Crops Analysis | February 22, 2023

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Corn

Price action: March corn fell 6 1/2 cents to $6.74, ending the session right above the 100-day moving average. May corn fell 6 1/4 cents to $6.74 1/4.

Fundamental analysis: Wheat and soybean weakness weighed heavily on corn futures throughout the session today, pushing corn down into support. Though buyers stepped in toward session lows, preventing further breakdown where selling likely accelerates below last week’s low.

Fieldwork is expected to advance this week despite showers and thunderstorms in Brazil, according to World Weather Inc. Second safrinha corn planting is expected to extend into March, beyond the ideal planting window. This delay in planting is likely to impact yields, but it is still too early to tell what kind of impact this may have.

The US dollar index extended gains following the FOMC minutes released this afternoon. Minutes showed that all voting members of the Federal Reserve backed a 25 BPS hike at the last meeting with a few members favoring a 50 BPS hike. Extended gains in the US dollar index will continue to put pressure on corn futures.

The USDA plans to release its 2023 Outlook reports tomorrow at 6am CT. Acres released in the reports have varied randomly from prospective plantings report released on March 31. The corn yield released in the Outlook Forum has been the same as the May WASDE corn yield released eight out of the last nine years.

Technical analysis: Buyers gathered interest around $6.76 and below on the March corn contract, helping prop prices just above support around $6.73 1/2, where the 40- and 100-day moving averages have nearly converged, late in the session. Corn closed right on support from the recent uptrend extending back to the January lows. Price action has been tightening all calendar year and corn is very close to putting in a lower low compared to last week after putting in a lower high. Bulls want to push prices above today’s high at $6.81 1/2, and then $6.83. Levels of additional support like at $6.72 1/4 and $6.68 3/4.

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

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

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

 

 

Soybeans

Price action: March soybeans fell 9 1/4 cents to $15.39 1/2, marking a low-range close, while March meal dropped $5.10 to $492.60. March soyoil rose 6 points to 62.83 cents.

Fundamental analysis: Soybeans faced mild profit-taking and technical selling after churning to the highest level in over a week in overnight trade. Traders are also anticipating the start of USDA’s Economic Outlook Forum, which will provide initial insight into 2023 production, supply and demand. Analysts expect early soybean acreage estimates to be projected at 88.6 million acres at a 51.5 bu. yield. 

Minutes of the latest Federal Open Market Committee meeting, released today, were a focus as recent economic data has shifted traders’ thinking that the Fed’s tightening of its monetary policy will extend until mid-year. Such move would likely drive the U.S. dollar higher, further crimping soybean export prospects.

A pattern of persistent rainfall is expected to continue in Brazil as World Weather Inc. predicts more rain in much of the country during the next ten days, further dampening harvest and planting efforts. Argentina will experience a restricted rainfall pattern through most of the next two weeks, with stress to crops likely increasing in many areas as the remaining soil moisture is lost to evaporation while fieldwork should advance well in much of the country.

Technical analysis: March soybeans traded a 16-cent range, briefly testing both initial support at$15.39 1/2 and initial resistance at $15.53 1/2. Although bulls continue to grasp the near-term technical advantage, a breach of initial support will send bears toward the 10- and 20-day moving averages of $15.33 and $15.28, respectively, as well as the 40-day moving average of $15.15. Conversely, a breach of initial resistance will provide bulls the needed momentum to work towards $15.58 1/4 and the $15.67 1/2.   

March meal traded a $7.60 range, ending the session below the 10-day moving average of $494.60 and support at $493.10. Next support lies at the 20-day moving average of $488.90 and then the 40-day moving average of $478.10. However, bull efforts will face resistance around the 10-day moving average, then at $501.90 and $506.10.

March soyoil traded a 143-point range but ended the session largely unchanged. Initial resistance remains at 63.52 cents, with additional resistance at 64.26 and 65.52 cents. Conversely, initial support remains at the 40-day moving average of 62.15 cents, then at 61.52 cents and the 10-day moving average of 61.10 cents.

What to do: Get current with advised cash sales. Be prepared to advance sales.  

