Crops Analysis | November 10, 2022
Corn
Price action: December corn fell 11 1/4 cents to $6.53 1/4, the lowest close since Aug. 25.
Fundamental analysis: Corn fell a fourth consecutive session as eroding technicals and poor export demand outweighed a sharp drop in the U.S. dollar and strength in crude oil. Persistently soft exports have discouraged buyers and encouraged bears to press the downside, with USDA’s higher than expected crop production figure reported Wednesday providing further downside impetus. Early today, USDA reported net weekly U.S. corn sales during the week ended Nov. 3 at 265,300 MT, down from 372,200 MT the previous week and below trade expectations ranging from 300,000 to 650,000 MT. Sales were also down 15% from an average of 311,175 MT the previous four weeks. Corn export commitments so far in 2022-23 are 54.1% behind a year-ago levels, compared to 53.3% behind last week. Also today, USDA reported daily corn sales of 209,931 MT for delivery to Mexico during the 2022-23 marketing year.
Traders continue to watch for updates on the Ukraine export deal, which expires Nov. 19. Top U.N. officials will meet a senior Russian delegation in Geneva on Friday to discuss extending the deal, along with efforts to smooth shipments of Russian food and fertilizers to global markets, the United Nations said. Corn harvest in Ukraine is trailing the previous year by 30%, with yields nearly 20% lower and reflecting Russia’s invasion and temporary occupation of some high-yielding territories.
Technical analysis: December corn traded a 14-cent range, breaching support at $6.57 3/4 for the second consecutive day, and was ultimately unable to end the session above the level. Next support stands at the technically significant 100-day moving average at $6.51. A breach of the level could signal heavy selling. However, $6.44 will stand as support if a breakthrough occurs. Although bears currently grasp the near-term price action, a turn to the upside would be met with resistance at $6.71 1/2, as well as $6.78 1/2, and at the 10-day moving average near $6.77 1/2. Solid resistance will stand near $6.81, where the 20 and 40-day moving averages have nearly converged.
What to do: Get current with advised sales. Wait to make additional 2022-crop sales.
Hedgers: You should have 50% of 2022-crop sold for harvest delivery.
Cash-only marketers: You should have 50% of 2022-crop sold for harvest delivery.
Price action: January soybeans plunged 29 cents to $14.23, the contract’s lowest close since Oct. 31. December soymeal tumbled $13.50 to $404.10, a three-week closing low. December soyoil rose 55 points to 76.09 cents.
Fundamental analysis: Soybeans fell sharply as chart breakdowns sparked technical selling and long liquidation across the grain and oilseed markets, overshadowing a sharp pullback in the U.S. dollar. Signs of slipping export demand also encouraged sellers in soybeans. Early today, USDA reported net weekly U.S. soybean sales at 794,800 MT, down from 830,200 MT the previous week and the third straight weekly decline. Sales were down 35% from an average of 1.229 MMT the previous four weeks and were at the low end of expectations ranging from 600,000 MT to 1.2 MMT. China was the top buyer at 927,100 MT. U.S. soybean export commitments so far in 2022-23 are running 0.4% behind a year-ago, versus 0.1% ahead last week. USDA’s higher than expected increases to its U.S. crop and supply forecasts a day ago also muted buying interest, while reports Argentina may bring back measures to boost soy exports, three traders said.
With the U.S. harvest largely finished, market focus is shifting to South American weather, where persistent dryness has plagued some areas. Argentina had light rainfall today as it moves into a wetter pattern that will prevail through early next week, World Weather Inc. said. “Waves of rain will occur through the next five days resulting in relief to the nation’s drought pattern,” the forecaster said. “Much more rain will be needed, but any precipitation will be welcome.”
Technical analysis: Soy complex technicals have turned neutral to slightly bearish near-term as January soybeans dropped sharply under the past week’s trading range and settled under the 10-day moving average, currently $14.39 1/4, for the first time since Oct. 25. January soybeans closed slightly above today’s low and slightly above the 50-day moving average at $14.18 1/2 and above the 20- and 40-day moving averages, which converge at $14.15 1/4. A close under those support levels Friday would likely confirm a near-term top at the six-week high of $14.69, posted Monday, and could trigger further speculator long liquidation and may compel bears to target $14.00, a late October low at $13.66 3/4 and the low for October at $13.62 1/4.
