Crops Analysis | October 25, 2022
Corn
Price action: December corn rose 4 3/4 cents to $6.86 1/4, slightly under the session high of $6.87 1/2 and the highest close since Oct. 19.
Fundamental analysis: Corn futures erased overnight declines and turned higher with support from a surge in the soy complex and supportive outside markets, as the U.S. dollar weakened sharply and crude oil firmed. Sideways price action may continue in coming days as traders watch for updates on a deal allowing Ukrainian grain shipments from Black Sea ports. Harvest pressure and soft exports may limit price upside. USDA late Monday reported the U.S. corn harvest at 61% complete as of Sunday, up from 45% a week earlier and ahead of the 52% average for that date for the previous five years. Harvest progress was slightly below trade expectations for 62% complete.
Rain fell across much of the Midwest today and more is expected later this week, which may lead to a small rise in Mississippi River levels and slight improvement in barge movement that’s been slowed by low waters in recent weeks. The lower Ohio River Basin, Tennessee River Basin and lower Mississippi River Basin are expected to receive rain of 0.20 to 0.75 inch today, with additional rainfall of 0.50 inch to nearly 2.0 inches late this weekend, World Weather Inc. said.
Technical analysis: Corn futures hold a largely neutral technical bias even with today’s firm close, as the December contract ended near the middle of a range that’s held for the past six week. The recent sideways, narrow-range price action indicates neither bulls nor bears hold much of an edge. Still, December futures’ close above the 10- and 40-day day moving averages, at $6.80 1/2 and $6.85 3/4, respectively, might encourage bulls to test initial resistance levels such as last week’s high at $6.92 1/4. Initial support is seen at last week's low of $6.74 and the 50-day moving average at $6.72 1/2. Strong 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 10 cents to $13.82, near the high end of today’s range. December soymeal rose $6.90 to $415.60, while December soyoil rose 41 points to 72.28 cents, the contract’s highest close since June 16.
Fundamental analysis: Soybeans rebounded from Monday’s sharp losses behind strength in soymeal and easing pressure from a mostly finished U.S. harvest. A sharp drop in the U.S. dollar and hopes for further export demand from China were also supportive factors. USDA late Monday said 80% of the soybean harvest was complete as of Sunday, up from 63% a week earlier and well-ahead of the 67% five-year average. Analysts on average expected 77%. Rains across the central Midwest this week will likely slow harvest progress briefly but may increase water levels on the Mississippi River enough to ease barge restrictions temporarily.
Prospects for a strong South American crop could limit further price upside. Brazil weather “will be very well balanced over the next two weeks with periods of rain and dry weather supporting aggressive fieldwork and early season crop development,” World Weather said today. The forecaster said yield potential likely haven’t been significantly impacted by excess rain or persistent dryness, but a better distribution of rainfall may be needed in a few crop areas. Brazil’s soybean crop was 34% planted as of Oct. 22, up from 24% a week earlier but down from 38% at the same point in 2021, according to CONAB.
Technical analysis: November soybeans traded a 20 1/2 cent range, breaching both the 20-day moving average at $13.81 1/2 and the 10-day at $13.84 1/2. Bulls managed to hold above the 20-day at the end of the session, with the 10-day maintaining technical resistance. Other key areas of resistance stand at $13.87 1/4 as well as $14.02 1/2. A close above the $14.00 level will see additional resistance at the 40-day moving average, currently at $14.07 1/2 along with the 100-day moving average near $14.20 3/4. Support remained untested in today’s session and will be encountered in downside attempts at $13.62 1/2, along with $13.53, and 13.37 3/4.
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.
Price action: December SRW wheat fell 4 cents to $8.34 3/4, the contract’s lowest close since Sept. 19. December HRW futures fell 3 1/2 cents to $9.34 1/2, the third straight daily decline and lowest close since Sept. 26. December spring wheat fell 5 1/2 cents to $9.52 1/4.
Fundamental analysis: SRW wheat futures extended a recent slide and ended at a five-week low on prospects for rainfall in the U.S. Plains that could provide a boost to the recently-seeded winter crop. A system expected to move through the central and southern Plains “will produce erratic rainfall in hard red winter wheat areas Thursday into Friday, with 0.10 to 0.75 inch of moisture,” World Weather said. Northern Texas will be wettest, along with a few Oklahoma locations.
Late Monday, USDA reported 79% of the winter wheat crop was planted as of Sunday, up from 69% a week earlier and slightly ahead of the 78% five-year average. Planting progress was short of trade expectations for about 81% complete. USDA said 49% of the crop had emerged, up from 38% a week earlier but behind the 56% average for that date the past five years.
Technical analysis: Winter wheat futures’ near-term technical posture has grown increasingly bearish as prices extended a two-week downtrend and December SRW closed under the 10-day average, currently $8.55 3/4, for the fourth session in a row. Further price weakness may encourage market bulls to target a late-September low at $8.19 1/4, as well as the psychologically key $8.00 level and the low for the entirety of September at $7.91 1/4. Near-term resistance is seen at the 10-day moving average, as well as the 40-day moving average near $8.66 1/2 and last week’s high at $8.77 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: December cotton rose 234 points to 78.47 cents, nearer the session high.
Fundamental analysis: Cotton futures rose behind a sharp drop in the U.S. dollar and short covering in the wake of the market’s plunge near two-year lows Monday. The U.S. dollar index tumbled following a downbeat report on U.S. consumer confidence that fueled ideas the Federal Reserve will temper its aggressive monetary policy tightening efforts. Strength in U.S. equities and in crude oil were also supportive for cotton prices. Still, the concern China may shift away from business with the West may limit the upside for the cotton market for at least the near term.
Late Monday, USDA said the U.S. cotton harvest was 45% complete as of Sunday, up from 37% the previous week and ahead of the five-year average of 39%. The crop was rated in 45% poor to very poor condition.
Technical analysis: Cotton bears still hold a solid near-term technical advantage, with prices in a two-month downtrend on the daily chart. The next upside objective for bulls is to close December futures above resistance at 85.00 cents. The next downside price objective for bears is to close prices below solid support at 70.00 cents. First resistance is seen at this week’s high of 80.80 cents, then at 82.50 cents. First support is seen at 77.00 cents, then at the October low of 75.80 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.
