Crops Analysis | September 27, 2022
Price action: December corn futures rose 1 1/4 cents to $6.67 1/2, near the bottom of today’s range.
Fundamental analysis: Corn futures posted a modest corrective recovery from Monday’s sharp declines as higher crude oi prices helped to boost grain markets. Slower-than-expected harvest also provided support. USDA late Monday reported the U.S. corn harvest at 12% complete as of Sunday, up from 5% from a week earlier but slightly under trade expectations for 13%. The crop was rated 52% “good” to “excellent,” unchanged from the previous 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 1.8 points to 335.2, the 11th straight weekly decline and 25.7 points under the five-year average.
Traders continue to closely watch the war in Ukraine, as heightened tensions between the West and Russia raise the prospect of disruptions to grain shipments out of the Black Sea region. Farmers are among the Russians being drafted into the military, President Vladimir Putin told a meeting with officials today, signaling potential risks for the 2023 crop, Reuters reported. Traders also await Friday’s USDA quarterly Grain Stocks Report, along with the agency’s annual Small Grains Summary. U.S. corn stockpiles as of Sept. 1 were an estimated 1.497 billion bu., based on a Bloomberg survey. The projected figure would be up from 1.235 billion bu. a year earlier.
Technical analysis: Near-term technicals still lean bearish in the corn market with the December contract trending lower for the past week. Prices ended near some key support levels, including the 100-day moving average at $6.64 1/2 and around $6.62, trendline support drawn from the July low. A push under those levels would meet further support at the 40-day moving average at $6.52 1/4 and the 200-day moving average at $6.44 1/4. Near-term resistance comes in at the 20- and 10-day moving averages at $6.77 1/2 and 6.79, followed by the September high at $6.99 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.
Price action: November soybeans fell 3 1/4 cents to $14.08, the contract’s lowest close since Sept. 8. December soymeal dropped $3.90 to $413.60. December soyoil fell 7 points at 62.39 cents.
Fundamental analysis: Heightened concern over a global recession and a general risk-off mindset in financial markets continued to weigh on the soy complex. A pullback in the U.S. dollar index provided some price support earlier today but increasing worries over currency market dislocations that could disrupt the global commodity trade remained concerning, discouraging grain market buyers.
Midwest weather remained largely favorable for late-season maturity and early harvest, with scattered frost in some areas not considered a threat, as beans in the northern Corn Belt have mostly halted growth. USDA late Monday reported the U.S. soybean harvest 8% complete as of Sunday, up from 3% a week earlier but behind the 13% average for the past five years. Analysts expected harvest to be 11% complete. USDA rated 55% of the crop in good-to-excellent condition, unchanged from last week.
Grain traders await Friday’s USDA quarterly Grains Stocks Report, which is expected to show U.S. soybean stocks as of Sept. 1 at 243 million bushels compared to 257 million bushels at the same time last year.
Technical analysis: Soybean bulls hold a slight near-term technical advantage but are fading and need to show fresh power soon. The next near-term upside objective for bulls is closing November futures above solid resistance at $15.00. The next downside objective for bears is closing prices below solid support at $14.00. First resistance is seen at today’s high of $14.37 1/4 and then at $14.50. First support is seen at this week’s low of $14.08 1/4 and then at $14.00.
Soymeal futures last week scored a bearish “key reversal” down on the daily bar chart, which is one clue a near-term market top is in place. The bulls still have the overall near-term technical advantage but are fading. A 2.5-month-old uptrend on the daily bar chart is still in place. The next upside price objective for the meal bulls is to produce a close in December futures above solid technical resistance at the contract high of $443.80. The next downside price objective for the bears is closing prices below solid technical support at the September low of $404.30. First resistance comes in at today’s high of $421.50 and then at this week’s high of $425.90. First support is seen at $412.50 and then at $410.00.
Soyoil bears hold a near-term technical advantage. The next upside objective for bulls is closing December prices above solid resistance at the August high of 68.16 cents. Bears' next downside objective is pushing and closing prices below solid support at the September low of 61.24 cents. First resistance is seen at this week’s high of 63.98 cents and then at 65.00 cents. First support is seen at this week’s low of 62.00 cents and then at 61.24 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.
Price action: December SRW wheat rose 13 1/2 cents to $8.71 1/2, around the middle of today’s range, while December HRW rose 13 3/4 cents to $9.43 1/4. December spring wheat rose 12 cents to $9.43 1/4.
Fundamental analysis: Winter wheat futures rose for the first time in three sessions on short covering and corrective buying following Monday’s declines. A pullback in the U.S. dollar index earlier today also lent support to grain prices, but the index remains near a 20-year high, stirring concerns demand for dollar-denominated commodities could be hampered. Grain markets remain on edge amid conflicting factors, including growing concern over a global recession along with stepped-up tensions with Russia raising the prospect of disruptions to Black Sea supplies.
U.S. winter wheat planting continues to advance slightly ahead of historical averages. USDA late yesterday said the U.S. winter wheat crop was 31% planted at the start of the week, up from 21% a week earlier and slightly ahead of the 30% five-year average, USDA reported. Analysts expected planting to be about 33% complete. Recent rains in the central Plains “induced some improved emergence and establishment conditions,” World Weather Inc. said today. However, Texas and Oklahoma “will be dry for the next 10 days to two weeks while a few other showers occur in the central Plains,” the forecaster said.
Technical analysis: Winter wheat futures remain in an uptrend that’s run nearly six weeks, but upside momentum has slowed this week with December futures slipping toward some key support levels. Initial support in December SRW futures comes in at the 40-day moving average of $8.53, followed by $8.35 to $8.36, trendline support drawn from the August intraday low. Upside objectives include the 200- and 100-day moving averages at $9.16 1/4 and $9.32 3/4, followed by $9.50.
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 fell 1 point to 88.36, the contract’s lowest closing price since July 14.
Fundamental analysis: Cotton futures fell a fourth straight session after initial strength failed to hold. Stronger crude oil prices and a brief pullback in the U.S. dollar index provided some support, but elevated recession fears continued to discourage buyers in many commodities. Traders also watched Hurricane Ian, which appeared to pose less of a threat to the cotton crop in the Southeast. While Georgia’s cotton crop will still be impacted by rain, the southwestern counties may be spared a serious change in open boll fiber quality because of the storm’s expected southeastward shift, World Weather said. The forecaster further noted that the greatest rain in Georgia will now occur in the east where cotton is not very common, with generalized rains to occur late week into the weekend in the Carolinas, where fiber quality issues are expected but chances of wind damage have diminished.
USDA late yesterday reported 31% of U.S. cotton acreage in good-to-excellent condition, down from 33% a week earlier and off sharply from 65% at the same point last year. USDA also said 67% of cotton bolls were open, up from 59% last week and 5% ahead of the five-year average. Cotton harvest was 15% complete, up from 11% a week earlier and 1 percentage point above the five-year average.
Technical analysis: December cotton traded a 430-point range and was unable to test support or resistance. Support levels currently stand 86.49, 84.62 as well as the July low at 82.54, which would then lead bears towards support 80.99. Resistance stands at 91.99, 95.62 and at 97.49.
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.
