Crops Analysis | December 19, 2022

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Corn

Price action: March corn fell 5 3/4 cents to $6.47 1/4, the contract’s lowest close since $6.44 on Dec. 9.

Fundamental analysis: Corn futures fell to the lowest levels in over a week as weekend rains in South America eased concerns over potential crop shortfalls from extended dryness. Needed rains fell on areas of southern Brazil over the weekend, but more will be needed to reverse a recent dry pattern. Northwestern areas of Argentina also received weekend rainfall, while other parts of the country were dry. Over the week ahead, Mato Grosso do Sul to Rio Grande do Sul in southern Brazil are expected to receive 0.20 to 0.75 inch of rain, with a few totals of up to 1.50 inches. “Net drying is most likely, but after weekend rain fell in a part of this region, crops should stay in mostly good shape,” World Weather Inc. said.

An improving rainfall outlook for South America may keep pressure on corn futures, but buying interest may emerge on further price declines, as has been the case recently. Recent export numbers showed signs of improvement, though overall foreign demand is still down sharply so far in 2022-23. Early today, USDA reported corn inspected for export during the week ended Dec. 15 at 743,420 MT (29.3 million bu.), up from 517,417 MT last week and within trade expectations ranging from 450,000 to 900,000 MT. Inspections to date in 2022-23 are down 30.4% from the same period in 2021-22. Also today, USDA reported a daily sale of 141,000 MT of corn for delivery to Mexico during the 2022-23 marketing year.

Technical analysis: Corn futures near-term technical posture has turned neutral to slightly bearish with today’s soft close and a brief downtrend over the past week. March futures closed 1/4 cent under the 10-day moving average at $6.47 1/2, the first settlement below that mark since Dec. 9. Choppy-sideways price action is likely the rest of the week as volume thins out ahead of the year-end holidays. Initial support comes in at last week’s low of $6.42 and the Aug. 22 high at $6.38, followed by a 3 1/2-month low of $6.35 posted Dec. 7. Initial resistance comes in at the $6.50 level, followed by the 20-day moving average of $6.54 1/2 and last week’s high at $6.60.

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: March soybeans fell 20 1/4 cents to $14.60 3/4, the contract’s lowest close since Dec. 6. March soymeal fell $14.10 to $446.10, also near a two-week low. March soyoil rose 95 points to 63.41 cents.

Fundamental analysis: Soybean futures fell as soymeal plunged and rains reached some dry areas of South America over the weekend, easing concern over potential crop damage from an extended dry spell. Argentina’s rainfall outlook has improved, with rain expected Friday into Sunday that will boost topsoil moisture and reduce crop stress, World Weather Inc. said. “Follow-up rain will be very important,” the forecaster added. “The outlook is poised for some improvement… but additional follow-up rainfall will be imperative to induce a true trend change. In the meantime, some increase in late season planting progress is expected and many crops will benefit from the boost in rainfall expected later this week and by the milder temperature outlook slated for the weekend and next week.”

Concern over a possible global economic downturn also weighed on soybeans. Covid-19 cases are sweeping across China’s biggest cities after the country eased restrictions. Reports said streets in Beijing remain empty and most businesses closed, with unofficial estimates suggesting nearly 40 percent of the city’s 22 million people have contracted the virus.    

Early today, USDA reported a daily sale of 132,000 MT of soybeans for delivery to “unknown destinations” during the 2022-23 marketing year. Also today, USDA reported soybeans inspected for export during the week ended Dec. 15 at 1.62 MMT (59.5 million bu.), down from 1.878 MMT last week and at the low end of trade expectations ranging from 1.5 to 2.12 MMT.

Technical analysis: January soybeans traded a 16-cent range after gapping 10 cents lower to begin the overnight session and falling below the 10-day moving average near $14.73 1/4, which will now serve as resistance. Further support will stand at the 20-day moving average near $14.58 1/4, as well as $14.47 3/4, and the 40-day moving average near $14.43 1/2. Conversely, a turn higher will find bulls encountering resistance at former support around $14.73 1/4, as well as $14.88 3/4, again at $14.97 1/2, with $15.00 serving as psychological resistance.

March soymeal futures traded a $14.70 range, falling below the 10-day moving average at $454.70 and marking a close just above support at $445.40. Additional support stands at $438.60 and at the 20-day moving average at $433.30.

January soyoil traded a 177-point range, breaching and maintaining a close above resistance at 64.22, further upside efforts will meet resistance at 65.09 and 66.02 cents. A turn lower, however will be met with support at former resistance at 64.22, along with 62.42, and 61.49 cents.

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 fell 5 cents to $7.48 1/2, the contract’s lowest close since Dec. 9. March HRW wheat fell 1/2 cent to $8.43 1/2. March spring wheat fell 1 1/4 cent to $9.08 1/4.

Fundamental analysis: SRW wheat futures fell amid heightened global recession fears and ongoing pressure from poor exports. USDA early today reported wheat inspected for export during the week ended Dec. 15 at 304,108 MT (11.2 million bu.), up from 219,358 MT last week and at the low end of trade expectations ranging from 200,000 to 600,000 MT. Despite some recent signs of improvement, the overall export picture for wheat remains bearish. Shipments so far in 2022-23 are now running 1.8% behind the same period year-ago, compared with 2.5% behind a year-ago last week.

HRW futures were supported by concern that frigid temperatures in the U.S. Plains this week could damage the crop, which went into dormancy under stress from drought. Snow this week will help protect wheat from possible winterkill when temperature extremes drop below the damage threshold, World Weather said today. “Strong wind speeds will induce significant blowing and drifting of snow, and it is possible that some wheat fields may not be adequately buried in snow,” the forecaster added. World Weather “is not expecting a serious risk of winterkill outside of a pocket or two, but the situation will be closely monitored.”

Technical analysis: March SRW wheat futures traded a 21-cent range, breaching the 10-day moving average at $7.47 1/4 along with support at $7.48 and $7.42 1/2, with each level maintaining support to end the session. Further downside efforts will meet additional support at $7.34 1/2 and the Dec. 6 low at $7.23 1/2. Sustained movement to the upside, however, will encounter resistance at $7.61 1/2, again at the 20-day moving average near $7.67 ½, then $7.69 1/2, and at $7.75. 

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 216 points to 84.08 cents, the contract’s highest close since 84.59 cents on Dec. 6.

Fundamental analysis: Cotton futures settled near a two-week high on support from bullish outside markets, as crude oil strengthened amid optimism over the Chinese economy and the U.S. dollar weakened slightly. Hopes for improved export demand also supported cotton prices after China recently eased strict anti-Covid measures, though surging cases in some cities could become concerning. Choppy, light-volume trading is expected ahead of the Christmas holiday.

Technical analysis: Cotton technicals took a bullish turn with today’s strong close, further reinforcing beliefs the market established a near-term bottom at the end of October. Followthrough buying early this week may encourage bulls to test the intraday high so far this month at 87.23 cents, with additional upside targets including the 100-day moving average at 89.83 cents and the November high at 89.92 cents. Downside objectives for bears includes the Oct. 7 low at 80.10 cents, last week’s low at 78.80 cents and the November low of 77.50 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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