Soymeal took a particularly bearish turn, closing under its 50-day moving average, currently $409.61, for the first time since Oct. 19, and putting the $400.00 level and the October low of $391.90 in bears’ sights.
What to do: Get current with advised cash sales. Wait to make additional sales.
Hedgers: You should be 60% sold for harvest delivery on 2022-crop production.
Cash-only marketers: You should be 60% sold for harvest delivery on 2022-crop production.
Price action: December SRW wheat fell 3 cents to $8.03 1/2, the contract’s lowest close since Sept. 1. December HRW wheat dropped 4 3/4 cents to $9.25 1/4, the lowest close since Oct. 28. December spring wheat fell 6 3/4 cents to $9.31 1/2, the lowest close since Sept. 26.
Fundamental analysis: SRW wheat futures fell a fourth straight session and ended at the lowest level in over two months on as sluggish export demand and slumping technicals overshadowed the U.S. dollar’s sharp drop to a two-month low. USDA’s weekly export sales numbers continued to illustrate U.S. wheat’s uncompetitive status on global markets. Net weekly U.S. wheat sales during the week ended Nov. 3 totaled 322,500 MT, down from 348,100 MT the previous week and at the low end of trade expectations ranging from 250,000 to 600,000 MT. Export commitments so far in 2022-23 are running 5.9% behind a year-ago versus 6.4% behind last week. Seemingly price-supportive news was ignored, including the Rosario Grain Exchange cutting another 1.9 MMT off its Argentine wheat production estimate, lowering it to 11.8 MMT, and warning it may have to make additional cuts. Argentina’s wheat crop may be the smallest since it produced 10.9 MMT in 2015-16.
Technical analysis: Winter wheat bears hold a firm near-term technical advantage with prices are in four-week downtrend on daily bar charts. SRW bulls' next upside objective is closing December futures above solid resistance at the November high of $9.04. Bears' next downside objective is closing prices below solid support at the August low of $7.43 1/4. First resistance is seen at Wednesday’s high of $8.34 and then at $8.50. First support is seen at $7.90 and then at $7.80.
HRW bulls' next upside objective is closing December futures above solid resistance at $10.00. Bears' next downside objective is closing prices below solid support at $9.00. First resistance is seen at Wednesday’s high of $9.51 1/4, then this week’s high of $9.71 3/4. First support is seen at the October low of $9.15 1/4, then $9.00.
What to do: Wait on an extended price rally to increase cash sales.
Hedgers: December SRW futures hit our buy stop at $8.50 to exit the 15% 2022-crop hedge. We registered a 67-cent loss on the position. You should be 85% sold in the cash market on 2022-crop. You should be 30% forward-priced on expected 2023-crop for harvest delivery next year.
Cash-only marketers: You should be 85% sold on 2022-crop. You should also be 30% forward-priced on expected 2023-crop production for harvest delivery next year.
Price action: December cotton fell 12 points to 86.38 cents and near mid-range.
Fundamental analysis: Cotton futures failed to show significant strength despite bullish outside market forces, including a sharp drop in the U.S. dollar index and a rally in the U.S. stock market, spurred by a cooler-than-expected Consumer Price Index report for October. Bearish numbers in USDA’s Crop Production and Supply and Demand updates Wednesday continued to hang over prices, after the agency raised its U.S. cotton crop estimate by 220,000 bales from last month to 14.03 million bales, contrary to expectations for a reduction, and hiked estimated 2022-23 ending stocks 200,000 bales.
Weekly export sales data provided little encouragement for bulls. USDA reported net weekly U.S. cotton net sales at 145,800 running bales (RB) for 2022-23, down from 191,800 RB from the previous week. Top buyers included primarily (57,300 RB), Pakistan (40,500 RB) and Vietnam (23,400 RB).
Technical analysis: Cotton bears still hold a near-term technical advantage. However, the strong rebound from the October low suggests a market bottom is in place. The next upside objective for the bulls is to close December futures above resistance at 95.00 cents. The next downside objective for bears is to close prices below solid support at 80.00 cents. First resistance is at this week’s high of 89.31 cents, then 90.00 cents. First support is seen at today’s low of 84.19 cents, then 83.00 cents.
What to do: Wait on an extended corrective rebound to get current with advised 2022-crop sales.
Hedgers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production.
Cash-only marketers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production.
