Crops Analysis | September 20, 2022

( )

Corn

Price action: December corn rose 13 3/4 cents to $6.92, the contract’s highest closing price since Sept. 13.

Fundamental analysis: December corn rose a second straight day on spillover from a sharp rally in the wheat market, which climbed on renewed concern over grain shipments from the Black Sea region. Concerns over Black Sea supplies escalated following reports Russian-installed leaders in occupied areas of four Ukrainian regions had set plans for referendums on joining Russia this week. Analysts also cited talk that Vladimir Putin may block a renewal of a safe passage deal allowing Ukrainian grain shipments from Black Sea ports, which is set to expire in November.

Gains in corn also reflected slower-than-expected harvest progress. USDA late Monday reported 7% of the U.S. crop was harvested as of Sunday, up from 5% a week earlier but slightly behind the 8% average for the previous five years. Harvest progress also fell short of expectations for about 10%. USDA rated 52% of the crop “good” or “excellent,” down from 53% last week. When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 3.3 points to 336.9, the 10th straight weekly decline.

Technical analysis: Corn futures retained a bullish near-term bias as the December extended an uptrend that started in late July. Key upside levels include the 2 1/2-month intraday high at $6.99 1/2, posted Sept. 12. A close above that price may have bulls targeting the June high at $7.49 1/4 and the contract high at $7.66 1/4. Initial support comes in at the 10- and 20-day moving averages at $6.82 and $6.73 3/4, respectively, followed by the 100-day moving average at $6.68 and Monday’s low at $6.67 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 17 1/2 cents to $14.78 3/4 and near the session high. December soymeal gained $10.10 to $439.40, a lifetime-high close. December soyoil rose 75 points to 65.91 cents.

Fundamental analysis: Soy complex futures rose on spillover from rallies in corn and wheat amid concern Russia may end its grain-shipment deal with Ukraine in coming weeks. Slower than expected U.S. harvest progress and indications of strong crushing demand also supported soybeans. Strong crushing margins suggest processors will be active soybean buyers. USDA late Monday reported 3% of the U.S. soybean crop was harvested as of Sunday, below both the 5% five-year average and analyst expectations, also around 5%. The crop was rated 55% “good” or “excellent,” down from 56% last week.

China has “massively increased” its soybean purchases from Argentina after the latter country devalued its currency, sparking a big rise in farmer selling, Bloomberg reported. The report said China booked as much as 3 MMT in the past two weeks.

Technical analysis: Soybean bulls hold a near-term technical advantage. The next near-term upside technical objective for the soybean bulls is closing November futures above solid resistance at the September high of $15.08 3/4. The next downside objective for bears is closing prices below solid support at $14.25. First resistance is seen at $14.89 and then at $15.00. First support is seen at $14.70 and then at $14.50.

Soymeal bulls hold a solid near-term technical advantage with a 2 1/2-month-old uptrend on the daily bar chart. The next upside objective for bulls is to close in December futures above solid resistance at $475.00. The next downside price objective for bears is closing prices below solid support at last week’s low of $417.50. First resistance comes in at today’s contract high of $442.70 and then at $450.00. First support is seen at $430.00 and then at today’s low of $424.90.

Soyoil bulls and bears are on a level overall near-term technical playing field amid choppy and sideways trading. 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 the September low of 61.24 cents. First resistance is seen at this week’s high of 66.39 cents and then at 67.50 cents. First support is seen at today’s low of 64.25 cents and then at last week’s low of 63.32 cents.

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 surged 63 1/4 cents to $8.93 3/4, the contract’s highest close since July 8. December HRW wheat rose 53 1/4 cents to $9.63, the contract’s highest close since June 30. December spring wheat gained 41 cents to $9.59 1/4.

Fundamental analysis: Winter wheat futures surged to the highest levels in over two months amid renewed concern over global supply disruptions following reports four regions in Ukraine requested referendums to break away and join Russia. The wheat market’s strength also reflected concern Vladimir Putin may block renewal of a safe passage deal allowing grain shipments out of Ukraine’s Black Sea ports.

Dry conditions in the U.S. Plains with winter wheat planting accelerating remains a concern. Dry weather is expected for the southern U.S., including Texas, the coming week, favoring crop maturation and harvest progress, World Weather Inc. said. Some winter wheat areas in Nebraska, northern Kansas and northeastern Colorado will benefit from rain Wednesday and Thursday while other areas in hard red winter wheat areas are dry-biased. USDA late Monday said 21% of the winter wheat crop was planted as of Sunday, up from 10% a week earlier and ahead of the five-year average of 17%. Analysts expected a planting to be about 20% complete.

Technical analysis: Wheat futures took a decisively bullish turn today as both December HRW and SRW contracts extended a month-long uptrend and closed above the trading ranges that persisted for over two months. Upside targets for December SRW include the 200- and 100-day moving averages at $9.14 and $9.42, respectively, followed by the July 11 spike high at $9.54. Initial support comes in at the 10- and 20-day moving averages at $8.56 1/4 and $8.34 1/4, respectively, followed by Monday’s low at $8.19 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 fell 292 points to 93.12 cents, the contract’s lowest closing price since July 25.

Fundamental analysis: Cotton futures tumbled a third straight session to near two-month lows amid ongoing global economic concerns and bearish spillover from outside markets. The S&P 500 index sank near a two-month low ahead of an expected Federal Reserve interest rate hike Wednesday, while the U.S. dollar index jumped to its highest level since a 20-year high posted Sept. 7. The accelerating U.S. harvest also weighed on cotton prices. USDA late Monday reported 11% of the U.S. crop was harvested as of Sunday, up from 8% a week earlier and even with the five-year average.

World Weather continues to predict mostly dry conditions in Texas, the U.S. Delta and Southeast, which will help crop development as well as protect open boll cotton fiber quality. USDA said 33% of the crop was in good-to-excellent condition as of Sunday, unchanged from the previous week. However, there was a notable reduction for Texas, with the state’s poor-to-very poor rating at 56%.

Technical analysis: December cotton traded a 342-point range, testing support at 93.68 cents as bears maintain a near-term technical advantage and increasing. Rapidly eroding technicals increase the likelihood of a drop under 90.00 cents towards the July low at 82.54 cents. Next support stands at 91.32 cents and again at 88.29 cents. Efforts to the upside will be met by resistance at 96.71 cents and 99.07 cents.

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

Hedgers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production. You should also have 30% of 2022-crop hedged in December futures at 99.58 cents.

Cash-only marketers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production.

 

Latest News

H&P Report negative compared to pre-report expectations
H&P Report negative compared to pre-report expectations

Nearly every category topped the average pre-report estimates.

After the Bell | March 28, 2024
After the Bell | March 28, 2024

After the Bell | March 28, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

PF Report Reaction: Bullish USDA data for corn
PF Report Reaction: Bullish USDA data for corn

Corn planting intentions and March 1 stocks came in lower than expected.

Report Snapshot: USDA shows lighter-than-expected corn acres and stocks
Report Snapshot: USDA shows lighter-than-expected corn acres and stocks

USDA reported corn acres of 90.036 million acres for 2024 and March 1 stocks of 8.347 billion bu., both well below trade estimates. Soybean acres were slightly lower than expectations, while stocks were higher.