Crops Analysis | November 16, 2022
Corn
Price action: December corn fell 1 1/2 cents to $6.65 1/4, nearer the session high.
Fundamental analysis: Corn fell with soybeans and wheat amid increasing confidence a deal allowing Ukrainian grain exports will be extended and easing concerns over the war escalation that boosted prices late Tuesday. Russia spoke in favor of extending the Black Sea grain deal, which expires Nov. 19, at this week’s G20 summit in Bali, as long as more grain was sent to countries in the greatest need, Finance Minister Anton Siluanov told Russian state-run RT news channel. Concerns over further escalation in the Rusiss-Ukraine war faded following reports that Tuesday’s missile strike in Poland, which killed two, appeared to be an accident and not a deliberate attack.
Fresh export demand helped lift corn off earlier lows. USDA reported a daily sale of 1.867 MMT of corn for delivery to Mexico, with 1.242 MMT for delivery in 2022-23 and the remainder for 2023-23. That was the fifth largest daily corn sale on record. Also today, U.S. ethanol production averaged 1.011 million barrels per day (bpd) during the week ended Nov. 11, down 40,000 bpd from the previous week and down 4.6% from the corresponding week a year ago. Ethanol stocks fell 894,000 barrels to 21.298 million barrels.
USDA will report weekly export sales Thursday morning for week ended Nov. 10, with pre-report expectations for corn between 700,000 MT to 1.4 MT, compared to 265,335 MT the previous week.
Technical analysis: December corn traded an 8 1/2-cent range, marking a session high just below the 10-day moving average at $6.66 1/2, which stands as near-term resistance, along with the 20-day moving average near $6.76 ½, and the 40-day moving average around $6.79. Downside efforts, however, will encounter support first at $6.53 1/2, with strong technical support standing at the 100-day moving average at $6.50 1/2. A break below the 100-day will likely signal heavier selling efforts towards $6.25.
What to do: Get current with advised sales. Wait to make additional 2022-crop sales.
Hedgers: You should have 50% of 2022-crop sold in the cash market.
Cash-only marketers: You should have 50% of 2022-crop sold.
Price action: January soybeans plunged 28 cents to $14.29 1/4, the contract’s lowest close since Nov. 10. December soymeal fell $3.30 to $406.60. December soyoil fell 290 points to 74.08 cents, the lowest close since Nov. 1.
Fundamental analysis: Soybean futures tumbled on pressure from weakness in crude oil and a sharp, profit-taking drop in soyoil. Pressure also stemmed from mostly favorable growing conditions in South America, which has bolstered expectations for a record crop. Rains reached key crop areas of Brazil early this week and more is expected, with the largest amounts expected in northeastern Brazil the next two weeks, World Weather Inc. said. Timely and widespread rain Sunday through Nov. 23 is expected to keep the soil moist enough to favorably support crop development from west-central into central and southern Brazil and Paraguay. Argentina has struggled with dryness recently but is expected to have greater rain prospects compared to forecasts earlier this week, though conditions will trend drier next week and stay that way into the following weekend.
USDA’s weekly export sales report Thursday is expected to show net U.S. soybean sales for the week ended Nov. 10 at 900,000 MT to 1.7 MMT, compared to 794,800 MT the previous week.
Technical analysis: Soybeans hold a largely neutral to slightly bullish near-term posture, though today’s weak close could encourage followthrough fund selling that could push prices below a few support levels, including the 50-day moving average at $14.21 3/4 and the 40- and 100-day moving averages, which converge at $14.12 3/4 and $14.13 3/4. A drop under those levels could prompt bears to target $14.00. Initial resistance comes in at the 200-day moving average at $14.47 3/4 and this week’s high at $14.64 3/4. Key resistance is seen at this month’s high of $14.69.
Soyoil technicals took a bearish turn, as the December contract closed under the 20-day moving average, currently 74.28 cents, for the first time since Oct. 13 and may have negated a steep uptrend that started in early October. Downside levels to watch include the intraday low for November at 72.74 cents.
What to do: Get current with advised cash sales. Wait to make additional sales.
Hedgers: You should be 60% sold in the cash market on 2022-crop production.
Cash-only marketers: You should be 60% sold on 2022-crop production.
Fundamental analysis: SRW wheat futures posted a loss for the first time in four sessions as optimism over an extension of the Ukraine export deal eased concern over tight global supplies. A United Nations source today said they have reasons to be “cautiously optimistic” on the renewal of the Black Sea grains corridor initiative, which is set to roll over on Saturday, Reuters reported. Crop conditions in U.S. HRW wheat areas have improved slightly following recent precipitation, but dryness remains a problem for much of the region. Little to no precipitation for the region is expected over the week ahead, World Weather said. Temperatures in some areas in the far northwest part of the region may drop slightly below zero Friday morning, leading to some winterkill concern. However, most of the HRW region should avoid threateningly cold temperatures.
Also, today, USDA today reported a daily sale of 150,000 MT of U.S. hard red spring wheat for delivery to Iraq in 2022-23. USDA’s weekly export sales report Thursday is expected to show net U.S. wheat sales at 300,000 to 600,000 MT, compared to 322,500 MT reported last week.
Technical analysis: Winter wheat bears hold a near-term technical advantage, with prices in five-week downtrend on daily 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 this week’s high of $8.43, then $8.50. First support is seen at $8.00, then last week’s low of $7.95 1/2.
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 this week’s high of $9.74 3/4, then the November high of $9.91. First support is seen at today’s low of $9.41 1/2, then at $9.25.
What to do: Wait on an extended price rally to increase cash sales.
Hedgers: 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 30 points to 88.44 cents and near the session low after earlier rising to 91.85 cents, the highest intraday price since Sept. 27.
Fundamental analysis: Cotton futures surged to a seven-week high in early trading on technical buying driven by the market’s recent upturn before profit-taking erased gains. Weakness in the U.S. dollar and signs of stronger consumer demand also support prices early. U.S. retail sales during October rose 1.3%, stronger than the 1.0% gain expected by many economists. But buying interest faded and cotton futures tumbled as U.S. equity markets and crude oil weakened.
Traders await Thursday morning’s weekly USDA export sales report, with close attention on the quantity of the U.S. fiber purchased by China.
Technical analysis: Cotton futures bulls and bears are on a level overall near-term technical playing field. Bulls are working on a price uptrend on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in December futures above technical resistance at 95.00 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 82.50 cents. First resistance is seen at today’s high of 91.85 cents and then at 93.00 cents. First support is seen at 88.00 cents and then at 86.00 cents.
What to do: Wait on an extended corrective rebound to get current with advised 2022-crop sales.
Hedgers: You should be 70% sold in the cash market on 2022-crop production.
Cash-only marketers: You should be 70% sold on 2022-crop production.
