Crops Analysis | September 19, 2022

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Corn

Price action: December corn rose 1 cent to $6.78 1/4, the contract’s first gain in five sessions.

Fundamental analysis: Corn futures posted modest advances after coming under pressure earlier in the day from sharp declines in the wheat market and strength in the U.S. dollar. Elevated concern over a possible global recession continued to hang over the grain markets. However, strength in soybeans helped lift corn off its lows by midsession.

Traders are closely monitoring weather prospects in anticipation of fresh harvest data. Late season Midwest weather is largely favorable for crop maturation and early harvesting, as World Weather Inc. noted recent rains combined with warm temperatures. Temperatures are expected to climb into the 90s Fahrenheit in the central Plains into the southwestern Corn Belt through Wednesday.

Earlier today, USDA reported 549,354 MT (21.6 million bu.) of corn inspected for export during the week ended Sep. 15, an increase of 74,966 MT on the week and 525,056 MT ahead of last year’s pace. Traders expected inspections to range from 375,000 to 800,000 MT. USDA will update harvest progress later today. A Reuter’s poll shows analysts expecting 10% of the corn crop to be harvested at the start of this week, up from 5% a week earlier, while the good-to-excellent rating expected to be unchanged at 53%.

Technical analysis: December corn traded an 11 3/4 cent range, reflecting modest pressure throughout most of the session with a test of the 20-day moving average at $6.70 1/2, along with first support at $6.69 1/2, and the 100-day moving average at $6.68 1/2. Resistance at the 10-day moving average at $6.80 1/4 was tested, however bulls were unable to generate a close above the level. Further attempts higher will be met with resistance at $6.82 1/2, $6.88 and $6.95 1/2.

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 rose 12 3/4 cents to $14.61 1/4, the contract’s first gain in five sessions. December soymeal rose $7.60 to $429.30, the contract’s highest close in a week. December soyoil fell 80 points to 65.16 cents.

Fundamental analysis: Soybean futures rebounded from overnight declines behind signs of improvement in export demand. USDA’s lower-than-expected production and ending stocks forecasts a week ago continue to underpin prices. Early today, USDA reported a daily soybean sale of 136,000 MT for delivery to China during the 2022-23 marketing year, the first daily announcement of a soybean sale to China since Aug. 31. Also today, USDA reported 518,743 MT (19.1 million bu.) of soybeans inspected for export during the week ended Sept. 15, up from 341,713 MT the previous week and around the middle of trade expectations ranging from 350,000 to 650,000 MT.

The Midwest weather outlook is mostly favorable for fieldwork, which will likely generate stepped-up harvest in coming weeks and limit price upside in soybean futures. USDA is expected to release its first harvest progress update of the season later today. The crop was 5% harvested as of Sunday, based on a Reuters survey of analysts.

Technical analysis: November soybeans appeared to reverse a recent downswing, though the market will need to produce followthrough buying Tuesday to confirm another leg higher and possible test of last week’s highs. The lead contract held support at the 10- and 20-day moving averages at $14.36 1/4 and $14.35 3/4, respectively. A drop under those levels may have bears targeting the 40-day moving average at $14.22 1/2 and trendline support around $13.88. Resistance comes in at $15.00 and last week’s high of $15.08 3/4.

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 29 1/4 cents to $8.30 1/2, the contract’s lowest closing price since Sept. 8. December HRW wheat dropped 25 1/2 cents to $9.09 3/4. December spring wheat fell 20 1/2 cents to $9.18 1/4.

Fundamental analysis: Wheat futures fell on reports of increasing grain shipments from Ukraine and an outlook for strong production in Russia. Renewed competition from the Black Sea region has pressured European wheat prices as export demand for European Union grain slipped, Reuters reported. A continued strong U.S. dollar is keeping U.S. wheat prices less competitive on the world market, while heightened concern over a potential global recession also weighed on wheat futures. Russian agriculture consultancy IKAR raised its forecast for Russia's 2022 wheat crop by 2 MMT to 99 MMT and the country will have 47.5 MMT of wheat potentially available for exports in the 2022-23 July-June marketing season.

Early today, USDA reported 790,145 MT of U.S. wheat inspected for export during the week ended Sept. 15, up from 757,804 MT the previous week and at the high end of trade expectations. Today’s numbers were also a current marketing-year high for wheat inspections, but still not robust. USDA is expected to report the U.S. winter wheat crop was about 20% complete as of Sunday, based on a Reuters survey. The spring wheat harvest is seen at 92% complete, compared to 85% done last week.

Technical analysis: Four-week price uptrends on the daily bar charts are close to being negated for winter wheat futures. SRW bulls' next upside objective is closing December futures above solid resistance at the September high of $8.84 3/4. Bears' next downside objective is closing prices below solid support at $8.00. First resistance is seen at $8.50 and then at today’s high of $8.61 1/4. First support is seen at today’s low of $8.19 1/4 and then at $8.00.

HRW bulls’ next upside objective is closing December futures above solid resistance at $10.00. Bears' next downside objective is closing December below solid support at $8.50. First resistance is seen at today’s high of $9.34, then $9.50. First support is seen at today’s low of $8.96 1/4, then $8.80.

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 fell 325 points to 96.04 cents, the contract’s lowest close since Aug. 8.

Fundamental analysis: Cotton futures tumbled for a second consecutive session and hit six-week intraday lows on continued recession concern and early strength in the U.S. dollar. World Weather, Inc. is closely monitoring Hurricane Fiona, recently upgraded to Category 3 storm as it travels toward Bermuda, with an additional disturbance northeast of the South America coast being observed. Fiona is currently expected to move northwesterly, and is expected to turn farther north on Wednesday, according to the forecaster. Improved crop development throughout Texas, Delta and southeastern states is expected due to a period of dry weather over the next two weeks, which will likely lead to improved crop development as well as protecting open boll cotton fiber quality.

China reported 110,000 MT of cotton was imported during August, up from the same month last year by 25%. However, year-to-date imports lagged 2021 levels by 23%.

Technical analysis: December cotton traded a 537-point range, testing support levels at 97.96 and 96.62 and giving bears the full technical advantage with a close below both levels. Next support will stand 93.96 cents. An attempt by bulls to regain control will be met with resistance at previous support at 97.96, 100.62, as well as 101.96.

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

Hedgers: -Hedge 30% of 2022-crop in short December futures. Our fill was 99.58 cents. 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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