Hedgers: You have 70% of 2022-crop sold in the cash market. No 2023-crop sales have been advised.

Cash-only marketers: You have 70% of 2022-crop sold. No 2023-crop sales have been advised.

 

 

Wheat

Price action: March SRW wheat futures fell 14 cents to $7.36 1/2. May SRW wheat fell 12 3/4 cents to $7.50, near the session low and hit a three-week low. March HRW wheat dropped 28 1/4 cents to $8.76. May HRW wheat slid 24 cents to $8.69 1/2 and near the session low. March spring wheat fell 10 1/4 cents to $9.14 1/4 and May spring fell 9 3/4 to $9.09.

Fundamental analysis: The winter wheat futures markets today fell victim to a lack of fresh, bullish fundamental news and lower corn and soybean futures prices. Reports say Ukraine will ask Turkey and the United Nations to soon begin discussions to roll over the Black Sea grain-shipping deal, seeking an extension of at least one year.

A firmer U.S. dollar index and lower crude oil prices today were bearish “outside market” forces working against the wheat futures markets.

World Weather Inc. today reported greater precipitation is still needed in U.S. hard red winter wheat areas, despite snow earlier this month. Recent snow in the northwestern U.S. Plains and Canada’s Prairies has improved winter crop protection against bitter cold while also raising spring runoff potential, said the forecaster.

The weekly USDA export sales report, normally out Thursday morning, will be released Friday morning due to the U.S. government holiday on Monday. Grain market bulls need to see better U.S. wheat sales abroad if they expect to see prices sustain rallies in the coming weeks.

Technical analysis: Winter wheat futures bears have the firm overall near-term technical advantage and have regained power this week. SRW bulls' next upside price objective is closing May prices above solid chart resistance at the February high of $8.07 1/2. The bears' next downside objective is closing prices below solid technical support at the January low of $7.29. First resistance is seen at today’s high of $7.66 3/4 and then at this week’s high of $7.84 1/2. First support is seen at today’s low of $7.46 3/4 and then at $7.35.  The HRW bulls' next upside price objective is closing May prices above solid technical resistance at $9.25. The bears' next downside objective is closing prices below solid technical support at $8.25. First resistance is seen at $8.80 and then at today’s high of $8.96 3/4. First support is seen at $8.60 and then at $8.50.

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 133 points to 82.25 cents, a mid-range close after gapping higher overnight. May cotton rose 35 points to 81.88 cents.

Fundamental analysis: Cotton futures edged higher on technical buying, marking further gains after the nearby March contract marked its lowest intraday level since Dec. 16. Improving technicals led the charge higher despite plunging crude oil futures and persisting strength in the U.S. dollar.

Traders continue to monitor demand recovery, which has recently been revealed via bolstered export activity along with prospective 2023 plantings. USDA’s Annual Ag Outlook Forum, set for Feb. 23-24 will provide further insight into planted acreage along with new-crop supply and demand. The National Cotton Council has projected 2023 cotton acres at 11.4 million, indicating a 17% reduction from year-ago.

Dry conditions are lingering in the U.S. southern Plains, which could influence acreage this spring. South Texas and a part of the Texas Coastal Bend are still too dry and unlikely to get significant moisture in the next couple of weeks, according to World Weather Inc. West Texas also needs greater moisture to improve planting potentials in May. The forecaster noted the Delta and southeastern states may dry down for a while, but more rain is expected during the planting season.

Technical analysis: March cotton traded a 91-point range after gapping higher overnight. Initial resistance stands at the 100-day moving average of 82.99 cents, with additional resistance at the 10-day moving average of 83.44 cents and the 40- and 20-day moving averages of 84.36 and 84.66 cents, respectively. First support lies at Tuesday’s close at 80.92, with further support lying at 79.31 and 77.1 cents.

Hedgers: You should be 70% sold in the cash market on 2022-crop production. You also should have 20% of expected 2023-crop forward sold for harvest delivery.

Cash-only marketers: You should be 70% sold on 2022-crop production. You also should have 20% of expected 2023-crop forward sold for harvest delivery.

 

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