Crops Analysis | September 30, 2022
5-day outlook: Corn futures ended with a modest gain for the week after USDA, in its quarterly Grain Stocks report today, said U.S. corn stockpiles as of Sept. 1 totaled 1.376 billion bu., up from 1.235 billion bu. the same date a year earlier but about 136 million bu. under analyst expectations on average. Tighter supplies combined with escalating tensions with Russia may keep futures supported early next week. USDA will update harvest progress on Monday. USDA last reported the U.S. corn harvest at 12% complete as of Sept 25, up from 5% from a week earlier but slightly under the 14% average for that date for the previous five years.
30-day outlook: December corn’s gains today narrowly averted a third straight weekly lower close and the contract appears to remain in a 10-week uptrend, albeit barely, from the July low. The market may actually be poised for more sideways trade at best as harvest pressure accelerates and economic uncertainty hovers over the commodity sector, with downside risks amplified if crude oil continues slumping and the dollar continues rallying. Outside markets and speculative money will be keys to price direction ahead of USDA’s next Crop Production Report on Oct. 12
90-day outlook: Harvest results will be closely followed in coming weeks. USDA will likely reduce its U.S. crop estimate in two upcoming production reports, but a smaller crop is likely already factored into current prices levels, meaning demand will be one key to longer-term market direction. Domestic ethanol demand has dropped off sharply recently, with weekly production shrinking to the lowest levels since February 2021, and U.S. exports remain slow so far in 2022-23. USDA reported net U.S. corn sales of 512,000 MT for the week ended Sept. 22, up from 182,300 MT the previous week. U.S. export commitments are running 48.7% behind year-ago levels, narrower than 50% behind last week.
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 plunged 46 cents to 13.64 3/4, down 62 cents for the week and the contract’s lowest closing price since July 26. December soymeal fell $4.20 to $403.00, the lowest close since Aug. 19. December soyoil fell 230 points to 61.56 cents, the lowest close since Aug. 4.
5-day outlook: November soybeans tumbled to a two-month closing low to end the week after USDA’s quarterly Grain Stocks listed U.S. soybean supplies as of Sept. 1 at an unexpectedly high 274 million bu., 32 million bu. above the average analyst estimate. Futures likely will face followthrough technical pressure to start next week after prices broke under the trading range that last much of the past two months. USDA will report weekly harvest progress updates Monday. Earlier this week, USDA reported the U.S. soybean harvest at 8% complete as of Sept. 25, up from 3% a week earlier but behind the 13% average for the past five years.
30-day outlook: The soy complex will face increasing harvest pressure in the month ahead, and continuing concern over a possible global recession could further burden prices. Potential further weakness in crude oil and Malaysian palm oil loom as other bearish elements ahead of USDA’s next Crop Production update Oct. 12. Firmer exports could help keep a floor under prices. USDA Thursday reported net weekly U.S. soybean sales totaled 1.003 MMT during the week ended Sept. 22, more than double the previous week’s 446,400 MT total. Top buyers included China (548,700 MT, including 132,000 MT switched from “unknown destinations”). Export demand has shown signs of picking up in recent weeks, with U.S. commitments now running 10.4% ahead of a year-ago, up from 9.9% ahead last week.
90-day outlook: South American’s crop outlook for 2022-23 will increasingly come into market focus, and many analysts expect a large increase, if not record combined crops, from Argentina and Brazil. Agribusiness consultancy Datagro last week estimated 2022-23 South American soybean production at a record 219.34 MMT, up 21% from 181.95 MMT in 2021-22. Longer-term, tight U.S. soybean supplies expected next year may limit price downside. USDA’s Crop Production Report Nov. 9 will another key to longer-term price direction.
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.
5-day outlook: Wheat futures surged late today after USDA, in its annual Small Grains Summary, lowered its final all wheat production estimate to 1.649 billion bu., down 134 million bu. from an August figure and 139 million bu. under trade expectations. The surprisingly large cut sparked a rally that send December SRW futures above last week’s highs and may generate followthrough technical buying early next week. Also next week, USDA will update planting progress. The U.S. winter wheat crop was 31% planted at the start of this week, slightly ahead of the 30% five-year average, USDA reported.
30-day outlook: Expanding drought conditions in the U.S. Plains are becoming increasingly worrisome, with over one-third of the U.S. winter wheat crop planted and moisture needed soon for proper establishment. World Weather today reported a few showers are expected in the high Plains region during the next week to ten days, but will have a very limited impact on autumn planting, wheat germination or emergence. “Every little bit of rain is welcome, but greater amounts are needed to support long-term crop development and additional planting and emergence. La Nina will see to it that rainfall is restricted through the fourth quarter, although complete dryness is not likely.”
90-day outlook: U.S. hard red spring wheat export sales commitments, at 1.096 MMT so far in 2022-23, are up 14% from the same point in 2021-22, a bright spot in an otherwise sluggish overall U.S. export picture. With the U.S. dollar index this week hitting another 20-year high, U.S. wheat priced on the world market will likely remain less competitive with most other wheat-producing countries.
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 18 points to 85.34 cents, down 720 points from a week ago.
5-day outlook: Cotton futures will continue to find near-term direction from outside markets as the U.S. Dollar trades slightly below a recent 20-year high. Further weakness in crude oil may burden cotton prices amid fears of an economic slowdown. Production cuts at the next OPEC+ meeting Wednesday could help prop up crude futures as talks of a 500,000 to 1.0 million barrel per day cuts to output continue to emerge. Damage reports from Hurricane Ian could provide further market movement as reports from crop damage start to pour in. World Weather reports that the greatest wind damage will be kept close to the coast between Charleston and Myrtle Beach, South Carolina while heavy rain and flooding impact a larger area from eastern and southern South Carolina into southern Virginia.
30-day outlook: Accelerating harvest progress in the U.S. will be critical over the next month as traders look to gather data on production as extreme weather conditions have heightened trade ambiguity regarding crop size. The government’s next supply and demand due out Oct. 12, will provide a bit more insight into production as well as demand prospects as the U.S. dollar remains near 20-year highs.
90-day outlook: World economic data and the effects of steps to curb inflation will drive the overall market as we enter the fourth quarter. China will remain a focus, as the country represents the largest cotton importer in the world. Two surveys out earlier today, provided insight into lackluster economic growth as ongoing pandemic restrictions have slowed export orders and increased job cuts amid weak factory growth through September. Traders will also continue to closely monitor world production as overall supply remains questionable in the wake of persisting weather anomalies around the world.
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.
