Crops Analysis | October 11, 2022
Price action: December corn futures fell 5 1/4 cents to $6.93, near the bottom of the day’s range.
Fundamental analysis: Corn futures posted modest losses on corrective selling following Monday’s rally near four-month highs, with traders continuing to monitor Ukraine as they await Wednesday’s USDA monthly Crop Production and Supply and Demand reports, which will likely set the tone for price direction this week. Analysts on average expect USDA to lower estimated corn production about 59 million bu. from a September forecast to 13.885 billion bu., based on a Reuters survey. The average yield is expected to be reduced to 171.8 bu. per acre from 172.5 bu. per acre. U.S. ending stocks for 2022-23 are expected to be cut 95 million bu. to 1.124 billion bu., a nine-year low.
Also today, USDA reported 457,366 MT (18.0 million bu.) of corn inspected for export during the week ended Oct. 6, down from 672,835 MT the previous week. Trade expectations ranged from 400,000 to 725,000 MT. USDA’s weekly crop progress report will be released after today’s close, a day late due to the Columbus Day holiday. Last week, USDA said 20% of the U.S. corn crop was harvested as of Oct. 2, up from 12% a week earlier but slightly behind the 22% average for that date the past five years.
Crop Consultant Michael Cordonnier kept his U.S. corn yield estimate unchanged this week at 169.0 bu. per acre and holds a “neutral” bias. “The weather has been good for harvesting and the forecast is calling for only localized light showers this week in the central and eastern Corn Belt,” he wrote.
Technical analysis: Corn futures’ near-term technical posture took a bullish turn with December’s climb above $7.00 Monday, the first time the contract traded above that level in nearly four months. But December futures failed to close above $7.00, indicating that any such push above that key level likely would trigger farmer felling. Near-term support is seen at Monday’s low of $6.83 1/2, followed by the 10- and 20-day moving averages at $6.81 1/2 and $6.80 1/4, respectively. Key resistance is pegged at Monday’s high of $7.06 1/2, followed by $7.14 1/4.
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 2 1/4 cents to $13.76 1/4, while December meal futures rose 30 cents to $406.00, and soyoil futures fell 56 points to 68.98 points.
Fundamental analysis: Soybeans faded from earlier strength and ended narrowly mixed as traders waiting for USDA’s Crop Production and Supply and Demand updates Wednesday. Lackluster export demand and an outlook for a large South American crop continued to hang over prices. USDA today said soybeans inspected for export during the week ended Oct. 6 at 969,212 MT (35.6 million bu.), with the expected range between 400,000 and 1.25 MMT. Soybean export inspections are currently running 23% behind a year ago, compared to 3.2% behind last week. Soyoil was led lower by crude oil, which dropped under $90 a barrel.
USDA, in its Crop Production Report, is expected to raise its soybean crop estimate by about 3 million bu. to 4.381 billion bu., based on the Reuters survey. The yield is expected to be revised up 0.1 bu. per acre to 50.6 bu. per acre. Later today, USDA is expected to report the soybean harvest at 41% complete at the start of this week, up from 22% the previous week.
Technical analysis: November soybeans traded a 20-cent range and earlier rose above the 10-day moving average at $13.78 1/2, but ultimately ended dropped below the level. Other resistance levels remained untested and will continue to stand at $13.93 as well as the 20-day moving average near $14.12, along with the 40-day moving average around $14.18, with a breach through these levels leading bulls toward the 100-day moving average, currently near $14.34 3/4. Support levels remained untouched in today’s session and will remain targets for bears at $13.60, as well as $13.47, and $13.28.
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 dropped sharply on pressure from profit-taking and corrective selling following Monday’s rally to three-month highs. Increasing tensions between Russia and the West and the potential disruption to Ukraine grain exports remains concerns. But an outlook for a large Russia crop is mitigating concern to some extent. Russian Deputy Prime Minister Viktoria Abramchenko today indicated Moscow could scrap a grain export quota for the second half of the season in light of an expected bumper wheat harvest.
Traders await USDA’s Supply and Demand and Crop Production updates Wednesday. In the Supply and Demand Report, USDA is expected to lower estimated U.S. wheat ending stocks for 2022-23 by about 56 million bu. from last month to 554 million bu., which would be the lowest since 2007-08. Also today, USDA reported 614,371 MT (22.6 million bu.) of wheat inspected for export during the week ended Oct. 6, down from 667,577 MT the previous week. Trade expectations ranged from 400,000 to 750,000 MT.
USDA will update winter wheat planting progress after today’s close. Analysts expect the winter wheat crop to be 55% planted at the start of this week, up from 40% the previous week.
Technical analysis: Wheat retains a bullish near-term bias with both December HRW and SRW contracts sustaining uptrends for nearly eight weeks. Today’s losses may have slowed bullish momentum somewhat, and any followthrough downside Tuesday could foster ideas the market may settle back into a sideways trade. The December SRW futures chart has near-term support at Monday’s low of $8.91 1/2, followed by the 20-day moving average at $8.88 and trendline support around $8.72.
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 63 points at 88.86 cents, the highest close in a week.
Fundamental analysis: Cotton posted modest advances as weakness in the U.S. dollar offset pessimism over the global economy and weakness in grain and crude oil. Cotton traders will closely examine this afternoon’s weekly USDA crop progress reports, delayed by one day due to the holiday on Monday. Traders also awaiting USDA’s Supply and Demand report Wednesday. U.S. cotton production is seen at 13.34 million bales, according to the average of analysts’ forecasts from a Reuters survey. That would be down 492,000 bales from last month’s USDA report.
Technical analysis: Cotton bears have a near-term technical advantage with prices in a seven-week downtrend on the daily chart. The next upside objective for bulls is to close December futures above resistance at 95.00 cents. The next downside objective for bears is to close prices below solid support at 82.00 cents. First resistance is seen at 90.00 cents and then at the October high of 90.52 cents. First support is seen at 86.00 cents and then at 85.00 cents.
What to do: Wait on an extended corrective rebound to get current with advised 2022-crop sales.
Hedgers: 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.
