Crops Analysis | September 21, 2022
Price action: December corn fell 6 1/2 cents to $6.85 1/2, slightly under the middle of today’s range.
Fundamental analysis: Corn futures fell under mild corrective selling after extending Tuesday’s gains overnight, with the December contract touching a one-week high. Pressure stemmed from outside markets as the U.S. dollar surged to a fresh 20-year high in anticipation of a Federal Reserve rate increase today, while crude oil futures fell earlier amid ongoing concerns over a global economic slide. Escalating geopolitical tensions also weighed on the market, as Russian President Vladimir Putin ordered Russia’s first mobilization since World War II and backed a plan to annex swaths of Ukraine, warning the U.S and its western allies that he is prepared to defend Russia by means of nuclear weaponry.
Also today, the Energy Information Administration reported U.S. ethanol production at 901,000 barrels per day (bpd) during the week ended Sept. 18, down 2.7% from the corresponding week last year and the lowest weekly average since February 2021. Ethanol stocks dropped 342,000 barrels to 22.501 million barrels.
Technical analysis: December corn traded a 19 1/4-cent range and hit a one-week high at $6.98 1/2, just shy of last week’s high at $6.99 1/2. A breach of the 10-day moving average at $6.83 1/2 occurred early as well as a test of support at $6.81 3/4, but bulls held their ground as December corn rebounded from its lows at mid-morning. More intense selling efforts will encounter support at the 20-day moving average at $6.75 1/2, as well as $6.71 1/2 and $6.65 3/4. Resistance was also tested at $6.97 3/4, with $7.03 1/2 and $7.13 3/4 standing as additional resistance. Corn currently maintains a bullish outlook from a technical perspective, based on the uptrend in both the daily and weekly charts.
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.
Price action: November soybeans fell 17 1/2 cents to $14.61 1/4, after earlier reaching a high for the week at $14.88 3/4. December soymeal fell 60 cents to $438.80. December soyoil fell 91 points to 65.00 cents.
Fundamental analysis: Soybean futures erased overnight gains and fell for the first time in three sessions amid corrective selling and increased competition from South American supplies. Increasing U.S. harvest activity and weakness in crude oil also weighed on the market. Argentine farmers continue to offload soy stockpiles following a series of measures aimed at spurring exports. The country’s ag ministry said 62% of the 2021-22 harvest was sold by the end of last week, Reuters reported. Between Sept. 8-14, producers sold 2.3 MMT of the 2021-22 harvest, up from 2.1 MMT the prior week. Sales volume was just 268,100 MT in the last week of August, but sales surged after Sept. 5, when the government launched a more favorable exchange rate for soybean producers.
Continued strength in soymeal and USDA export readings, along with a longer-term outlook for tighter supplies, may limit selling interest in the soy complex. USDA’s weekly export sales report Thursday is expected to show net U.S. soybean sales totaling 500,000 MT to 1.0 MMT for 2022-23. Last week, USDA reported net sales totaling 843,000 MT, at the high end of expectations. U.S. export commitments are running 12% ahead of a year-ago.
Technical analysis: Soybean market bulls retain a near-term technical advantage with prices trending up since late July and November futures trading above most key moving averages. Upside objective for bulls include closing November futures above solid resistance at the September high of $15.08 3/4, followed by the contract high of $15.84 3/4 posted June 9. Near-term support comes in at the 10- and 100-day moving averages at $14.52 and $14.48, respectively, as well as trendline support around $13.97.
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.
Price action: December SRW wheat rose 10 cents to $9.03 3/4, the contract’s lowest close since July 8. December HRW wheat gained 4 cents to $9.67. December spring wheat rose 5 cents to $9.64 1/4.
Fundamental analysis: Winter wheat futures settled at 2 1/2-month highs as escalating tensions with Russia fueled concern over potential disruptions to grain supplies from the Black Sea region. Russian President Vladimir Putin said he will mobilize more Russian troops and threatened to use nuclear weapons if Russia’s integrity is threatened. Also, Ukraine agriculture officials said their country’s 2023 wheat crop may decrease to 16 MMT to 18 MMT, down from 19 MMT this year, due to an expected decline in the winter wheat sowing area of up to 20%.
Dryness in the U.S. Plains remains concerning. The HRW wheat crop may be hampered by poor rainfall during the autumn, winter and spring during La Nina events, World Weather Inc. said. “Producers have been taking advantage of every rain event that has come along recently to get planting under way,” the forecaster said. More rain expected today into Friday will bolster topsoil moisture in northern production areas where a new surge of field progress is likely to occur this weekend into next week.
Thursday’s weekly USDA export sales report is expected to show net U.S. wheat sales of 200,000 to 500,000 MT. Last week’s reported wheat sales were 217,300 MT.
Technical analysis: Winter wheat futures retained four-week uptrends on daily bar charts and bulls have a near-term technical advantage. SRW bulls' next upside objective is closing December futures above solid resistance at $10.00. Bears' next downside objective is closing prices below solid support at this week’s low of $8.19 1/4. First resistance is seen at today’s high of $9.19 1/2 and then at $9.50. First support is seen at today’s low of $8.73 and then at $8.50.
HRW bulls' next upside price objective is closing December prices above solid technical resistance at $10.50. The bears' next downside objective is closing prices below solid technical support at $8.75. First resistance is seen at today’s high of $9.82 and then at $10.00. First support is seen at today’s low of $9.44 1/4 and then at $9.25.
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 359 points at 96.92 cents and nearer the session high.
Fundamental analysis: Cotton futures were boosted by short-covering and corrective buying after hitting a six-week low early today. The cotton market today ignored bearish outside markets action that included the U.S. dollar index surging to a 20-year high, lower crude oil prices and a sell-off in the U.S. stock market amid keener risk aversion. Cotton traders also seemed to look past heightened geopolitical tensions revolving around Russia’s plan to mobilize more troops to fight in Ukraine. However, all of the above factors suggest further price gains in cotton futures in the near term will be hard to achieve.
Technical analysis: Cotton futures bears still have the overall near-term technical advantage. The market had become short-term oversold and was due for an upside correction. Key for the cotton market bulls will be to show solid followthrough buying Thursday and Friday, which would then be an early clue the market has put in a near-term bottom. Prices are in a four-week downtrend on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in December futures above technical resistance 102.50 cents. The next downside objective for bears is to close prices below solid support at the July low of 82.54 cents. First resistance is seen at 98.00 cents, then 100.00 cents. First support is seen at 95.00 cents and then at today’s low of 92.38 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.
