Crops Analysis | June 24, 2021

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Corn

Price action: July corn futures closed down 11 cents at $6.53 1/4 today. December corn futures closed up 1/4 cent at $5.36, nearer the session high after hitting a four-week low early on today.

Fundamental analysis: The weather market has fizzled for now. The midday weather report from World Weather Inc. said “an excessively wet outlook for the heart of the Midwest” remains in place. World Weather still looks for the first week of July high-pressure ridge to be mostly over the high Plains region. “The ridge will be broad based enough, however, to bring warmer weather to much of the central United States and a part of the western Corn Belt. This should reduce some of the rainfall expected, although totally dry weather is not likely.”

The worsening technical posture of the soybean futures market recently, compared to corn, may mean corn traders will look increasingly to the soybean market for direction, with soybeans possibly even becoming the price leader for the grain futures markets during the next several weeks. The bearish soybean charts along with extended Corn Belt weather forecasts now peering into the early part of the key pollination period for corn in July and showing no major heat or dryness suggest the corn market will continue to struggle in the coming weeks.

Today’s USDA Weekly Export Sales Report showed U.S. corn net sales of 216,300 MT for 2020-21, up from the previous week but down 33% from the prior four-week average. For 2021-22, net sales of 310,800 MT were primarily for unknown destinations. Sales were in line with market expectations.

Technical analysis: The corn futures bulls and bears are on a level overall near-term technical playing field amid recent choppy and volatile trading. The next downside target for the bears is closing December prices below chart support at the May low of $5.00 1/4. The next upside price objective for the bulls is to close December prices above solid chart resistance at $5.85. First resistance is seen at $5.50 and then at $5.60. First support is at $5.20 and then at today’s low of $5.14 1/4.

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 fell 8 1/2 cents to $12.91 3/4, on track for a second consecutive lower week. July soybean meal fell $8.40 to $345.80, the lowest close since October. July soyoil rose 57 points to 62.70 cents, the contract’s highest close since June 15.

Fundamental analysis: Soybeans remain under pressure from generally crop-favoring weather across most of the U.S. Midwest, while meal-oil spread trading kept soymeal prices on the retreat while boosting soyoil. “Excessive” rain is likely for areas of the Midwest over the next two to three days, with Missouri, Illinois, southeastern Iowa and areas of Indiana likely to see the most rain, says World Weather Inc., though certain pockets will remain relatively dry. The Dakotas, Minnesota, northwestern Iowa and western Wisconsin “will get some periodic rainfall, but it is not likely to be nearly as great as that in the lower and eastern Midwest,” the forecaster said, adding that more drying and crop stress is likely in July and August.

USDA early today reported 141,700 MT in soybean sales for 2020-21 delivery and 47,300 MT in sales for 2021-22 the week ending June 17. Old-crop sales were near the upper end of expectations, while new-crop sales were lighter than expected. Overall export demand for U.S. soybeans remains robust. For the marketing year to date, U.S. soybean exports totaled 58.1 MMT, up 58% from the same period a year earlier. Accumulated exports to China, at 35 MMT, were nearly triple the level compared to this point a year ago.

Also, USDA announced a 132,000 MT daily bean sale to China, as well as a 260,000 MT soybean sale to unknown destinations — both for 2021-22 delivery. USDA has announced daily soybeans sales to China and unknown destinations three of this week’s four days, with total sales now at 1.178 MMT. These come at a when Beijing typically sources soybeans from South America. 

Technical analysis: In soybean futures, a bear flag or bearish pennant pattern may be forming on the daily bar chart. For market bulls, near-term upside objectives include closing November prices above solid resistance at $14.00. For bears, downside targets include closing the contract below the June low of $12.40 1/2.

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: HRS wheat futures settled 1 to 4 1/2 cents higher through the December contract. SRW futures ended mostly 10 to 12-plus cents lower, while HRW futures dropped 6 to 7 cents.

Fundamental analysis: Wheat futures fell along with corn and soybeans, with the winter wheat market leading the early price decline. But wheat also rebounded well off the lows around midmorning as the other markets recovered. Spring wheat led the intra-day price recovery on support from weather and crop concerns in the Northern Plains.

Eastern areas of the Northern Plains are expected to receive some periodic rainfall through next week, though amounts will be light and coverage scattered. Traders are watching a building heat wave in the Pacific Northwest that’s expected to eventually move into the Northern Plains. This will further stress the struggling U.S. spring wheat crop.

Weekly export data offered no surprises, with net sales of 374,100 MT for 2021-22 and exports of 590,800 MT. China did not show up on the list of buyers or export destinations.

Technical analysis: September HRS futures flirted with a bullish reversal but ended with a simple outside day up. The contract bounced from the five-day moving average at $7.84 3/4, marking that as solid initial support. The 10-, 20-, 40- and 50-day averages fall within a range from $7.72 3/4 to $7.48 1/4 and offer additional near-term support. Initial resistance is at today’s high at $8.17 1/4, with the contract high at $8.45 3/4 being a stronger barrier for bulls.

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

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.

Cotton

Price action: Cotton futures 43 points lower in the July contract, which started the delivery process today, and 21 points lower in the new-crop December contract. Futures ended at the high end of today’s ranges.

Fundamental analysis: Cotton futures continue to get much of their price direction from the row-crop markets, following them lower on the sharp early morning retreat and then rebounding as corn and soybeans came well off their lows. Pressure also originated from weather forecasts calling for West Texas to get much-needed rains this weekend and early next week. World Weather Inc. says rainfall totals in the area could range from 0.75 to 2 inches, though “some hail damage is possible.” The Delta and Southeast are expected to receive “well-timed rains and seasonably mild to slightly cool temperatures,” according to World Weather.

Weekly upland cotton export sales totaled 74,700 running bales for 2020-21 and 148,900 bales for 2021-22. China bought 14,000 bales of old-crop cotton on the week, but had net reductions of 7,900 bales for the new-crop marketing year. Exports of 38,800 running bales were noted to China for the week.

Traders have started to prepare for the June 30 USDA Acreage Report. Analysts polled by Bloomberg News expect cotton plantings to slip 200,000 acres from March intentions to 11.8 million acres.

Technical analysis: The overall technical pattern slightly favors bulls but is generally neutral. December cotton futures found support at the 5- and 10-day moving averages after closing above the 10-day average on Wednesday for the first time since June 15. Near-term resistance is at the June 11 high at 88.50 cents and the contract high at 89.28 cents. Near-term support extends from last week’s low at 83.37 cents to the May low at 80.99 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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