Crops Analysis | September 15, 2022

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Corn

Price action: December corn futures fell 4 3/4 cents to $6.77 1/2, down from $6.85 at the end of last week.

Fundamental analysis: Corn futures traded mostly sideways to lower in a third day of corrective selling, with added pressure from outside markets as the U.S. dollar index firmed and crude oil fell sharply following reports U.S. railroads and unions representing workers reached tentative agreement, avoiding a strike that would have disrupted agricultural shipments. Selling pressure also stemmed from accelerating U.S. harvest. Temperatures are expected to be well above normal in the central U.S. next week, with record and near record temperatures to be expected for a few days that will accelerate drying conditions, World Weather Inc. said today. The weather should be mostly favorable for late summer crop maturation and harvest progress.

USDA resumed its weekly export sales reports today after technical problems forced a halt Aug. 25. For the week ended Sept. 8, net U.S. corn sales totaled 583,100 MT for 2022-23, within analyst expectations ranging from 300,000 to 900,000 MT. Corn export commitments are running 50% behind year-ago, versus 4.8% ahead the previous week. USDA projects exports in 2022-23 at 2.275 billion bu., 8.1% below the previous marketing year.

Technical analysis: December corn traded a 13 3/4 cent range and ended near the session low. Support was tested and failed at $6.78 1/4 with support holding at the 10-day moving average of $6.77 1/4. Next support is seen at $6.74 1/4, followed by $6.67 and the 100-day moving average at $6.69 3/4. Upside resistance stands at $6.85 1/2, $6.89 1/2 and again at $6.96 3/4. Psychological resistance stands 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

Price action: November soybeans fell 3 1/2 cents to $14.51 1/2, still up over 39 cents for the week. December soymeal rose $4.90 to $428.00, while December soyoil fell 57 points to 64.30 cents.

Fundamental analysis: Soybean futures fell a third straight day as the market extended a corrective pullback from 2 1/2-month highs posted earlier this week, with lower-than-expected crushing figures and sharp declines in crude oil adding pressure. National Oilseed Processors Association (NOPA) members crushed 165.54 million bu. of soybeans last month, down 2.8% from 170.22 million bu. processed in July but up 4.2% from the August 2021 crush of 158.84 million bu. August crush was expected to drop to about 166.50 million bu. Soyoil supplies among NOPA members as of Aug. 31 fell to 1.565 billion lbs., down from 1.684 billion lbs. at the end of July and the lowest since June 2021.

Selling interest in soybean futures may be limited by USDA’s smaller than expected U.S. crop forecast released earlier this week and an outlook for domestic supplies to fall to a seven-year low in 2023. Harvest pressure will increase in coming weeks, but that may be offset to some extent by firm USDA export numbers. USDA today reported net weekly soybean sales totaling 843,000 MT for 2022-23, primarily for China (441,700 MT), unknown destinations (107,400 MT) and Taiwan (104,200 MT). Sales were at the high end of expectations ranging from 300,000 MT to 1.0 MMT. Export commitments are running 11.8% ahead of a year-ago, compared with 3.3% ahead of last week.

Technical analysis: Soybean futures retain a near-term bullish bias, but upside momentum has slowed late this week. November soybeans pushed under the 100-day moving average at $14.50 but bounced back to close above that support level. Further support comes in at the 20- and 10-day moving averages at $14.30 3/4 and $14.26 3/4, respectively. Bulls are likely targeting $15.00 and the 2 1/2-month intraday high of $15.08 3/4 posted Tuesday, with a break above those levels likely facing further resistance at $15.00 and the contract high of $15.84 3/4, posted June 9.

What to do: Get current with advised cash sales. Wait to make additional sales.

Hedgers: 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 fell 27 1/4 cents to $8.45, after climbing overnight to a two-month intraday high at $8.84 3/4. December HRW wheat dropped 20 3/4 cents to $9.26 1/4. December spring wheat fell 9 1/4 cents to $9.28 3/4.

Fundamental analysis: Winter wheat futures faded from overnight gains as a tentative agreement to avert a U.S. rail shutdown fueled corrective selling. Prices had been supported the past week by worries a strike by U.S. rail workers would disrupt grain shipping. Soft export figures also weighed on wheat prices. USDA reported net weekly U.S. wheat sales at 217,300 MT for 2022-23, at the low end of expectations, at the low end of expectations ranging from 200,000 to 550,000 MT.

Dry weather in the U.S. Plains remains a concern with winter planting underway. Some rain in the next seven days “will be beneficial but will not be enough to satisfy the needs for winter wheat planting, especially with temperatures being above to well above average,” World Weather Inc. said. Additional rain is likely Sep. 22-23, though “more will still be needed,” the forecaster said. The need for favorable soil moisture will be greatest during peak planting season in October.

Technical analysis: Wheat bulls appeared to run out of gas amid a “risk-off” day in the broader marketplace. It will be important for wheat bulls to at least stabilize prices on Friday, to avoid technically bearish weekly low closes which would begin to suggest near-term market tops are in place. Winter wheat futures posted a bearish “outside day” lower on daily bar charts, suggesting the bulls may now be short-term exhausted though prices are still in four-week-old uptrends on the daily bar charts. 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 $8.65 and then at today’s high of $8.84 3/4. First support is seen at $8.40 and then at $8.26.

HRW bulls' next upside objective is closing December prices above solid resistance at $10.00. Bears' next downside objective is closing prices below solid support at $8.50. First resistance is seen at $9.40, then at today’s high of $9.58. First support is seen at this week’s low of $9.14 1/4, then $9.00.

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 58 points at 103.29 cents, nearer the session high.

Fundamental analysis: Cotton futures rose slightly after USDA export indicated firm overseas demand, though gains were limited by strength in the U.S. dollar. USDA reported net U.S. cotton sales of 100,300 running bales (RB) for 2022-23 during the week ended Sept. 8, primarily for Pakistan (77,900 RB). Net sales of 25,500 RB for 2023-24 were also primarily for Pakistan (21,700 RB). Weekly shipments of 141,000 RB were primarily to China (34,100 RB) and Vietnam (18,400 RB). Cotton export sales over the past month have been weaker than average, but that’s offset by large export carryover sales for the new crop year that began on Aug. 1. Upland commitments are nearly 8 million RB, which compare to 6.3 million RB last year and 7.6 million RB two years ago. Because of the crop losses due to the Texas drought, total cotton supplies available to export will be constrained.

Total upland commitments, according to USDA, are already at 65% of the forecast and that is well up from the average of 54%. Traders therefore may be inclined to look past recently weak recent export sales; plus, this is a seasonally weak price period for shipments.

Technical analysis: Cotton bulls and bears are on a level near-term technical playing field. The next upside objective for bulls is to close December futures above resistance 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 105.00 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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