Crops Analysis | December 8, 2022
Corn
Price action: March corn rose 1 1/4 cents to $6.42 1/2 after reaching a 3 1/2 month low in the previous session.
Fundamental analysis: Corn futures posted modest gains in narrow-range trading as strength in soybeans offset to some extent sluggish export readings. USDA early today reported net U.S. corn sales totaling 691,600 MT during the week ended Dec. 1, up from 602,700 MT the previous week. Trade expectations ranged from 300,000 to 950,000 MT. Top buyers included Mexico (333,100 MT, including decreases of 32,400 MT) and China (204,900 MT). Despite the slight weekly improvement, U.S. corn export commitments so far in 2022-23 are running 48% under the same period in 2021-22. Weakness in the U.S. dollar also lended mild support to grain prices as traders waited for fresh USDA data.
USDA’s monthly Supply and Demand update Friday is expected to reflect slightly higher corn supplies for the U.S. and world in 2023. Estimated U.S. corn stockpiles at the end of the 2022-23 marketing year are expected to be revised to 1.237 billion bu. from 1.182 billion bu. currently, based on a Reuters survey of analysts. Global ending stocks for 2022-23 are expected to be increased to 300.86 MMT from 300.76 MMT. Friday’s report will also include updates on South American production, with analysts expecting a slight decrease in Argentina’s crop estimate to 53.54 MMT from 55.00 MMT, and an increase in Brazil’s corn crop to 126.45 MMT 126.00 MMT.
Technical analysis: March corn traded a 7-cent range, remaining within the previous session’s range. Downside efforts will continue to encounter support at $6.35 1/2, as well as $6.29 3/4 and $6.24 3/4. Though a turn higher will see resistance first at $6.46 1/4, again at $6.51 1/4 and $6.57. A test of the 10-day moving average at $6.54 1/2 could provide bulls the needed fodder to then test the 20-day moving average at $6.59 1/2 and the technically significant 100-day moving average at $6.74 1/4.
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 rose 14 1/4 cents to $14.86 1/4, the contract’s highest close since $14.92 1/4 on Sept. 12. January soymeal surged $7.40 to $466.40, a lifetime high close for the contract for the third straight day. January soyoil rose 35 points to 61.31 cents.
Fundamental analysis: Nearby soybeans ended higher for a third consecutive session as soymeal extended a steep rally and China drove a recent uptick in export demand. Early today, USDA reported daily sales of 118,000 MT of soybeans to China and 718,000 MT of soybeans to “unknown destinations,” both for the 2022-23 marketing year. With today’s announcement, USDA has reported eight separate daily sales to China or unknown destinations totaling 1.826 MMT since Nov. 23. Also today, USDA reported net weekly U.S. soybean sales totaling 1.716 MMT, more than double 693,800 MT the previous week and easily surpassing trade expectations from 600,000 MT to 1.2 MMT. China led buyers at 839,600 MT, including 396,000 MT switched from unknown destinations.
Escalating concern over dryness in South America contributed to soybean price gains. Excessive heat in Argentina this week is stressing crops in central and northern parts of the country, especially where soil moisture is depleted, World Weather Inc. said “The heat and dryness may be damaging early-season crops and some loss may evolve if there is no relief soon, the forecaster said. “Rain expected Friday through Monday should offer enough relief to buy a little more time, but greater rain will still be needed in those crop areas.” Brazil’s crops are faring better, with mostly favorable weather expected the next two weeks.
USDA’s monthly Supply and Demand update Friday is expected to carry minor adjustments. U.S. soybeans stocks at the end of the 2022-23 marketing year will be increased about 38 million bu., to 238 million bu., based on a Reuters survey of analysts. USDA is expected to lower its forecast for Argentina’s soybean crop to about 48.7 MMT from 49.5 MMT in a November estimate.
