Crops Analysis | November 16, 2021
Price action: Corn futures struggled to overcome resistance near recent highs, with the December contract slipping 6 1/4 cents to $5.71.
Fundamental analysis: Corn futures fell under profit-taking from the recent rally and spillover weakness from double-digit declines in the wheat markets. Dollar strength is also emerging as a bearish factor. The U.S. dollar index surged to a 16-month high after U.S. retail sales for October came out stronger than expected. Ultimately, bulls need more bullish news to push corn to fresh autumn highs. The market had little response to USDA’s report early today of a daily corn sale of 270,000 MT to Mexico for delivery during the 2021-22 marketing year.
Other bearish factors included a Russian consultant SovEcon raising its Ukrainian corn crop estimate by 1.5 MMT to a record 39.9 MMT, as the country continues to report strong yields. USDA projects Ukraine’s corn crop at 38 MMT. China recently booked Ukrainian corn, according to export sources.
Late yesterday, USDA reported the U.S. corn crop was 91% harvested as of Nov. 14, up from 84% a week earlier and above the 86% average for that date for the previous five years. Harvest progress matched trade expectations.
Technical analysis: Bulls have a near-term advantage with a five-week uptrend on the daily bar chart still intact, but December futures have yet to push above the Nov. 2 intraday high at $5.86 or trendline resistance drawn from the early-May high. The absence of a stronger response to export news today may have encouraged selling. Bulls would likely try to challenge the $6.00 level if the market could break through trendline resistance.
In March futures, upside objectives for bulls includes closing above resistance at the November high of $5.93 1/2. Support is seen at 10-, 20- and 40-day moving averages at $5.64, $5.59 and $5.45, respectively. A drop below those levels would have bears targeting the short-term uptrend line near $5.17.
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 soybean futures fell 6 cents to $12.51 1/4, after reaching a three-week high earlier today. December soybean meal dropped $4.20 to $367.50 per ton, while December soybean oil gained 97 points to 59.17 cents per pound.
Fundamental analysis: Soybean futures fell under modest profit-taking following the past week’s gains, though declines were limited by fresh export business and winding down of harvest pressure. Early today, USDA reported a daily soybean sale of 161,000 MT for delivery to “unknown destinations” for the 2021-22 marketing year. Today’s sale announcement followed a daily sale yesterday of 264,000 MT, also for unknown destinations. Soymeal futures fell after three straight days of gains, pressured by unwinding of spreads against soyoil.
The outlook for South America’s soybean crop remained favorable. Well-timed rainfall is expected in both Brazil and Argentina over the next 10 days, World Weather Inc. said. “Sufficient rain will support ongoing field progress, including the planting of summer crops and the advancement of early planted grain and oilseeds,” the forecaster said.
Late yesterday, USDA said the U.S. soybean crop was 92% harvested as of Nov. 14, up from 87% a week earlier and just under the five-year average of 93%. Harvest progress matched trade expectations.
Technical analysis: Market bears still have a near-term technical advantage, but a five-month-old downtrend on the daily chart has stalled. January soybeans rose as high as $12.61 1/2 but encountered resistance near a downtrend line drawn from the June 7 high. The lead contract yesterday rose above the 50-day moving average, currently $12.54 3/4, for the first time since August. A push above the October high at $12.73 3/4 could spark additional buying interest. Other chart levels to watch include the 200-day moving average at $12.96 1/2.
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.
Price action: March SRW wheat futures fell 16 3/4 cents to $8.20, near the session low. March HRW wheat fell 15 3/4 cents to $8.22 3/4. March spring wheat fell 13 1/4 cents to $10.17.
Fundamental analysis: Winter wheat futures fell in a corrective profit-taking pullback following multi-year highs posted yesterday, along with pressure from the surging U.S. dollar. The tighter global supply outlook and dryness in the U.S. Plains continued to underpin the market. Late yesterday, USDA’s crop condition ratings indicated slight improvement in winter wheat acreage. As of Nov. 14, the crop was rated 46% “good” or “excellent” condition, up from 45% a week earlier.
Weather conditions in major global wheat growers, including Australia, China and India, appears generally favorable for crop development. Winter wheat in Russia and Ukraine wheat are dormant or semi-dormant and there is need for spring moisture in parts of those production regions. Brazil and Argentina weather has also been generally favorable in the wheat-growing regions there. In the U.S., winter wheat is not well established in parts of the unirrigated crop in Oregon, Montana or from western Texas to southeastern Colorado, said World Weather Inc.
HRW bulls’ next upside price objective is closing December futures above solid resistance at $8.65. Bears' next downside objective is closing December below solid support at last week’s low of $7.74. First resistance is seen at the contract high of $8.43 1/2 and then at $8.50. First support is seen at today’s low of $8.18 3/4 and then at $8.10.
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.
Price action: December cotton futures rose 36 points to 117.98 cents and March futures rose 49 points to 115.13 cents.
Fundamental analysis: Cotton futures managed to sustain a firm tone despite a sell-off in grain futures and the U.S. dollar index rallying to a 16-month high. Cotton also likely saw some buying interest as October U.S. retail sales came in higher than expected, at up 1.7% from September, compared to expectations of up 1.5%. Sales rose 0.7% in September from August.
Recent weaker U.S. exports and an accelerating U.S. harvest limited futures upside. USDA late yesterday reported 65% of the U.S. cotton crop was harvested as of Nov. 14, compared to 68% a year ago at this time and 64% for the five-year average.
Good harvest weather is expected in West Texas over the next 10 days. Crops in the U.S. Delta will continue to deal with some periodic precipitation keeping fiber quality lower than hoped for. Southeastern U.S. cotton harvest progress should advance better in the next ten days due to less frequent and less significant rain. California and Arizona harvesting should advance well along with northern Mexico.
Technical analysis: The cotton bulls still have the strong overall near-term technical advantage, with few signs suggesting a market top is close at hand. The next upside price objective for the cotton bulls is to close in March futures above solid resistance at 120.00 cents. The next downside price objective for bears is closing prices below solid support at 110.00 cents. First resistance is seen at this week’s high of 115.63 cents and then at the contract high of 116.73 cents. First support is seen at this week’s low of 113.61 cents and then at 112.50 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.
