Crops Analysis | December 27, 2022
Corn
Price action: March corn rose 8 1/2 cents to $6.74 3/4, the contract’s highest close since Nov. 7.
Fundamental analysis: Corn futures opened strong following the three-day weekend and surged to seven-week highs with support from strengthening charts, gains in crude oil and optimism China’s easing of Covid restrictions will lead to greater demand for ag commodities. Also today, USDA reported a daily sale to Japan of 177,500 MT of for delivery during the 2022-23 and 2023-24 marketing years.
Weather in South America was also price-supportive as dryness persists in many of Argentina’s prime growing areas and weekend rains fell short of expectations, although some rain fell in central through southeastern Buenos Aires and in the far northwest areas of the country. Argentina remains concerning as limited rains are expected this week, with net drying likely and temperatures near to above normal, World Weather Inc. said.
USDA reported corn export inspections of 856,606 MT for week ended Dec. 22, up from the previous week’s figure of 826,955 MT and at the high end of trade expectations ranging from 500,000 to 900,000 MT. Inspections so far this year are still running 28% under the same period last year.
Technical analysis: March corn traded an 8 1/2-cent range after gapping 2 3/4 cents higher from Friday’s close, just above the technically significant 100-day moving average near $6.69 1/2, providing the momentum to breach hold above resistance at $6.72 3/4 into the close. Additional upside efforts will encounter resistance at $6.78 and $6.91 3/4. A turn lower, however, will face support first at the 100-day moving average, and then at the 40-day near $6.63 3/4, the 10-day at $6.57 1/4, and 20-day near $6.53 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.
Fundamental analysis: Soybean futures gapped higher at today’s open and soared to the highest levels since mid-June after disappointing weekend rainfall in Argentina fueled concern over dryness and China’s decision to drop a quarantine rule for inbound travelers fueling optimism over the country’s commodity demand. Beneficial rain fell on much of Argentina during the weekend, but outside of some pockets in northern and southeastern areas, “much of the rain was light as moisture was quickly lost to evaporation,” World Weather said. One round of organized rain expected during the next two weeks “is not likely to be great enough to prevent overall increases in crop stress and declines in yield potential,” the forecaster added. “Crop conditions should deteriorate before this weekend’s rain and should decline again when the moisture is lost to evaporation next week.”
Also today, South America crop consultant, Cordonnier, cut his Argentine soybean crop estimate for the fifth consecutive week to 43 MMT, down 2 MMT from last week and noted 40% of the country’s soybean acreage remains unplanted. “Soybean planting in Argentina needs to be completed within about two weeks and some areas may not receive the moisture needed to plant,” the consultant said. “Therefore, there is the possibility that not all the intended soybeans will get planted.”
USDA reported soybean export inspections of 1.753 MT for week ended Dec 22, down from the previous week’s figure of 1.963 MMT but at the high end of trade expectations ranging from 1.2 to 1.86 MMT.
Technical analysis: Soybean futures’ technical posture initially took a strong bullish turn after breaking above the past month’s trading range and rising above $15.00 for the first time since Sept. 13. But March futures’ sharp pullback from the early highs to close near the day’s low and below the early-month highs sapped much of the bullish impact. The pullback indicates any further advances above $15.00 are likely to generate strong selling interest, from farmers in particular. Still, prices should retain a neutral to bullish near-term technical bias, with initial resistance at the previous December high at $14.97 1/4 and $15.00. Initial support comes in at the 10- and 20-day moving averages at $14.80 1/4 and $14.72 3/4, respectively.
Soyoil technicals strengthened with today’s firm close, and the March contract faces initial resistance at the 50- and 40-day moving averages at 66.97 cents and 67.21 cents, respectively.
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 fell 1 1/2 cents to $7.74 1/2. March HRW wheat gained 4 1/2 cents to $8.79 1/4, the contract’s highest intraday price since Dec. 1. March spring wheat rose 2 1/2 cents to $9.34 1/4.
Fundamental analysis: Wheat futures traded choppy and mixed, with winter markets supported by strengthening technicals and concern recent extreme cold in the U.S. Plains may have damaged crops. While wheat futures appeared to establish a near-term price bottom earlier this month, soft export demand will likely limit market upside. Early today, USDA reported weekly wheat export inspections of 280,554 MT for week ended Dec. 22, down from the previous week at 304,108 MT and within trade expectations. Inspections are running 2.0% under year-ago levels. Also, gains may be limited as Russian wheat prices are dropping amid high domestic supplies following a record wheat crop and steady wheat shipments out of the Black Sea region.
Technical analysis: While winter wheat bears still hold a near-term technical advantage, prices are now in fledgling uptrends on daily bar charts. SRW bulls' next upside objective is closing March futures above solid resistance at $8.00. Bears' next downside objective is closing prices below solid support at the December low of $7.23 1/2. First resistance is seen at today’s high of $7.84 1/2 and then at $8.00. First support is seen at $7.58 and then at $7.50.
HRW bulls' next upside price objective is closing March prices above solid technical resistance at $9.50. 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 today’s high of $8.94 3/4 and then at $9.00. 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.
Price action: March cotton fell 97 points to 84.24 cents, the contract’s lowest close since Dec. 19.
Fundamental analysis: Cotton futures were pressured by weakness in U.S. equities amid concern the Federal Reserve will continue hiking interest rates and trigger a recession. Uncertainty over China’s economic outlook also weighed on prices. China’s relaxation of its strict Covid policies remains in focus for cotton traders, leading to hopes of faster growth but also concern over a surge in Covid infections that could dampen demand for major commodities such as cotton.
Technical analysis: Cotton futures bulls and bears are on a level overall near-term technical playing field amid the recent choppy and sideways trading. Bulls appear to have run out of gas after challenging the November high of 89.92 cents in March futures. The next upside objective for the bulls is to close March futures above resistance at the November high of 89.92 cents. The next downside objective for bears is to close prices below solid support at the December low of 78.80 cents. First resistance is seen at 87.00 cents and then at 88.00 cents. First support is seen at 84.00 cents and then at 83.00 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.