Technical analysis: The soybean market’s technicals strengthened further after January futures closed above the November high and continued to climb well-above key short- and medium-turn moving averages. Today’s high of $14.92 1/4, puts the $15.00 mark squarely within bulls’ sights, and followthrough buying Friday could help breach that level, though the market could also run into some pre-weekend profit-taking. Beyond $15.00, key upside targets include the September high of $15.12 1/4 and the contract high of $15.87 3/4, posted June 19. Initial support comes in at 10-, 200- and 20-day moving averages at $14.54, 14.48 3/4 and $14.44 1/4, respectively.
Technicals are particularly bullish for soymeal, with upside targets including the late-August high of $488.40, the $500.00 level and a nine-year high of $532.20 reached in August, based on continuation charts.
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 3 1/4 cents to $7.46 1/4. March HRW wheat dropped 4 cents to $8.44 3/4. March spring wheat rose 7 1/2 cents to $9.09 1/2.
Fundamental analysis: Wheat futures remained near multi-month lows on weak charts and sluggish exports. USDA reported net weekly U.S. wheat sales for 2022-23 totaling 189,900 MT, up from 155,500 MT the previous week but at the low end of trade expectations ranging from 150,000 to 350,000 MT. Lead buyers included China at 65,000 MT. U.S. export commitments are running 6.3% behind a year-ago, compared to 6.1% behind last week. Russia’s record wheat crop and the prospect for record production from Australia also kept pressure on U.S. wheat.
U.S. Plains winter wheat entered dormancy in poor condition and there appears to be little long-term change from persistent drought. “Not much change will occur for a few more weeks, but with weakening La Nina coming in the first quarter of 2023 relief is expected and crop improvement should follow,” World Weather said today. “Until then, though, the region will continue dealing with drought.”
Friday morning’s USDA supply and demand report for November is expected to show 2022-23 U.S. wheat ending stocks to decline 2 million bu., to 576 million bu., according to a Reuters survey.
Technical analysis: Winter wheat bears hold a near-term technical advantage with prices in steep seven-week downtrends on the daily bar charts. SRW bulls' next upside objective is closing March futures above solid chart resistance at $8.00. The bears' next downside objective is closing prices below solid technical support at $7.00. First resistance is seen at Tuesday’s high of $7.56 1/4 and then at this week’s high of $7.68. First support is seen at $7.35 and then at this week’s low of $7.23 1/2.
HRW bulls' next upside objective is closing March prices above solid technical resistance at $9.00. 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 $8.60 and then at this week’s high of $8.77 3/4. First support is seen at today’s low of $8.31 1/4 and then at this week’s low of $8.21 3/4.
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 98 points to 80.85 cents, the contract’s lowest settlement since Nov. 29.
Fundamental analysis: Cotton futures fell sharply as concern over sluggish export demand weighed on the market, overshadowing bullish outside factors like a weaker dollar. USDA early today reported net weekly U.S. cotton net sales of 32,600 running bales (RB) for 2022-23, nearly double the 16,500 RB reported the previous week. Top buyers included China (11,000 RB), Bangladesh (7,300 RB, Turkey (6,500 RB) and Vietnam (4,300 RB). Exports of 141,100 RB were primarily to China (59,900 RB), Pakistan (36,200 RB) and Mexico (10,000 RB). Still, U.S. cotton export commitments so far in 2022-23 are running 10.2% behind year-ago levels, and USDA forecasts total cotton exports will fall 14.5% from a year ago to 12.5 million bales.
Friday’s USDA Supply and Demand report may show only slight adjustments in U.S. cotton production. The agency is expected to slightly lower this year’s U.S. cotton crop to 13.96 million bales from 14.03 million bales in its November report, based on a Bloomberg survey. Recent USDA reports have shown world cotton production numbers and usage trending lower, while global ending stocks have been trending higher.
Technical analysis: Cotton futures bears hold a overall near-term technical advantage. However, recent price action still 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 75.00 cents. First resistance is seen at today’s high of 84.10 cents and then at 85.00 cents. First support is seen at 80.00 cents and then at 79.00 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.
