Crops Analysis | September 28, 2022
Price action: December corn rose 3 cents to $6.70 1/2, after dropping earlier in the session to a three-week low at $6.61 1/2.
Fundamental analysis: Corn futures followed wheat higher as the U.S. dollar pulled back and crude oil broke back above $80 a barrel. Low temperatures this morning slipped into the upper 20s Fahrenheit in northeastern Minnesota and northern and central Wisconsin, ending the growing season for many crops in the region, World Weather said. A few locations in northern Iowa and Minnesota’s corn country had temperatures of 26 to 30 F, cold enough to induce damage to the most immature corn in the dough and dent stages. Overall, the impact on production should be limited. Harvest progress should continue to accelerate with infrequent and mostly light rains expected through the next two weeks, with exceptions Saturday into Monday from eastern Kentucky to southern Ohio, where remnants of Hurricane Ian bring rain to the region.
The Energy Information Administration said weekly U.S. ethanol production averaged 855,000 barrels per day (bpd) during the week ended Sept. 23, down 46,000 bpd from the previous week and the lowest weekly average since February 2021. Ethanol stocks rose 190,000 barrels to 22.691 million barrels. Weekly USDA export sales Thursday are expected to reflect sales within the range of 250,000 to 800,000 MT through the week ended sept. 22.
Technical analysis: December corn traded an 11 3/4-cent range, testing support at $6.63 along with the 100-day moving average at $6.64. However, bulls were able to muster enough momentum to hold a close above both levels. A break below these levels will lead to support at $6.58 3/4 as well as the 40-day moving average at $6.54 1/4. A break below these levels will find bears encountering further support at $6.51 1/2. Bulls were just short of testing resistance at $6.74 3/4, with next levels of resistance standing at $6.82 1/4 along with $6.86 1/2. Psychological resistance remains 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.
Price action: November soybeans rose 3/4 cent to $14.08 3/4, after earlier dropping to a three-week low at $13.90 3/4. December soymeal fell 90 cents to $412.70. December soyoil fell 24 points to 62.15 cent, a three-week closing low.
Fundamental analysis: Soybean futures rose for the first time in six sessions after recovering from earlier weakness with support from sharp gains in the crude oil market, which had risen over $3 per barrel. Gains in corn and wheat also support soybean futures as the markets watched for developments with Ukraine. Sunflower oil’s premium over soyoil has narrowed and the oil has started gaining lost market share on rising supplies from top exporter Ukraine after shipments from the Black Sea resumed in August. Sunflower oil prices have dropped by nearly half from their record high hit in April. Gains in soybean futures likely will be limited by favorable Midwest for late-season crop maturity and accelerating harvest.
USDA’s weekly export sales report Thursday is expected to show net U.S. soybeans sale ranging from 250,000 to 850,000 MT. Last week, USDA reported net weekly U.S. soybean sales totaling 446,400 MT for 2022-23.
Technical analysis: Technicals took a bearish turn today after November soybeans pushed under trendline support around $14.05 and fell as low as $13.92 1/4, the contract’s lowest intraday price since $13.87 1/4 on Sept. 9. However, November futures bounced back to close above trendline support drawn from the July low, so it’s unclear if negation of the recent uptrend will be confirmed. Further declines in November futures may have bears targeting the September intraday low at $13.73. Upside resistance comes in at several moving averages, including the 50- and 40-day at $14.18 and $14.28, respectively.
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.
Fundamental analysis: Wheat markets were supported by ongoing worries over grain shipments from the Black Sea region. Russian President Putin appears to be ratcheting up his anti-West rhetoric, including claiming current grain shipments out of Ukraine are only headed toward rich nations. A rebound in crude oil and a pullback in the U.S. dollar supported grain prices. Grain traders will continue to closely track movements in the currency and bond markets, which have been on shaky ground recently. Keener risk aversion in the general marketplace would likely squelch the grain market bulls.
USDAs’ weekly export sales report Thursday is expected to show net U.S. wheat sales between 175,000 and 500,000 MT, compared to 185,200 MT reported in last week. Traders are also awaiting Friday’s USDA quarterly Grain Stocks and Small Grains Summary.
Technical analysis: Four-week-old uptrends are in place on the daily bar charts for winter wheat futures. The bulls have the near-term technical advantage. SRW bulls' next upside price objective is closing December prices above solid chart resistance at $9.50. The bears' next downside objective is closing prices below solid technical support at $8.00. First resistance is seen at today’s high of $9.05 and then at the September high of $9.22 1/2. First support is seen at $8.75 and then at this week’s low of $8.54 1/4.
HRW bulls' next upside price objective is closing December prices above solid technical resistance at $10.00. The bears' next downside objective is closing prices below solid technical support at $8.50. First resistance is seen at the September high of $9.82 and then at $10.00. First support is seen at $9.50 and then at this week’s low of $9.26 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.
Price action: December cotton futures rose 40 points at 88.49 cents, after hitting a nine-week low earlier.
Fundamental analysis: Cotton was lifted modestly by worries Hurricane Ian could damage the southeastern U.S. cotton crop. World Weather reported rain will impact cotton in much of the southeastern states associated with Ian, “but the storm will come into the region as a decaying tropical storm and should only produce widespread rain.” The Carolinas and Virginia will get most of the storm’s rain causing some fiber quality decline, said the forecaster.
Key outside markets also turned friendly to cotton futures. The U.S. dollar index reversed course to post solid losses after hitting a 20-year high overnight. Crude oil prices rallied along with the U.S. stock indexes. Still, U.S. and or/global recession worries and wobbly global bond and currency markets are making for keener risk aversion in the general market place, which is likely to continue to limit buying interest in the cotton market.
Technical analysis: Cotton bears still hold a solid near-term technical advantage, with prices in a six-week downtrend on the daily bar chart. The next upside objective for bulls is to close December futures above resistance 98.00 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 90.00 cents and then at Tuesday’s high of 91.85 cents. First support is seen at 88.00 cents and then at today’s low of 85.70 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.
