Crops Analysis | June 1, 2021

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Corn

Price action: July corn advanced 32 cents to $6.88 3/4 and December jumped 31 1/2 cents to $5.77.

Fundamental analysis: Funds were active buyers today as the continued El Niño-like atmospheric conditions will push consistent warmth into the northern Plains, southern Canadian prairies, Midwest, Great Lakes, while still cooler south. Overall, this persisting pattern is due to a less wavy pattern across the globe and a Pacific jet stream oriented north, pushing in more warmth in the central U.S. However, a more frequent ridge of High pressure is starting to be modeled across East Asia that could sustain dryness into month’s end. Meteorological summer officially starts today, and grain traders are taking note of a seasonal ridge of high pressure forming across the Central U.S. and retrograding slowly westward into mid-June. Scattered rain forecast next week could be very important, especially in western areas of the Midwest. 

Tonight’s first USDA crop rating is expected to show 70% of the crop rated in “good” and “excellent” condition compared with 69% on average for the date the past five years.

Corn inspected for export jumped to 2.049 MMT in the week ended May 27, up from 1.746 MMT a week earlier with China taking more than half of the weekly tally.  China has pushed up its corn export pace to about 1 MMT a week, and that should continue and support stronger cash basis bids. Meanwhile, a man in eastern China has contracted what might be the world’s first human case of the H10N3 strain of bird flu, but the risk of large-scale spread is low, the government said Tuesday. The 41-year-old man in Jiangsu province, northwest of Shanghai, was hospitalized April 28 and is in stable condition, the National Health Commission said on its website.

Technical analysis: Corn charts took out Friday’s high with stochastics up, and plowed through its parabolic buy-stop orders. The 20-day moving average support in the July is $6.76, and the contract high is 7.35 1/4.  December futures also rose to the highest since May 13 today, touching $5.85 1/2.  Initial resistance is at $5.93 and then the contract high at $6.38.

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: Soybean futures ended sharply higher, with July contracts up 17 3/4 cents at $15.48 1/2 a bushel and November up 24 1/4 cents at $13.97. July soymeal rose $2.80 at $398.70 per ton and July soyoil up 154 points at 67.39 cents.

Fundamental analysis: Concerns that heat and dryness in the Midwest may stress young crops helped trigger a rally across the grain and oilseed complex. Most of the eastern Corn Belt and about 70% of the western Corn Belt received rain over the holiday weekend, but totals were generally light, especially in the driest areas in the northwest. A warmer and drier weather pattern is expected to settle into the Midwest during the early part of June. Scattered rain coverage and amounts next week will be important.

Expectations for continued strong demand further encouraged soy market bulls. Earlier today, the USDA reported weekly export inspections as of May 27 of 192,221 MT for soybeans, down from 222,107 MT a week earlier. While inspections were on the low end of trader expectations for 90,000 MT to 400,000 MT, the report further underscored robust foreign demand for U.S. ag products. Soybeans inspected for export for the current marketing year totaled 56.4 million MT, up 59% from the same period a year ago, USDA said. Traders continue to wait for evidence the break in prices has spurred increased Chinese buying of new-crop U.S. soybeans as they are wrapping up their Brazilian soybean buying.

U.S. farmers, ahead of schedule with spring planting, are expected to wrap up soon. The USDA’s weekly crop progress report, scheduled for release later today, was expected to show the soybean crop about 87% planted, based on the average analyst estimate. As of May 23, the crop was 75% planted, compared to the five-year average of 54% for that date. About 41% of the soybean crop had emerged by May 23, compared to the five-year average of 25%.

Soybean processors in the U.S. crushed 170.0 million bu., blow the 171.1 million expected by traders surveyed by Reuters.  Also, the latest CFTC report showed managed money traders mostly selling in grain and soybean contracts, with funds cutting net longs by 13,200 contracts in soybeans. But fund buying was active today.

Technical analysis: July soybeans posted the contract’s highest closing price since May 18, after rising to $15.78 1/2, the highest intraday price since $16.04 3/4 on May 18. November futures rose as high as $14.19 3/4, the highest since $16.04 3/4 on May 18. For bullish traders, near term upside technical objectives include closing July prices above solid resistance at $16.00. Support includes last week’s low around $14.89.

