Crops Analysis | July 26, 2021
Price action: Corn futures ended high-range with gains of 2 1/2 to 4 cents through the July 2022 contract. December rose 3 3/4 cents to $5.46 3/4 a bushel.
Fundamental analysis: Corn futures traded lower for much of the day on follow-through selling after a poor close last Friday. Traders chose to focus on the second week of outlook, which overnight models indicated would feature slightly cooler temps and some increased rain chances compared with the hot and dry forecast this week. But when the midday GFS model run removed some of the rains through the heart of the Corn Belt, prices firmed. Prices will continue to ebb and flow with the weather and crop condition ratings, but the demand side of the market isn’t helping bulls.
Weekly corn export inspections totaled 40.8 million bu., up from 33.1 million bu. during the same week last year but shy of the “required” pace to hit USDA’s forecast. Weekly inspections must now average 52.5 million bu. per week during the final weeks of 2020-21 to get to USDA’s 2.85-billion-bu. estimate, which seems unlikely. As a result, we lowered our old-crop export forecast to 2.825 billion bushels.
Technical analysis: December corn futures spiked the 100-day moving average intra-day, which triggered sell stops, but the contract rebounded to close above this level. Today’s low at $5.32 1/4 is initial support, with stronger support at the July 9 low at $5.07 and the June low at $5.00 1/4. Overhead resistance is marked by the short- and intermediate-term moving averages in a range from $5.52 to $5.61 1/2. Stronger resistance is last week’s high at $5.73, which came within 1/2 cent of filling the July 6 chart gap.
What to do: Get current with advised 2020- and 2021-crop sales.
Hedgers: You should be 90% sold in the cash market on 2020-crop. You should also have 30% of expected 2021-crop forward-priced for harvest delivery.
Cash-only marketers: You should be 90% sold on 2020-crop. You should also have 30% of expected 2021-crop forward-priced for harvest delivery.
Soybeans
Price action: November soybeans rose 6 cents to $13.57 3/4 a bushel, after earlier falling to $13.32, near a two-week low. December soymeal fell $1.10 to $355.10 per ton but recovered most of an early drop to a one-month low. December soyoil rose 84 points to 64.07 cents per pound.
Fundamental analysis: Soybeans and soymeal recovered from overnight losses with help from gains in soyoil and lingering concerns heat and dryness in the Midwest will hamper crop development as soybean approach critical reproductive stages. Highs will reach the upper 90s Fahrenheit in a few eastern South Dakota locations today, and the interior eastern and southeastern parts of the state will warm to the lower 100s Tuesday, with upper 90s in some nearby areas as well as in parts of eastern Nebraska and western Iowa, World Weather Inc. said in a report today. Highs in the upper 90s and lower 100s will be common from eastern South Dakota to northern and western Iowa and eastern Nebraska on Wednesday.
“Much of the Midwest will dry down during the next two weeks, but with a lack of heat starting late this week and adequate subsoil moisture in place outside of the northwest, conditions for crops outside of the far northwest should remain mostly favorable,” World Weather added.
Traders will scan USDA’s weekly crop progress report later today for indications whether rains earlier this month improved the harvest outlook and how much of soybean crop has reached key reproductive phases like pod-setting. The soybean crop’s good-to-excellent rating is expected to hold around 60%.
Soybeans inspected for export during the week ended July 22 totaled 241,897 MT, up from 143,934 MT the previous week and in line with expectations. For the marketing year to date, exports totaled 58 MMT, up 49% from the same period in the previous year.
Speculators also scaled up bullish bets in soybeans earlier this month. Money managers have the most bullish view since mid-June, recent CFTC data shows.
Technical analysis: November soybeans fell as low as $13.32 overnight, the lowest intraday price since $13.27 on July 12, before buying interest emerged a few cents above the 100-day moving average around $13.27. Chart levels to watch include and last week’s high of $14.18, and $13.27, the July 12 low. December soymeal fell as low as $348.70, a one-month low and the lowest intraday price since a six-month low of $347 reached in late June.
What to do: Make sure you are current with our latest old- and new-crop sales advice. Hold remaining inventories as gambling stocks.
Hedgers: You should be 90% priced in the cash market on 2020 crop. You should also have 30% of expected 2021-crop forward-priced for harvest delivery.
Cash-only marketers: You should be 90% sold on 2020 crop. You should also have 30% of expected 2021-crop forward-priced for harvest delivery.
Price action: September SRW futures fell 7 cents to $6.77 a bushel, September HRW fell 7 cents to $6.39 and September spring wheat fell 4 3/4 cents to $8.78 3/4.
Fundamental analysis: Wheat futures fell overnight, with SRW near a two-week low, and maintained losses throughout the day. Pressure stemmed from fresh supplies from the U.S. winter harvest and sluggish export demand. Spring wheat extended last week’s decline amid technical weakness and beliefs the market may have put in a top
Wheat inspected for export during the week ended July 22 totaled 477,964 MT, down from an upwardly revised 532,898 the previous week and in line with expectations. For the marketing year to date, wheat exports totaled 3.34 million MMT, down 19% from the same period a year earlier.
USDA’s crop progress report later today is expected to show the U.S. winter wheat crop was 84% harvested at the start of this week, based on the average analyst estimate. The spring wheat crop is expected to be about 4% harvested. Spring wheat is expected to be rated about 10% “good” or “excellent,” compared to 11% in those categories a week ago.
Technical analysis: September SRW futures overnight fell as low as $6.65 1/2, the lowest intraday price since $6.51 1/4 on July 15. Chart levels to watch include the 200-day moving average around $6.43 and last week’s high as $7.18. September spring wheat fell as low as $8.70, the lowest intraday price since $8.60 1/4 on July 14. September has dropped 7% from the $9.44 1/2 contract high posted July 19.
What to do: Make sure you are current with advised sales. Spring wheat producers should adjust sales levels based on your expected production levels.
Hedgers: You should have 60% of 2021-crop sold in the cash market. You should also have 10% of expected 2022-crop production sold for harvest delivery next year.
Cash-only marketers: You should have 60% of 2021-crop sold. You should also have 10% of expected 2022-crop production sold for harvest delivery next year.
Price action: Cotton futures settled 6 points lower to 11 points higher through the May contract, which was high-range for the day. December settled at 89.60 cents.
Fundamental analysis: Cotton futures were influenced by the pressure on the grain and soybean markets for much of the day. But as corn and soybeans firmed, cotton futures came well off their lows. Weakness in the U.S. dollar index to kick off the week also helped produce the high-range finish in cotton, though the dollar is up sharply from the May lows.
USDA’s weekly crop condition ratings will give traders some fresh fundamental data to trade on Tuesday. Overall, conditions remain above normal, which may cap buyer interest, barring fresh supportive news. Forecasts signal conditions will be warmer and drier than they’ve been from West Texas eastward across the South, though that isn’t necessary a bad thing for a cotton crop that has generally received ample rains.
Technical analysis: Contract-high resistance for December cotton futures is at last Friday’s high at 90.59 cents. Above that, bulls would target the May high of 91.00 cents on the continuation chart, followed by this year’s high at 92.95 cents. The short- and intermediate-term moving averages are clustered from 89.26 cents to 86.12 cents, forming a layer of support under today’s closing level.
What to do: Get current with advised 2020- and 2021-crop sales.
Hedgers: You should be 100% priced in the cash market on 2020-crop. You should also have 60% of expected 2021-crop forward-priced for harvest delivery.
Cash-only marketers: You should be 100% priced on 2020-crop. You should also have 60% of expected 2021-crop forward-priced for harvest delivery.
