Crops Analysis | June 9, 2021

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Corn

Price action: Corn futures finished a turnaround today with a firmer close. July corn ended 10 3/4 cents higher at $6.90 3/4 a bushel, while December corn firmed 1/4 cent to $6.09 3/4 after dropping as much as 16 1/2 cents earlier in the day.

Fundamental analysis: Traders bull-spread the corn market today in their preparations for Thursday’s Supply & Demand Report. We believe USDA could/should raise its old-crop corn-for-ethanol use and exports tomorrow morning. USDA is expected to slightly reduce its old- and new-crop ending stocks forecasts from last month to 1.207 billion bu. and 1.423 billion bu., respectively. Traders will respond if there are any surprises – bullish or bearish – but attention should rather quickly return to weather.

Midday forecast models were drier than previously advertised for portions of the Corn Belt the remainder of this week and next. Of particular interest will be any rains across dry western and northern areas of the region. World Weather Inc. expects just light and scattered rains over the driest areas.

Weekly ethanol production rose 33,000 barrels per day (bpd) to 1.07 bpd, which was the highest since the end of February 2020. However, ethanol stocks rose for a second straight week as gasoline demand was the lowest since the week ended March 12.

Besides USDA’s reports and weather, traders will also get weekly export sales data tomorrow morning. For the week ended June 3, traders expect old-crop corn sales between 100,000 MT and 500,000 MT and new-crop sales from 200,000 MT to 600,000 MT.

Technical analysis: December corn futures came with 1/4 cent of filling the June 4 chart gap at $5.92 3/4. If the gap remains open and the contract pushes above Monday’s high at $6.18 1/4 it would suggest a near-term test of the contract high at $6.38. If the gap is filled, it would likely suggest at least a 38.2% retracement of the rally from the May low, which would be around $5.73.

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: July soybeans closed down 17 1/2 cents at $15.62 1/2 a bushel today and near mid-range. July soybean meal closed down $3.40 at $386.40 today, nearer the session low and hitting a two-week low. July soybean oil futures fell 49 points at 71.59 cents.

Fundamental analysis: Volatile trading continues in the grain markets at mid-week. Today’s price pressure came from some scattered rains put in the weather forecasts for the western and northern areas of the Corn Belt in the coming days—but certainly not the widespread precipitation that is needed for much of the Corn Belt at present. World Weather Inc today said the Midwest will see warm temperatures and more sunshine than rain through the next two weeks. Some relief from dryness occurs in the northwest, but coverage of significant rain may not be great enough to prevent an overall increase and expansion of crop stress. “The rain will be welcome, but light enough that only temporary improvements in soil moisture will result. By the fourth week of June much of the Midwest will be significantly drier than today and stress to crops should have expanded outward…,” said Worldwide Weather.

The very weak posture of the soybean meal futures market continues, and soybean market bulls should be worried about this situation. If soybeans are to make another run near the recent highs, meal futures will have to participate.

Traders await Thursday’s USDA supply and demand report in which traders expect the agency to slightly increase its old- and new-crop soybean ending stocks forecasts compared to the May report. It’s likely that once the USDA report is out, focus will quickly turn back to the weather market playing out in the Midwest.

Thursday morning’s weekly USDA export sales report is expected to show total U.S. soybean sales of 100,000 to 400,000 MT.

Technical analysis:. The soybean bulls have the firm overall near-term technical advantage. The next near-term upside technical objective for the soybean bulls is closing July prices above solid resistance at this week’s high of $16.23 1/2. The next downside price objective for the bears is closing prices below solid technical support at the May low of $14.89 1/4. First resistance is seen at today’s high of $15.86 3/4 and then at $16.00. First support is seen at today’s low of $15.50 and then at $15.40. Soybean meal bears have the firm overall near-term technical advantage. Prices are trending lower on the daily bar chart. The next upside price objective for the meal bulls is to produce a close in July futures above solid technical resistance at the June high of $406.90. The next downside price objective for the bears is closing prices below solid technical support at the May low of $378.30. First resistance comes in at today’s high of $391.30 and then at Tuesday’s high of $395.50. First support is seen at today’s low of $383.90 and then at $380.00.

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 down 2 3/4 cents at $6.82 1/4 today and nearer the session high. July HRW wheat closed up 3 1/4 cents today at $6.35 3/4 and near the session high. Spring wheat futures fell 7 cents to $7.64 1/4.

Fundamental analysis: Spring wheat futures continue to be the price leader this week, pressured today by beneficial rainfall coming to dry regions of the northern Plains, and more in the forecast. World Weather Inc. said rainfall today through Friday will further improve soil moisture in a majority of the region, but southern Montana will see net drying. “The soil moisture improvement in the parts of the region that receive significant rain may be temporary due to drier conditions in the second week of the outlook with near to above average temperatures.” World Weather said conditions will be favorable in much of the U.S. hard red winter wheat region the next ten days to two weeks for fieldwork.

Wheat futures traders will also continue to look to the corn and soybean futures markets for price direction, and especially corn. The wheat trade awaits Thursday morning’s June USDA supply and demand report. No major changes are expected from the numbers in the May report.

Thursday’s weekly USDA export sales report is expected to show total U.S. wheat sales of 200,000 to 450,000 MT.

Technical analysis: SRW wheat bulls have the slight overall near-term technical advantage amid recent choppy trading. 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 the May low of $6.39 1/2. First resistance is seen at today’s high of $6.86 and then at $7.00. First support is seen at today’s low of $6.73 1/2 and then at $6.69 1/4. HRW bulls and bears are on a level overall near-term technical playing field. 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 the May low of $5.88. First resistance is seen at $6.40 and then at $6.50. First support is seen at today’s low of $6.21 and then at $6.17 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 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 firmed 148 points in the July contract and 135 points in new-crop December futures. The market ended near session highs.

Fundamental analysis: Traders added to long positions in the cotton market ahead of USDA’s June Supply & Demand Report tomorrow morning. Traders expect USDA to cut its old- and new-crop ending stocks forecasts from last month. For 2020-21, traders anticipate a higher export forecast from USDA even after it hiked that category by 500,000 bales last month.

Before USDA’s reports tomorrow, traders will get weekly export sales data. With the old-crop marketing year winding down, weekly shipments should be a greater focal point than sales.

Weather is price-supportive for new-crop cotton. West Texas is expected to be exceptionally hot the next couple days. Scattered showers and slightly cooler temps are likely from the weekend into next week, though crops will be stressed in areas that didn’t receive recent rains. There is also some mild dryness in Georgia and the Carolinas, while areas of the Mid-South are experiencing flooding after recent rains.

Technical analysis: December cotton futures continue to climb from the May lows, pushing out to a for-the-move high today. Near-term resistance is layered from 87.00 cents to the April high at 91.66 cents. Near-term support is layered from 85.79 cents to the May double-bottom at 81.53 cents. The short-term, intermediate and 100-day moving averages all fall within that range.

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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