Crops Analysis | November 15, 2021

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Corn ­

Price action: Corn futures finished narrowly mixed with the first three contracts fractionally to a penny lower. December corn dropped 3/4 cent to $5.76 1/2.

Fundamental analysis: Corn futures were unable to find sustained spillover support from strong gains in the soybean and soymeal markets and lesser gains in winter wheat today, largely because of heavy selling in spring wheat market. Given some of the big price moves in the other markets, corn was relatively quiet to start the week, suggesting funds may not be interested in greatly altering their positions at the moment.

Weekly corn export inspections were stronger than anticipated at 33.7 million bu. for the week ending Nov. 11, though that was a relatively normal seasonal tally and right in line with year-ago. So far in 2021-22, corn inspections are running 20.6% behind year-ago, whereas USDA projects a 9.2% decline.

The corn market has had a muted response to strong gains in soymeal the past two days amid talk of lysine shortages. If there are indeed shortages, it would increase demand for natural proteins in feed rations, meaning more meal, corn and DDG use domestically.

Technical analysis: December corn futures are at a critical technical juncture with the contract bumping up against the downtrend drawn off the May and June highs. A close above the downtrend and this month’s high at $5.86 would open the door to fresh chart-based buying and point to a near-term test of the August high at $5.94 1/4. Near-term support is the 5-day moving average at $5.69 1/4 and the 10-day average at $5.64 3/4.

What to do: Get current with advised 2021-crop sales.

Hedgers: You should be 50% sold in the cash market on 2021-crop production. You should also have 10% of expected 2022-crop production forward-sold for harvest delivery next year.

Cash-only marketers: You should be 50% sold on 2021-crop production. You should also have 10% of expected 2022-crop production forward-sold for harvest delivery next year.

 

Soybeans

Price action: January soybeans rose 13 cents to $12.57 1/4, the highest closing price since $12.65 1/2 on Sept. 30. today March soybean meal rose $10.40 to $363.60, near the session high and a four-month closing high. March soyoil fell 82 points to 57.78 cents, the lowest settlement since late September.

Fundamental analysis: Soybean meal futures were in the spotlight to start the trading week, aggressively extending recent corrective gains amid talk of potential lysine shortages in the U.S. A shortage, if it emerges, would drive up soymeal use in livestock feed rations. There was unconfirmed talk China may shut off lysine exports. Meal was also supported by active long soyoil/short meal spread unwinding. The significantly improved near-term technical posture for soybean meal futures is also inviting speculator buying interest.

USDA this morning reported a daily U.S. soybean sale of 264,000 MT for delivery to “unknown destinations” for delivery during the 2021-22 marketing year. U.S. soybeans inspected for export during the week ended Nov. 11, totaled 2.074 MMT (76.2 million bu.), down from 2.91 MMT the previous week and within trade expectations.

Today’s NOPA crush report showed 184.0 million bu. of soybeans crushed in October, up 30.2 million bu. from September. NOPA data implies the full crush for October was 194.0 million bu., which, if confirmed in USDA’s Dec. 1 crushing report, would be the third-largest monthly total on record, below only 196.6 million bu. last October and 196.5 million bu. in January this year. NOPA soyoil stocks totaled 1.834 billion lbs., up 150 million lbs. from last month.

South American weather has been mostly favorable for early soybean development. Brazil and Argentina are expected to get timely rainfall over the next two weeks, World Weather Inc. said today.

Technical analysis: Soybean bears still have the overall near-term technical advantage. However, a five-month-old downtrend on the daily chart is being challenged. More upside price action this week would negate the downtrend to suggest a market bottom is in place. The next near-term upside technical objective for bulls would be closing January futures above solid resistance at $13.00. The next downside price objective for bears would be closing prices below solid support at the November low of $11.81 1/4. First resistance is seen at 12.66 1/4 and then at $12.75. First support is seen at today’s low of $12.38, then at $12.25.

Soymeal bulls have the overall near-term technical advantage and gained more power today. Prices have been trending up for five weeks. The next upside price objective for bulls would be to close March futures above solid resistance at the July high of $385.50. The next downside price objective for bears would be closing prices below solid support at $350.00. First resistance comes in at today’s high of $366.60 and then at $370.00. First support is seen at $360.00 and then at $355.70.

Soyoil bears have the overall near-term technical advantage, with prices in a four-week downtrend on the daily bar chart. The next upside price objective for bulls would be closing March futures above solid resistance at 61.00 cents. Bears' next downside price objective would be closing prices below solid support at the September low of 54.30 cents. First resistance is seen at today’s high of 58.70 cents and then at last week’s high of 59.32 cents. First support is seen at the November low of 57.06 cents and then at 56.00 cents.

