Crops Analysis | October 4, 2022
Price action: December corn rose 2 1/4 cents to $6.83, the contract’s highest close since Sept. 22.
Fundamental analysis: Corn futures rose a third straight session after USDA’s harvest progress update fell short of trade expectations and concerns lingered over disruptions of Ukrainian supplies. Outside markets also supported grain futures, with crude oil briefly rallying over $4 near a three-week high, U.S. equities climbing and the U.S. dollar index dropping over 1,500 points.
The U.S. corn harvest running slightly behind the average pace is a mildly price-supportive factor but not a major market concern. Stepped-up harvest this month likely will lead to increased hedging pressure that will limit futures upside. Late Monday, USDA reported 20% of the U.S. corn crop was harvested as of Sunday, up from 12% a week earlier but slightly behind the 22% average for that date the past five years. Progress also fell short of analysts’ expectations to harvest to be about 22% finished. Two more weeks of mostly favorable harvest weather will occur with one round of organized rain Oct. 11-13 and a few showers on occasion that will favor the northwestern Corn Belt through the Great Lakes region, World Weather said.
Technical analysis: Corn futures retain a neutral to bullish near-term bias with the December contract closing above most major moving averages and trendline support around $6.73 to $6.74. Absent a sharp price break higher or lower, or a several outside market event, futures may extend a sideways trend that’s held the past three weeks for at least a few more days. A push under trendline support at $6.73 to $6.74 could trigger chart-based selling that might prompt bulls to target last week’s low at $6.61 1/2, the 100-day moving average at $6.62 1/4 and the September low at $6.54. Initial resistance comes in at last week’s high at $6.69 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 rose 9 1/2 cents to $13.83 1/2. December soymeal fell $3.80 to $401.5. December soyoil gained 168 points at 65.02 cents, the contract’s highest close since Sept. 22.
Fundamental analysis: Soybean futures rose a second day behind continued corrective buying and support from strength in corn, crude oil and soyoil, but gains were limited by weakness in soymeal, which ended near a 1 1/2-month low. Continued weakness in soymeal may also weigh on soybean prices, which are already facing accelerating harvest pressure. Late Momday, USDA said the U.S. soybean crop was 22% harvested as of Sunday, up from 8% a week earlier but behind the 25% five-year average. The pace topped analysts’ expectations averaging 20%. The crop was rated 55% “good” to “excellent,” unchanged from last week.
Technical analysis: Soybean bears hold a slight near-term technical advantage with the November contract trending lower on the daily chart. The next near-term upside objective for bulls is closing November futures above resistance at $14.25. The next downside objective for bears is closing prices below solid support at the July low of $12.88 1/2. First resistance is seen at today’s high of $13.95, then $14.00. First support is seen at today’s low of $13.71 3/4,then this week’s low of $13.61 1/4.
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 futures faded from overnight gains and ended mixed in part on continued corrective selling and profit-taking following the market’s recent rally near three-month highs. The wheat market’s performance likely disappointed bulls, considering outside markets were largely supportive for commodities, with stock indexes and crude oil gaining and the U.S. dollar index dropping sharply. Tension with Russia and concern over possible disruptions to Black Sea shipments remains a background supportive factor, but failed to motivate buyers today.
Dryness in U.S. Plains winter wheat areas also remains concerning. USDA reported 40% of the winter wheat crop was planted as of Sunday, up from 31% the previous week but behind the 44% five-year average. Plantings also fell short of the 44% analysts expected. HRW wheat areas in the central and southwestern Plains are advertised to get some rain over the next 10 days, “but this should not be the start of a trend change,” World Weather Inc. said. “Most of the precipitation is not likely to have a huge benefit to soil moisture, but there will be pockets of improved planting, emergence and establishment.”
Technical analysis: Winter wheat retains a bullish near-term bias with prices in six-week uptrends. December SRW futures pulled back the past two sessions but still held support at the 10-day moving average at $8.96, with further key support at the 20-day moving average of $8.76 and trendline support around $8.54. December SRW briefly pushed above the 100-day moving average at $9.22 3/4 but failed to extend gains. A further attempt above that resistance will have bulls targeting the September high of $9.45 3/4.
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: We advise cotton hedgers to claim profits on the 30% 2022-crop hedges in December futures. Our exit was at 88.12 cents for a 11.46-cent profit.
Price action: December cotton futures rose the 400-point initial daily trading limit to 88.20, the highest close since Sept. 28.
Fundamental analysis: Cotton futures rose for the first time in eight sessions with support from outside markets, as U.S. equities surged a second day and the U.S. dollar index tumbled. Crude oil futures soared amid ideas OPEC+ may cut production. Cotton country of West Texas and southwest Oklahoma is expected to experience isolated to scattered showers and thunderstorms through the next two weeks Panhandle. The rain may cause some discoloration to the crop, but rain coverage isn’t expected to be widespread enough to prevent the crop from drying and bleaching. World Weather said showers will expand into portions of the Blacklands, Coastal Bend and South Texas Oct. 12-18, causing some interruptions to harvesting while some quality declines may occur as well.
USDA late Monday reported the crop at 31% “good” to “excellent,” with 77% of bolls open, up 10% from the week prior. Harvest progress was pegged at 22%, up from 15% a week earlier.
Technical analysis: December cotton made a strong recovery and managed to test and hold resistance at 86.02 as well as 87.84, with next resistance standing at the 10-day moving average at 89.39 and again at 89.50 on continued efforts higher. The 20-day moving average at 95.34 will also serve as considerable resistance for the bull camp. Support remained untested in today’s session and will stand at the July low at 82.54, as well as 80.88 and 79.87. The downtrend is still currently in place, however continued attempts higher will confirm a near-term bottom has been made.
What to do: Wait on a corrective rebound to get current with advised 2022-crop sales.
Hedgers: NEW ADVICE – Claim profits on the 30% 2022-crop hedges in December futures. Our exit was at 88.12 cents for a 11.46-cent profit. You should be 70% forward-priced for harvest delivery on expected 2022-crop production.
Cash-only marketers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production.
