Crops Analysis | November 14, 2022
Corn
Price action: December corn fell 3/4 cent to $6.57 1/4, after earlier dropping to $6.52 1/4, the lowest intraday price since Aug. 26.
Fundamental analysis: Corn took pressure as the U.S. dollar rebounded sharply following last week’s steep drop, crude oil futures plunged over $3 and rising Covid cases in China stirred concerns over demand. Traders continue to watch for updates on the Ukraine export deal as the agreement’s Nov. 19 expiration nears. The Kremlin said work to renew the deal is ongoing and talks with the United Nations last week were “fairly constructive.”
Weak export demand continued to weigh on corn prices. USDA reported corn inspected for export at 484,001 MT (19.1 million bu.) during the week ended Nov. 10, up sharply from 232,510 MT the previous week and at the high end of trade expectations ranging from 200,000 to 500,000 MT. While corn inspections posted stronger showings in recent week, the overall pace so far in 2022-23 lags the comparable year-ago period by 29.5%. Over half of the week’s shipments were routed through the Mississippi River, though levels remain low.
USDA will update harvest progress following the close, with a Reuters poll of nine analysts suggesting a completion rate of 93% as of Nov. 13, up from 87% a week earlier.
Technical analysis: December corn traded a 9 3/4 cent range, trading below support at $6.54, but ultimately held above the level to end the session. The 100-day moving average near $6.50 1/2 continues to prove solid support, however a breach of the level would find a test of support at $6.46 1/2 and likely signal heavier selling pressure towards $6.25. Moves higher will encounter resistance first at $6.61, then at $6.65, and again at $6.69. Stiff resistance continues to hover around the 10-day moving average near $6.72, along with the 20 and 40-day moving averages near $6.77 3/4, and $6.80 14, respectively.
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 fell 9 1/2 cents to $14.40 1/2, at the lower end of today’s range. December soymeal fell $1.40 to $406.00. December soyoil fell 69 points to 76.28 cents.
Fundamental analysis: The soy complex posted broad declines amid pressure from weakness in global vegoils, concerns over Chinese demand and a mostly favorable crop outlook in South America. Malaysian palm oil futures fell 4.1% on a stronger ringgit and weakness in competing vegetable oils, while front-month crude oil was down nearly $3 in late trade. Widespread rain fell over the weekend in Argentina, improving conditions for planting and establishment of summer crops, World Weather Inc. said. Over 5.0 inches of rain fell just south of west-central Cordoba, while most other areas received 0.20 to 1.50 inches. Brazil and Paraguay also had widespread, beneficial rain over the weekend, with heavy amounts from central and southern Paraguay to southern parts of Brazil’s Mato Grosso do Sul, western and southern Parana, and northwestern Rio Grande do Sul.
USDA reported weekly soybean inspections of 1.858 MMT (68.3 million bu.), down from 2.606 MMT the previous week and 2.434 MMT last year. Soybean export inspections so far in 2022-23 are running 11.6% behind a year ago, compared to 9.7% behind last week. USDA will update harvest progress later today. Analysts expect the crop to be 97% harvested as of Sunday, up from 94% the previous week.
Technical analysis: Soybean and soymeal technicals retain a neutral-to-lower bias after last week’s soft performance carried into the start of this week. January soybeans closed under the 10- and 100-day moving averages at $14.46 1/4 and $14.47, respectively, and are nearly 30 cents under key resistance at last week’s high of $14.69. But the market is well-supported around last week’s low of $14.20 1/2, which is backed by the 50-day moving average at $14.19 3/4 and the 100-day and 40-day moving averages at $14.13 1/2 to $14.14 1/4, respectively. A break under those levels, followed by further support at $14.00. may have bears targeting the October low at $13.62 1/2.
Soyoil retains a bullish bias, with prices in an up-trend for the past six weeks. Key resistance includes last week’s four-month high at 78.64 cents and the contract high at 79.29 cents, posted June 8.
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.
Fundamental analysis: Wheat futures disregarded weakness in corn and soybeans and posted moderate to firm gains, led by spring wheat, as signs of improved export demand spurred short covering and corrective buying in the wake of last week’s losses. Gains were limited by bearish outside markets, with crude oil lower and the dollar higher. USDA today reported disappointing weekly U.S. wheat inspections of 76,408 MT, down from 181,989 MT last week and the lowest weekly figure since at least the mid-1990s. Also limiting buying interest in wheat futures were reports today India, one of world’s largest wheat producers and also an exporter, may increase its wheat acreage by around 10%.
Heavy snow fell over the weekend in some U.S. SRW areas, including southeastern Missouri to southern Indiana and southwestern Ohio, World Weather said. Amounts ranged from 4 to 6 inches, with up to 9 inches from interior southeastern Missouri to the Effingham area of Illinois. U.S. Plains HRW wheat areas had no significant rain over the weekend, World Weather said. Precipitation in the next seven days will be greatest today, with snow and some rain expected. The associated moisture will help increase topsoil moisture a little more mainly in the southern half of the region.
USDA later today is expected to report the winter wheat crop at 31% good-to-excellent, up from 30% last week.
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 $8.34 and then at $8.50. First support is seen at last week’s low of $7.95 1/2 and then at $7.80.
HRW bulls' next upside objective is closing December prices above solid resistance at $10.00. Bears' next downside objective is closing prices below solid technical support at $9.00. First resistance is seen at today’s high of $9.65 3/4 and then at last week’s high of $9.71 3/4. First support is seen at today’s low of $9.42 3/4 and then at $9.25.
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 292 points to 85.28 cents, the contract’s lowest closing price since Nov. 3.
Fundamental analysis: Cotton took pressure as the U.S. dollar turned stronger, while crude oil futures tumbled over $3 amid heightened concern over global demand as Covid cases in China continue to rise. Recent hawkish comments from the Fed also indicate an extension of aggressive rate hikes which increase fears of slowing U.S. economic growth and weaker overall demand. President Biden and President Xi met before the G-20 Summit in Indonesia, amid efforts to normalize relations between the U.S. and China. According to Reuters, the two engaged in blunt talks over Taiwan and North Korea earlier today in a three-hour meeting aimed at preventing strained U.S-China ties from spilling into a new Cold War. Although explicit differences on human rights, Russia’s invasion of Ukraine, and support of domestic industry, the two leaders pledged more frequent communications.
Technical analysis: December cotton traded a 328-point range, turning below support at 86.80 and 85.41. Other areas of support stand at 84.97, along with the 10-day moving average around $84.55 and 40-day moving average near $84.12. A breach of this particular area could spark heavy selling back toward the low made at the beginning of Nov. Attempts higher, however, will meet resistance at former support at 86.80, then at 89.17, and again at 90.15.
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.
