in the fourth quarter of the year. However, the IEA also said it expects widespread switching from gas to oil for heating purposes.

Technical analysis: Soybean bulls retain a near-term technical advantage with prices in a two-month uptrend, though today’s weak close may lead to followthrough selling pressure in coming days. There appears to be stepped-up selling interest when November futures rise above $15.00, which marks initial resistance. Other upside chart objectives include a 2 1/2-month intraday high at $15.08 3/4 posted Tuesday and the $15.25 area. Initial support comes in at the 100-day moving average at 14.50 1/2, followed by the 20-day moving average at $14.27 3/4 and the $14.00 level.

What to do: Get current with advised cash sales. Hedgers should exit the 10% short hedge position in November futures.

Hedgers: NEW ADVICE -- Exit the 10% hedge in November soybean futures. Our exit was $14.68 1/2 for a 4 1/2 cent gain. You should be 60% sold for harvest delivery on 2022-crop production.

Cash-only marketers: You should be 60% sold for harvest delivery on 2022-crop production.

 

Wheat

Price action: December SRW wheat rose 11 3/4 cents to $8.72 1/4 and December HRW wheat gained 13 1/4 cents to $9.47, both two-month closing highs. December spring wheat rose 6 3/4 cents to $9.38, the contract’s highest closing price since July 28.

Fundamental analysis: Winter wheat rose to two-month highs behind a combination of weakness in the U.S. dollar, persistent dryness in the U.S. Plains and concern over potential disruptions from a U.S. rail strike. Some rain is expected in the HRW belt over the week ahead, but it “will still not be enough to satisfy the needs for winter wheat planting,” World Weather Inc. said today. There will still be an opportunity for greater rainfall in the second week of the outlook, particularly Sep. 21-23, as a frontal boundary “should promote at least some showers and thunderstorms,” the forecaster said. The U.S. winter wheat crop was 10% planted as of Sunday, above the five-year average of 7% for that date, USDA reported early this week.

USDA on Thursday morning is expected to report net weekly U.S. wheat sales between 200,000 and 550,000 MT.

Technical analysis: Winter wheat futures bulls are gaining momentum as near-term chart postures improved the past two weeks, inviting speculators to the long side of the markets. SRW bulls' next upside objective is closing December futures above psychological resistance at $9.00. Bears' next downside objective is closing prices below solid support at $8.00. First resistance is seen at this week’s high of $8.78, then $9.00. First support is seen at this week’s low of $8.48 1/2, then $8.26.

HRW bulls' next upside objective is closing December prices above solid resistance at $10.00. The bears' next downside objective is closing prices below solid support at $8.50. First resistance is seen at today’s high of $9.51 3/4, then $9.65. First support is seen at today’s low of $9.28 3/4, then this week’s low of $9.14 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.

 

Cotton

Price action: December cotton rose 39 points at 102.71 cents, nearer the session high.

Fundamental analysis: Cotton futures drew mild support from signs of stabilization in U.S. stock indexes following Tuesday’s sharp losses, as well as a weaker U.S. dollar index and higher crude oil prices. The markets remain jittery in the wake of the Labor Department’s unexpectedly high consumer price readings reported Tuesday. Cotton traders may continue to look to outside markets for direction in coming days. Traders also await the expected resumption of USDA’s weekly export sales report Thursday. The reports were halted in late August due to computer programming problems at USDA.

Technical analysis: Cotton futures bulls and bears are on a level overall near-term technical playing field. The next upside objective for the cotton bulls is to close December futures above resistance at 110.00 cents. The next downside objective for bears is to close prices below solid support at 100.00 cents. First resistance is seen at 104.00 cents, then at Tuesday’s high of 105.95 cents. First support is seen at the September low of 101.19 cents, then 100.00 cents.

What to do: Get current with advised 2022-crop sales.

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.

 

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