Crops Analysis | June 29, 2021
Price action: Corn futures ended 19 cents higher in the deliverable July contract. Other contracts posted fractional to 1-cent gains. December corn ended 1 1/4 cents higher and midrange.
Fundamental analysis:
Corn futures traded both sides of unchanged in relatively quiet trade. Traders evened positions ahead of Wednesday’s Acreage and Grain Stocks Report, both of which have the potential to swiftly move the market in either direction. Traders on average expect corn acreage to increase about 2.7 million from March intentions to 93.8 million acres based on a Reuters survey. But the range of estimates is from 92 million to 95.8 million acres, meaning someone will be surprised. June 1 corn stocks are expected to come in at 4.114 billion bu., down nearly 18% from year-ago, but the range of estimates is 629 million bu. wide, also signaling someone will be surprised. Analysts have consistently missed on quarterly corn stocks for years, prompting major price reactions.
Weather is expected to remain status-quo for the next week to 10 days, meaning rains will likely be ample over southern and eastern areas, while scattered, light showers are expected in northwestern areas of the Corn Belt. Some model data brings rain to the drier areas July 7-9, but World Weather Inc. believes the rain is overdone, and the midday GFS model reduced rainfall chances for the dry areas.
Technical analysis: December corn futures closed above the 10-day moving average for the first time since June 11. Initial resistance at today’s high of $5.59 is backed by a band from $5.64 3/4 to $5.69 1/2, where the 20-, 40- and 50-day averages reside. Near-term support is at last week’s low at $5.14 1/4 and the May low at $5.00 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.
Price action: July soybeans closed up 2 3/4 cents at $13.59 3/4 today and November soybeans closed steady at $13.12 1/2 a bushel. Prices closed near mid-range today. December soybean meal closed down $5.50 at $353.80 today and nearer the session low. December soyoil closed up 126 points at 61.29 cents today and near mid-range.
Fundamental analysis: There is just enough uncertainty in the Corn Belt weather patterns expected in July to keep the sellers timid so far this week. World Weather Inc. today reported restricted rains will occur in the northern Plains, upper Midwest and parts of the northwestern Corn Belt in the coming days. Excessive heat in the northwestern U.S. will be slow to abate, but as it does some of the heat will reach into the northwestern U.S. Plains.
Traders today were also tentative ahead of USDA’s Acreage and Grain Stocks Report on Wednesday. Traders expect U.S. soybean plantings to rise about 1.4 million acres from March intentions to near 89 million acres. June 1 soybean stocks are expected to be down 43% from year-ago. Wednesday is also the last trading day of the month and of the quarter, which makes it an extra important day from a technical perspective, too.
Spreaders today were featured buying soybean oil and selling soybean meal futures.
USDA’s “good” to “excellent” ratings for soybeans held at 60% over the past week, though there was a one-point increase in the top category. Traders expected a one-point increase in the overall “good” to “excellent” rating. On our weighted CCI, the soybean crop slipped 0.3 point to 354.3 points, which is 8.8 points below the five-year average for the end of June.
Technical analysis: The bean bulls have the overall near-term technical advantage but need to show more power this week to begin to restart a price uptrend on the daily bar chart. The next near-term upside technical objective for the soybean bulls is closing November prices above solid resistance at $14.00. The next downside price objective for the bears is closing prices below solid technical support at the June low of $12.40 1/2. First resistance is seen at last week’s high of $13.29 and then at $13.41. First support is seen at today’s low of $12.98 and then at $12.85.
Soybean meal bears have the firm overall near-term technical advantage. Prices are in a steep six-week-old downtrend on the daily bar chart. The next upside price objective for the meal bulls is to produce a close in December futures above solid technical resistance at last week’s high of $380.20. The next downside price objective for the bears is closing prices below solid technical support at $340.00. The bean oil bulls have the overall near-term technical advantage and are regaining power. However, the recent strong losses negated a price uptrend to still suggest a market top is in place.
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: July spring wheat futures soared $8.62 3/4, the highest levels in over eight years, before ending 22 1/2 cents lower, with the September contract up 19 1/2 cents. September SRW futures fell 5 1/4 cents to $6.46 1/4 and September HRW futures rose 1/4 cent to $6.27.
Fundamental analysis: A further decline in USDA crop ratings sent spring wheat futures surging overnight before profit-taking in the U.S. session sent prices lower. Ongoing deterioration in spring wheat conditions of the Northern Plains continues to propel buying interest. USDA yesterday reported 20% of the spring wheat crop was in “good” to “excellent” condition, down from 27% a week ago and 69% a year ago. And the forecast signals crop stress is likely to worsen.
Meanwhile, pressure from the accelerating harvest weighed on winter wheat futures. USDA reported the winter wheat crop was 33% harvested as of Sunday, up from 17% a week earlier but behind the five-year average of 40%.
U.S. farmers probably scaled back wheat seedings compared to expectations earlier this year. Tomorrow’s USDA acreage report is expected to show 2021 planting of all U.S. wheat at 45.94 million acres, based on the average estimate in a survey of analysts, down slightly from March but up nearly 1.6 million acres from last year’s low tally. Other spring wheat planted acres are expected to come in around 11.41 million.
Statistics Canada raised its estimate for the country’s all wheat plantings to 23.36 million acres, up from 23.26 million acres in an April forecast but still down 6.5% from a year earlier.
Technical analysis: September spring wheat futures soared to a contract high at $8.57 overnight but faded in early trading today, settling at $8.14 1/2, barely above yesterday’s low at $8.14 and narrowly avoiding the formation of a key reversal.
In SRW futures, market bulls and bears remained on a relatively level technical playing field, near-term, though prices are in a six-week-old downtrend on the daily bar chart. SRW bulls' next upside price objective is closing December prices above solid technical resistance at $7.15 1/4. Downside targets include closing prices below technical support at the March low of $6.01.
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.
Price action: October cotton futures fell 13 points to 88.14 cents per pound, while December futures rose 15 points to 87.58 cents.
Fundamental analysis: Fundamental analysis: Cotton futures ended mostly firmer following light trading as the market waits for tomorrow’s USDA’s acreage update. U.S. cotton plantings for 2021 will total 11.856 million acres, based on the average estimate in a Reuters survey of analysts. The average estimate would be down from USDA’s March projection for plantings of 12 million acres.
Weekend rainfall across cotton areas of West Texas muted buying interest early this week, but those rains were highly varied, with localized flooding occurring in some areas and little rain falling in others. Overall, conditions have improved and much of the Texas cotton crop has sufficient moisture for normal development. USDA’s weekly crop progress report yesterday showed 52% of the cotton crop was in good to excellent condition, unchanged from a week ago. More rain is expected in West Texas.
Technical analysis: December cotton futures remain in a 14-month uptrend, though the contract today fell 1 cent short of yesterday’s high of 87.94 cents. Upside targets include 88.50 cents, a 3 1/2-month high reached June 11, and the contract high of 89.28 cents, reached Feb. 25. Downside price objectives included closing December below solid support at the mid-June low of 83.37 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.
