Crops Analysis | December 1, 2022

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Corn

Price action: March corn fell 6 1/2 cents to $6.60 1/2, the contract’s lowest close since Nov. 22 and below the 100-day moving average.

Fundamental analysis: Corn fell for the third straight session as sharp losses in soybeans overshadowed supportive outside markets, including a drop in the U.S. dollar index and crude oil’s climb to two-week highs above $80.00 per barrel. Weekly USDA export numbers underscored a sluggish sales pace so far in 2022-23. USDA reported net U.S. corn sales of 602,700 MT during the week ended Nov. 24, down from 1.85 MMT the previous week and at the low end of trade expectations ranging from 475,000 MT to 1.0 MMT. Mexico led buyers at 387,100 MT, including decreases of 2,700 MT. Also today, USDA reported a daily sale of 114,300 MT of corn for delivery to Mexico during the 2022-23 marketing year.

Earlier today, the EPA proposed increases in the amount of ethanol and other biofuels oil refiners must blend into their fuel over the next three years. The increases, if implemented, provide a long-term bullish demand factor, though corn used for ethanol in 2022-23 is expected to drop from 2021-22, USDA estimated.

Technical analysis: March corn traded a 9 3/4-cent range, falling below support at $6.63 1/4 and marking a session low and ending the session below the 100-day moving average near $6.61 1/2. Further downside support will continue to stand at $6.59 1/2 and $6.55 1/4. Conversely, a turn to the upside will encounter resistance at $6.63 1/4, as well as at the 10-day moving average near $6.65 3/4 and the 20-day moving average at $6.69.

What to do: Get current with advised sales. Wait to make additional 2022-crop sales.

Hedgers: You should have 50% of 2022-crop sold in the cash market.  

Cash-only marketers: You should have 50% of 2022-crop sold.

 

Soybeans

Price action: January soybeans plunged 39 3/4 cents to $14.29 3/4, the contract’s lowest close since Nov. 22. January soymeal rose $3.80 to $421.60, the highest close since Sept. 22. January soyoil fell 450 points to 67.38 cents, the lowest close since Oct. 18.

Fundamental analysis: Soybean futures fell for the first time in five sessions as the soyoil market’s nosedive amid disappointment over U.S. biofuels targets fueled heavy speculative fund selling. The EPA today proposed increases in the amount of ethanol and other biofuels oil refiners must blend into their fuel over the next three years, but the numbers appeared to fall short of trade expectations. The proposal calls for overall blending mandates of 20.82 billion gallons in 2023, 21.87 billion gallons in 2024 and 22.68 billion gallons in 2025. Signs of a slowdown in exports contributed to price weakness. USDA reported net weekly U.S. soybean sales of 693,800 MT, up from 690,100 MT the previous week but at the lower end of expectations ranging from 550,000 MT to 1.0 MT. China led buyers at 927,400 MT, including 524,000 MT switched from “unknown destinations.”

Longer-term soybean fundamentals remain bullish with U.S. ending stocks heading for a seven-year low in 2023. Additionally, growing concerns over persistent dryness in Argentina and southern Brazil, should limit sustained price downside. Additional rain today in northern Argentina “will induce mostly temporary relief from dryness before warm to hot and mostly dry weather returns Friday through next week,” World Weather Inc. said today. “Soil moisture is still short in much of the country outside of some southern and a few eastern and northern areas and rain today should not be great enough to prevent crop stress from returning this weekend and especially next week.”

Technical analysis: Soybean futures’ near-term technical posture took a sharp bearish turn after the January contract dropped under the 10- and 20-day moving averages and closed below a brief uptrend line drawn from a low of $14.06 3/4 on Nov. 17. Fund-driven followthrough selling Friday could confirm a near-term peak was established with the 2 1/2-month high of $14.78 1/2 posted Wednesday. Initial support comes in at 40-, 50- and 100-day moving averages, which converge at $14.17 3/4 to $14.20 1/2. A break below those levels may have bears targeting the November low at $14.06 3/4 and the $14.00 level.