What to do: Make sure you are caught up with advised sales.

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.

Wheat

Price action: July SRW wheat closed up 30 cents today at $6.93 1/2. July HRW wheat closed up 24 1/4 cents today at $6.37 1/2. Prices closed nearer the session highs today. September spring wheat futures jumped 42 cents to $7.75 1/2.

Fundamental analysis: A weather market has quickly developed in the grains to start the month of June. There is trader concern over this week’s hot and dry weather forecasts for the northern U.S. Plains and southern Canada Prairies, which had spring wheat leading the charge today, despite some rain potential for next week. A little less rain expected for hard red winter wheat production areas later this week will be good for that crop, but quality concerns remain after recent heavy rains.

China and India wheat production outlooks are favorable and similar conditions are expected across Europe and parts of the Black Sea region. Planting prospects are very good in Argentina and improving in Australia. 

U.S. wheat inspected for export last week fell to 256,496 MT, down from 598,941 a week earlier. Traders expected inspection of 250,000 to 650,000 MT last week.

Analysts on average expect USDA this afternoon to rate 48% of the U.S. winter wheat crop as good-to-excellent condition, up one percentage point from the previous week. Planting of the U.S. spring wheat crop is nearly completed and analysts forecast a 98% complete figure from USDA, and 45% of that crop in good-to-excellent condition--steady with last week.

Technical analysis: SRW wheat bulls have gained the overall near-term technical advantage. It appears last week’s low was a near-term bottom and that prices can now trade at least sideways in the near term. SRW bulls' next upside price objective is closing July prices above solid technical resistance at $7.25. The bears' next downside breakout objective is closing prices below solid technical support at last week’s low of $6.39 1/2. First resistance is seen at today’s high of $7.02 and then at $7.10. First support is seen at $6.80 and then at today’s low of $6.72.  HRW bulls and bears are back on a level overall near-term technical playing field. It also appears HRW last week put in a near-term bottom. The HRW bulls’ next upside price objective is closing July prices above solid technical resistance at the February high of $6.67. The bears' next downside objective is closing prices below solid technical support at last week’s low of $5.88. First resistance is seen at today’s high of $6.53 and then at $6.60. First support is seen at $6.30 and then at today’s low of $6.21 1/2.

What to do: Make sure you are current with advised sales. Spring wheat producers should adjust sales levels based on your expected production levels based on your moisture situation.

Hedgers: You should be 100% sold on 2020-crop. You should also have 60% of expected 2021-crop sold for harvest delivery.

Cash-only marketers: You should be 100% sold on 2020-crop. You should also have 60% of expected 2021-crop sold for harvest delivery.

Cotton

Price action: July cotton closed up 213 points at 84.25 cents today and December gained 149 points at 84.81 cents. Prices closed near the session highs today and hit two-week highs.

Fundamental analysis: The cotton market bulls had a strong supporting cast of outside markets today. Solid gains in the grains, U.S. stocks indexes that are close to record highs, a weaker U.S. dollar index, and Nymex crude oil prices that pushed to a 2.5-year high today all helped to rally cotton futures. Cotton traders are now looking ahead to U.S. jobs data on Friday for reassurance the biggest global economy is improving following the previous month’s big hiring miss.

Reports of major flooding and hail damage in parts of Texas cotton country also supported buying interest in the cotton market today.

USDA will release its initial cotton crop condition rating Tuesday afternoon, with many looking for planting progress of around 65% but it may be in the low 60s percentile. Those numbers are above the historical average for planting progress this time of year.

Technical analysis: The cotton bulls and bears are back on a level overall near-term technical playing field amid recent choppy and sideways trading. The next upside price objective for the cotton bulls is to produce a close in July futures above solid technical resistance at 88.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at the May low of 81.50 cents. First resistance is seen at 85.00 cents and then at 86.00 cents. First support is seen at 83.00 cents and then at today’s low of 82.30 cents.

What to do: Get current with advised 2020 and 2021 crop sales; be ready to advance new-crop sales.

Hedgers: You should be 90% sold in the cash market on 2020-crop. You should have 40% of expected 2021-crop forward-priced for harvest delivery.

Cash-only marketers: You should be 90% sold on 2020-crop. You should have 40% of expected 2021-crop forward-priced for harvest delivery.

 

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