What to do: Get current with advised sales and hedge advice.

Hedgers: You should have 60% of 2021-crop sold in the cash market. You also have hedges covering 15% of 2021-crop production in January futures at $12.02 1/4.

Cash-only marketers: You should be 50% priced on 2021-crop production.

 

Wheat

Price action: December SRW wheat futures rose 9 1/4 cents to $8.26 1/4, the sixth consecutive daily gain and the highest settlement for a nearby contract since December 2012. December HRW futures rose 3 cents to $8.36, the highest closing price for a nearby contract since May 2014. December spring wheat fell dropped 23 1/2 cents to $10.26 1/2.

Fundamental analysis: Winter wheat futures extended a month-long rally on shrinking global supplies and signs of a pick-up in export demand. USDA earlier today reported wheat inspected for export during the week ended Nov. 11 at 388,743 MMT (14.3 million bu.), up from 251,452 MT the previous week and above trade expectations ranging from 150,000 to 375,000 MT.

Persistent dryness in prime HRW growing areas of the U.S. Plains also supported winter wheat futures. Little precipitation was recorded in HRW states over the weekend, and conditions are expected to remain generally dry into next week, World Weather said. Wheat is sufficiently established in the bulk of the U.S. producing areas, but not from the Texas Panhandle into Colorado and far western Kansas, World Weather said. “Dry biased conditions during the next 10 days will not offer a significant amount of change,” the forecaster said.

USDA’s weekly crop condition ratings later today likely will continue to reflect stress from lack of moisture. The winter wheat crop is expected to be reported in 45% “good” or “excellent” condition, unchanged from a week earlier, based on a Reuters survey of analysts. Winter wheat planting is expected to be 95% complete, up from 91% the previous week.

Russian wheat prices gained for the fourth consecutive week amid concerns of further export limits from the world's top wheat exporter. Russian wheat with 12.5% protein loading from Black Sea ports for supply in the second half of November was $328.00 per MT free on board at the end of last week, up $2.00 from the previous week, the IKAR consultancy said.

Technical analysis: Technical patterns continue to lean bullish for December SRW wheat, with the contract coming off three weekly gains in the past four. Support levels include the psychologically important $8.00 and the 10-day moving average at $7.91 3/4. In December HRW futures, chart levels to watch include last week’s high at $8.43 1/2 and the 10-day moving average at $8.03 1/2.

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

Hedgers: You should be 70% priced in the cash market on 2021-crop. You should also have 20% of expected 2022-crop production forward-priced for harvest delivery next year.

Cash-only marketers: You should be 70% priced on 2021-crop. You should also have 20% of expected 2022-crop production forward-priced for harvest delivery next year.

 

Cotton

Price action: December cotton futures fell 7 points to 117.62 cents per pound, the lowest closing price since Nov. 8.

Fundamental analysis: Cotton futures extended the past week’s sideways-to-lower trade amid pressure from continued dollar strength, weaker exports and an accelerating U.S. harvest. The U.S. dollar index today reached the highest level since July 2020. Prospects for continued strong demand from China may limit futures declines.

USDA later today is expected to report another jump in cotton harvest progress, and weather in top U.S. cotton regions is expected to remain mostly favorable for fieldwork. The crop was 55% harvested as of Nov. 7, up from 45% the previous week and just under the five-year average at 57%.

“Good harvest weather is expected in West Texas over the next 10 days,” World Weather said. “Crops in the U.S. Delta will continue to deal with some periodic precipitation, keeping fiber quality lower than hoped. Southeastern U.S. cotton harvest progress should advance better in the next 10 days due to less frequent and less significant rain.”

Technical analysis: The cotton market’s bullish momentum stalled over the past two weeks, as the December contract edged farther away from the contract high of 121.67 cents posted Nov. 2. December futures today briefly pushed below last Friday’s low at 116.53 cents, but quickly bounced back. Support levels include last week’s low at 116.20 cents and the 20-day moving average at 114.35 cents. Resistance is seen at last week’s high at 120.75 cents.

What to do: Get current with advised 2021- and 2022-crop sales and the buyback.

Hedgers: You should be 100% priced in the cash market on 2021-crop production, with 15% re-owned in long March cotton futures at 111.34 cents.  You should also be 30% forward-priced on expected 2022-crop production for harvest delivery next year.

Cash-only marketers: You should be 85% priced on 2021-crop production. You should also be 30% forward-priced on expected 2022-crop production for harvest delivery next year.

 

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