Longer-term soybean technicals still lean bullish, with the weekly chart still trending up and January futures coming off two consecutive monthly gains. Soymeal technicals also remain supportive, with today’s strong close setting the market up for a test of the October high of $430.00.

What to do: Get current with advised cash sales. Wait to make additional sales.

Hedgers: You should be 60% sold in the cash market on 2022-crop production.

Cash-only marketers: You should be 60% sold on 2022-crop production.

 

Wheat

Price action: March SRW wheat fell 12 1/2 cents to $7.83 and near the session low. March HRW wheat dropped 9 1/2 cents to $8.90 1/4, near a three-month low. March spring wheat fell 5 cents to $9.38.

Fundamental analysis: Wheat futures fell after USDA export numbers continued to reflect sagging demand for U.S. grain. Losses in corn and soybean markets also weighed on wheat. Wheat bulls were likely disappointed the market couldn’t post gains despite a drop in the U.S. dollar index to three-month low. USDA reported net weekly U.S. wheat sales totaling 155,500 MT, down from 511,800 MT the previous week and short of trade expectations ranging from 300,000 to 625,000 MT.

Continued dryness in HRW wheat country also provided little bullish impact. World Weather said precipitation in the region is still expected to be “quite limited” over the coming week. Some showers will occur in northern areas and the greatest shower activity is expected to be in central and southern Oklahoma. Temperatures will be unusually warm at times, but not for long enough to stimulate much wheat emergence or establishment, said the forecaster.

Technical analysis: Winter wheat bears have a solid near-term technical advantage with prices in seven-week downtrends on daily bar charts. SRW bulls' next upside objective is closing March futures above solid resistance at $8.50. Bears' next downside objective is closing prices below solid support at the August low of $7.60 1/4. First resistance is seen at $8.00 and then at $8.20 1/4. First support is seen at this week’s low of $7.73 1/4 and then at $7.60 1/4.

HRW bulls' next upside objective is closing March prices above solid technical resistance at the November high of $9.87 1/2. The bears' next downside objective is closing prices below solid technical support at the August low of $8.11 3/4. First resistance is seen at $9.00 and then at this week’s high of $9.13 1/4. First support is seen at today’s low of $8.81 3/4 and then at $8.75.

What to do: Wait on an extended price rally to increase cash sales.

Hedgers: 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: March cotton rose 24 points to 84.85 cents, the contract’s highest close since Nov. 17.

Fundamental analysis: Cotton rose only modestly from limit-up gains Wednesday as bullish momentum appears to be fading and futures generated limited upside despite a weaker dollar and stronger crude oil. Weekly USDA export sales data continued an uninspiring trend. Net U.S. cotton sales totaled 16,500 running bales (RB) for the week ended Nov. 24, following net reductions of 116,400 RB the previous week. Exports of 139,500 RB were primarily to China (38,300 RB), Pakistan (31,900 RB) and Bangladesh (15,200 RB).    

Cotton traders continued to monitor the civil unrest in China. It seems the situation is not spiraling out of control but is also not fading away. China is reportedly relaxing some its Covid lockdowns, likely due to the public protests, while at the same time China says new Covid infections are declining and vaccinations are on the rise.

Technical analysis: Cotton futures bears have the overall near-term technical advantage. However, recent price action suggests a market bottom is in place. The next upside price objective for the cotton bulls is to produce a close in March futures above technical resistance at the November high of 89.92 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at last week’s low of 77.50 cents. First resistance is seen at 86.00 cents and then at today’s high of 87.23 cents. First support is seen at today’s low of 83.23 cents and then at 82.00 cents.

What to do: Wait on an extended corrective rebound to get current with advised 2022-crop sales.

Hedgers: You should be 70% sold in the cash market on 2022-crop production.

Cash-only marketers: You should be 70% sold on 2022-crop production.

 

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