Crops Analysis | December 12, 2022
Corn
Price action: March corn rose 10 cents to $6.54, the contract’s highest close since Dec. 1.
Fundamental analysis: Corn futures rose a fourth consecutive session and closed at the highest level in over a week behind spillover from a rally in wheat and strength in crude oil. Concern over possible disruptions to Ukrainian grain shipments after Russia bombing over the weekend left some Black Sea export facilities without power. Ukraine’s Black Sea port of Odesa has resumed operations that had been temporarily suspended after a Russian attack on the region’s energy system, Reuters reported today, citing a spokesperson for the infrastructure ministry.
Lackluster export demand likely will limit any sustained rally attempts in corn futures. Earlier today, USDA reported corn inspected for export during the week ended Dec. 8 at 505,014 MT (19.9 million bu.), down from 824,429 MT last week and within trade expectations ranging from 400,000 to 675,000 MT. There was also a 300,116-MT upward revision to inspections for the week ended Dec. 1. Inspections are running 30.9% behind a year-ago, compared to 32.7% behind last week. Exports in the 2022-23 marketing year will fall to an estimated 2.075 billion bu., 16% below the previous marketing year.
Technical analysis: Corn market technicals continued to strengthen as March futures closed above the 10-day moving average, currently $6.50 1/4, for the first time since Nov. 29. Further price strength, including a close above the 20-day moving average at $6.58 1/4 and the $6.60 level, could confirm the market established a near-term bottom with the 3 1/2-month low of $6.35 on Dec. 7. Additional upside targets include the 100- and 40-day moving averages at $6.64 1/4 and $6.71 1/2, respectively. Initial support is seen at today’s low of $6.44 1/2 and the Dec. 7 low. A push under the latter price may portend a test of the Aug. 4 high of $6.18 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.
Price action: January soybeans fell 23 1/4 to $14.60 1/2. January soymeal fell $21.40 to $450.20 after setting contract highs the previous four sessions. January soyoil rose 219 points to 62.20 cents after reaching the contract’s lowest price since July 22.
Fundamental analysis: Soybeans dropped sharply as soymeal sold off amid heavy spread unwinding, boosting soyoil prices, and profit-taking following last week’s gains. Selling in soybean futures also stemmed from USDA’s higher than expected global supply outlook as well as greater than expected weekend rains in Argentina. Soyoil rallied, helped by strength in crude oil. Argentina’s weekend rain “was a little more significant than expected” in several areas, improving moisture for soybeans and other crops, World Weather Inc. said. However, “there will not be much follow up rain for the next 10 days and the region is likely to dry down again, relatively quickly because of warm temperatures.” There is “still a huge need for precipitation in Argentina,” the forecaster added.
In Brazil, a mostly favorable weather pattern will dominate during the coming two weeks, World Weather said. “Some of the precipitation in the far south will be a little too erratic and light at times, resulting in some net drying that may translate into a concern over low soil moisture in time.”
Also today, USDA reported weekly soybean export inspections at 1.84 MMT (67.6 million bu.), down from 2.08 MMT the previous week but within expectations for 1.5 to 2.0 MMT. Inspections are running 8.4% behind a year ago.
Technical analysis: January soybeans traded a 25 3/4 cent range, falling below support at $14.76 3/4 and $14.69 3/4 and making a low just below the 10-day moving average of $14.59 1/4, which was able to maintain support into the close. Continued efforts lower will see further support at $14.62 as well as the 20-day moving average at $14.48. A turn higher, however, will encounter resistance at former support at $14.76 3/4 and again at $14.69 3/4 and $14.91 3/4.
March meal futures dipped below support at $466.10, $460.50, and $456.40. Further downside efforts will see support at the 10-day moving average at $439.90. A turn higher will encounter resistance at former support levels of $456.40, $460.50, and $466.10 as well as $475.80 and $479.90.
January soyoil will encounter resistance at 62.75 and 63.50 in further upside attempts, while 59.26, 58.51, and 57.14 will continue to serve as support.
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.
Price action: March SRW wheat rose 20 1/2 cents to $7.54 3/4, the contract’s highest close since Dec. 2. March HRW wheat rose 29 1/4 cents to $8.62 1/4. March spring wheat rose 14 1/4 cents to $9.15 3/4.
Fundamental analysis: Wheat futures rallied after Russia’s weekend attacks on Ukraine’s energy grids and near key ports fueled concern over disruptions to grain shipments. Operations at the Black Sea port of Odessa was suspended operations following a Russian attack but resumed today, according to a spokesperson for the infrastructure ministry. Mixed outside markets provided support through strengthening crude oil futures, while the U.S. dollar firmer in anticipation of further interest rate hikes following the Federal Reserve’s policy meeting this week.
A major snowstorm with blizzard conditions is expected to hit the Northern Plains starting tonight, bringing “significant” snowfall in the central and western Dakotas, eastern Montana, and northwestern Minnesota, World Weather said.
Also today, USDA reported wheat inspected for export during the week ended Dec. 8 at 218,460 MT (8.0 million bu.), down from 341,674 MT last week and at the low end of trade expectations ranging from 200,000 to 475,000 MT. Shipments are running 2.5% behind a year ago.
Technical analysis: March SRW wheat traded a 21 3/4-cent range and ended the session above first resistance at $7.47 1/2. A brief attempt to turn above the 10-day moving average near $7.57 1/4 failed and will continue to serve as resistance. Further resistance stands at $$7.60 3/4 along with $7.69 1/4 and the 20-day moving average near $7.88. Conversely, downside efforts will encounter support at former resistance near $7.47 1/2, as well as $7.25 3/4 and $7.17 1/4. A close above the 10-day moving average will likely signal stronger buying efforts.
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.
Price action: March cotton fell 156 points to 79.39 cents, the contract’s lowest close since Nov. 28.
Fundamental analysis: Cotton futures fell for the third time in the past four sessions as the market extended Friday’s USDA-driven losses. USDA, in its monthly Supply & Demand Report today, hiked its estimate for the U.S. cotton crop to 14.242 million bales, up 211,000 bales from November and contrary to trader expectations for a reduction of 71,000 bales. USDA also boosted estimated 2022-23 ending stocks 500,000 bales to 3.5 million bales and cut its export forecast to 12.25 million bales, which would be a three-year low. Demand concerns centering on China may continue to weigh on the market as traders watch for economic readings that may suggest the country’s economy is improving following recent restrictive Covid lockdowns in major cities.
Technical analysis: Cotton bears strengthened a near-term technical advantage as futures extended a nearly two-week downtrend. While a near-term bottom was likely established with the Oct. 31 low, March futures could face further downside toward the lower end of the past month’s trading range from a Nov. 28 low at 77.50 to a high of 89.92. Bears’ downside objectives include closing March futures below the Nov. 28 low and further at 75.00 cents. Upside objectives for bulls is closing March futures above resistance at the November high of 89.92 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.
