Crops Analysis | October 26, 2022

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Corn

Price action: December corn fell 1 1/4 cents to $6.85, nearer the session low and slightly below the 10-day moving average.

Fundamental analysis: Corn futures faded from early gains spurred by supportive outside markets, as the U.S. dollar index weakened to its lowest level since mid-September and crude oil futures rallied over $2 on supply concerns. The market trimmed gains following reports signaling growing prospects a deal allowing Ukrainian grain exports from Black Sea ports will be extended beyond November. United Nations aid chief Martin Griffiths said today he was “relatively optimistic” the U.N.-brokered deal would be extended beyond, according to Reuters. The UN is working to extend the deal for up to a year and smooth the joint inspections of ships by U.N., Turkish, Russian and Ukrainian officials. Recently, the UN warned of a backlog of more than 150 ships.

Rains across much of the central U.S. this week likely will delay harvest but could alleviate shipping snags to some extent. The Middle Mississippi and Illinois Rivers were below flood stage this morning and will see temporary increases in water levels during the next week, with conditions for barge traffic expected to improve only slightly, World Weather Inc. said. The forecaster noted the Midwest will see a few rounds of rains during the next two weeks that will interrupt harvest.

U.S. ethanol production averaged 1.033 million barrels per day (bpd) in the week ended Oct. 21, up 17,000 bpd from a week earlier and the highest since the week ended July 29. Production was still down 6.6% from the same week a year ago. Ethanol stocks increased 447,000 barrels to 22.291 million barrels.

Technical analysis: December corn traded a narrow 6 1/2-cent range but held steadily above the 20-day moving average near $6.84 1/2 and ended the session slightly below the 10-day moving average near $6.85 1/4. An intraday high of $6.89 3/4 was achieved, further confirming the 10-day as solid near-term resistance. A close above the level would find further resistance at the session’s intraday high at $6.89 3/4, again at $6.93 1/2, and $6.99 1/2. Conversely, the 20-day moving average remains near-term support as well as $6.80, $6.74, and $6.70 1/4. The 100-day moving average near $6.55 1/4 stands as longer-term support.

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.

 

Soybeans

Price action: November soybeans fell 1/4 cent to $13.81 3/4, after earlier reaching a high for the week at $13.97 3/4. January futures rose 3/4 cent to $13.93. December soymeal fell $6.90 to $408.70. December soyoil rose 114 points to 73.42 cents, the contract’s highest close since June 15.

Fundamental analysis: Soybeans faded from a morning rally to end mixed, as profit-taking emerged following a climb to weekly highs. Early buying interest stemmed from strength in crude oil, which rose over $2, and continued pullback in the U.S. dollar index. Recent strong export demand and diminishing pressure from the U.S. harvest continues to underpin prices, but gains are being limited by a mostly favorable outlook for South America’s crop. As much as 3.9 inches of rain fell in much of Argentina, including at least 1.2 inches in key crop areas, over the past day, bringing relief from drought that’s persisted since May, Reuters reported, citing the Argentine National Meteorological Service. In Brazil, two rounds of rain expected through Tuesday will improve conditions for planting across the driest areas in northern Brazil, World Weather said. Central and southern Brazil and Paraguay are expected to also receive rain before weather turns drier Nov. 2-9.

Thursday’s weekly USDA export sales report will be closely studied to see if a recent upturn in demand is being sustained. Net weekly soybean sales are expected to range from 800,000 MT to 1.6 MMT, based on a Reuters survey. A week ago, USDA reported net soybean sales totaling 2.336 MMT, primarily for China, at 1.976 MMT, including 436,000 MT switched from “unknown destinations.”

Technical analysis: Soybean futures’ near-term technical posture is largely neutral, as the November contract faded late today and settled around the middle of this month’s trading range. Prices have potential to push higher if November can break above resistance at the $13.99 to $14.00 area, which coincides with a trendline drawn from a three-month high of $15.08 3/4 posted Sept. 13. A push above $14.00 and the 40-day moving average at $14.06 1/4 could prompt bulls to target the October high at $14.14. Initial support comes in at this week’s low of $13.66, followed by last week’s low of $13.57 and the October low of $13.50. Soyoil holds the most bullish potential in the soy complex, with December’s strong close likely putting the contract high of 79.28 cents in bulls’ sights.

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.

 

Wheat

Advice: We advise wheat hedgers to enter a standing buy stop at $8.50 in December SRW futures to exit the 15% 2022-crop hedge.

Price action: December SRW wheat rose 5 3/4 cents to $8.40 1/2, after falling to a five-week low of $8.24 earlier. December HRW wheat gained 6 1/4 cents to $9.40 3/4. December spring wheat fell 1/4 cent to $9.52.

Fundamental analysis: Winter wheat futures erased initial declines as a continued drop in the U.S. dollar and gains in crude oil spurred light short covering. Gains were limited by signs the Ukrainian grain export deal will be extended beyond November. Weather in U.S. wheat country is mostly price-neutral. World Weather said dryness in U.S. HRW country continues from central through western Kansas, Colorado and Nebraska, though recent rain in parts of the Texas Panhandle and Oklahoma improved winter crop planting potentials. Thursday’s weekly USDA export sales report is expected to show net U.S. wheat sales of 100,000 to 400,000 MT for the week ended Oct. 20. A week ago, sales totaled 163,100 MT.

Technical analysis: Winter wheat bears have a near-term technical advantage, with prices in fledgling downtrends on daily bar charts. SRW bulls' next upside objective is closing December futures above solid resistance at the October high of $9.49 3/4. Bears' next downside objective is closing prices below solid support at $8.00. First resistance is seen at this week’s high of $8.56 1/2 and then at $8.63. First support is seen at today’s low of $8.24 and then at $8.15.

HRW bulls' next upside objective is closing December prices above solid resistance at $10.00. The bears' next downside objective is closing prices below solid technical support at $9.00. First resistance is seen at this week’s high of $9.53 1/4 and then at last week’s high of $9.69 1/4. First support is seen at today’s low of $9.23 and then at $9.10.

What to do: Wait on a corrective rebound to increase cash sales.

Hedgers: NEW ADVICE: Enter a standing buy stop at $8.50 in December SRW futures to exit the 15% 2022-crop hedge that was entered 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.

 

Cotton

Price action: December cotton fell 65 points to 77.82 cents and near the session low.

Fundamental analysis: Cotton market bulls were likely disappointed futures couldn’t rally behind the U.S. dollar pullback and gains in crude oil. The market’s soft performance underscores expanding bearish sentiment as prices tumbled the past two months. Traders are still assessing the longer-term implications of the weekend power grab by China’s President Xi Jinping. Xi’s virtual complete control of China seemingly ensures the world’s second-largest economy will continue to pull away from doing business with the West. Such a scenario would be significantly bearish for the U.S. cotton market.

Thursday weekly USDA export sales report will be studied to see if the recent slide in the dollar has spurred stronger overseas demand. However, there are some early technical clues the U.S. dollar index has peaked, which would be welcome news for the cotton market bulls and for U.S. cotton exporters.

Technical analysis: Cotton futures bears have a strong near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in December futures above technical resistance at 85.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 70.00 cents. First resistance is seen at this week’s high of 80.80 cents and then at 82.50 cents. First support is seen at 77.00 cents and 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.

 

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