Crops Analysis | November 17, 2022
Corn
Price action: December corn rose 2 1/4 cents to $6.67 1/2 after falling as low as $6.54 3/4 earlier in the session.
Fundamental analysis: Corn futures rebounded from early declines as strong export numbers encouraged buyers and offset bearish outside markets, including a stronger dollar and slumping crude oil. Prices fell overnight after the United Nations announced an agreement to extend a deal allowing grain shipments from Ukraine’s Black Sea ports. The deal, which was set to expire Saturday, was extended for 120 days from Nov. 18 without any changes, the UN Secretary General said. Early today, USDA reported net U.S. corn sales during the week ended Nov. 10 at 1.17 MMT, more than quadruple the 265,300 MT from the previous week and in the upper end of expectations ranging from 700,000 MT to 1.4 MMT. But the longer-term export picture for U.S. corn remains lackluster and will make it difficult to sustain price rallies. So far in the 2022-23 marketing year, U.S. export commitments are running 51.8% behind a year-ago, compared to 54.1% behind last week.
On a potentially encouraging note for market bulls, a Chinese Grains and Oils Trading research manager told delegates at the Global Grains Geneva conference this week of a policy-driven acreage shift from corn to soybeans, reflecting China’s aim to reduce reliance on imported oilseeds and lower corn yields in flood-affected areas. The shift opens opportunities for corn exporters in 2022-23, especially from Brazil, as the country’s new crop has the best import margins into China, according to the research manager.
Technical analysis: December corn traded a 13 1/2 cent range, testing support at $6.59 3/4, and marking a session low just above support at $6.54 1/2. The contract ended the session above the 10-day moving average for the first time since Nov. 2. Late session strength lifted corn to its session high of $6.68 1/4, securing a close back above the 10-day moving average at $6.65 1/2. Continued movement to the upside will be met with resistance at the session high, as well as $6.71 1/2, and $6.76 3/4. The 40-day moving average at $6.78 1/2 will also act as near-term technical resistance. Attempts lower will continue to find support at $6.59 3/4, $6.54 1/4, along with the 100-day moving average around $6.50 3/4. A breach of the 100-day would likely signal heavier selling 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 fell 12 1/4 cents to $14.17, the contract’s lowest close since Oct. 28. December soymeal fell 90 cents to $405.70. December soyoil fell 195 points to 72.13 cents, the contract’s lowest close since Oct. 28.
Fundamental analysis: Soybeans and soyoil settled near three-week lows amid weakness in global vegoil prices and slumping crude oil futures, which ended near seven-week lows. Strong crop prospects in South America and concern over slower demand amid Covid lockdowns in China also weighed on the market. Rains fell on parts of northern Brazil Wednesday, including some locally heavy amounts in central Mato Grosso while central and southern Brazil and Paraguay were mostly dry, World Weather Inc. said. “Timely and nearly widespread” rain Sunday to Wednesday will help support crop development, the forecaster said. Argentina’s outlook is drier, which could lead to stress on crops in some areas if rain fails to develop, World Weather said.
Still, nearby soybeans finished off the early lows, illustrating buying interest on price declines and strong demand fundamentals that should underpin the market over the long-term. Early today, USDA reported net weekly U.S. soybean sales of 3.03 MMT, nearly quadruple the 794,800 MT reported the previous week and well above expectations for 900,000 MT to 1.7 MMT. Sales were the largest for a single week, excluding marketing-year rollovers, since 3.195 MMT reported for the week ended Sept. 17, 2020. China led buyers at 1.542 MT, including 395,100 MT switched from “unknown destinations.”
Technical analysis: Soybeans’ technical posture took a bearish turn as January futures fell below this month’s trading range to date and closed under the 50-day moving average, currently $14.22 1/4, for the first time since Oct. 28. Bulls could take encouragement from January futures dropping briefly under the 100- and 40-day moving averages, currently $14.13 1/4 and $14.11 1/2, but bouncing back to settle above those levels. Followthrough price weakness Friday could confirm a near-term peak and have bears targeting $14.00. Further downside levels to watch include the October low at $13.62 1/4. Initial resistance comes in at the 50-day moving average, followed by the 20-day moving average at $14.27 1/2 and today’s high at $14.31 3/4.
Soyoil technicals are also turning increasingly bearish turn, as the December contract fell sharply for the second straight day and broke below an uptrend line drawn from an Oct. 28 low of 60.75 cents. Initial support is seen at the 40-day moving average of 69.88 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: Wheat futures fell as the extension of an agreement allowing grain exports from Ukraine’s Black Sea ports eased supply concerns, though prices recovered much of the initial declines. Strength in the U.S. dollar and weak export numbers also burdened prices, illustrating U.S. grain’s uncompetitive position in the global market. USDA reported net weekly U.S. wheat sales of 290,300 MT, down from 322,500 MT the previous week and at the low end of expectations. U.S. export commitments so far in 2022-23 are running 6.5% behind a year-ago, compared to 5.9% behind last week.
Persistent dryness in the U.S. Plains HRW belt remains a background concern but continues to be overshadowed by a soft export pace and outside markets. The HRW belt continues to “see the need for a widespread, generalized meaningful precipitation event, although with crops turning dormant or semi-dormant the need for moisture will be reduced for a while,” World Weather said. Very little precipitation is expected through next Tuesday. A larger weather disturbance is then likely Wednesday into next Thursday. However, much of the precipitation associated with that could be in southeastern production areas of the region again.
Technical analysis: Winter wheat bears hold a near-term technical advantage, with prices in a five-week downtrend on daily bar charts. SRW bulls' next upside objective is closing December prices 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 $8.25 and then at this week’s high of $8.43. First support is seen at today’s low of $7.93 3/4 and then at $7.80.
HRW bulls' next upside objective is closing December prices above solid technical resistance at $10.00. The bears' next downside objective is closing prices below solid technical support at $9.00. First resistance is seen at this week’s high of $9.74 3/4 and then at the November high of $9.91. First support is seen at today’s low of $9.33 and then at the November low of $9.17.
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 140 points to 87.04 cents, around the middle of today’s range.
Fundamental analysis: Cotton futures fell on poor export readings, as well as bearish outside factors, including strength in the U.S. dollar and weakness in U.S. equities and crude oil. Hawkish comments from two Federal Reserve officials weighed on markets generally amid concern further interest rate hikes will slow the economy. Early today, USDA reported net weekly U.S. cotton sales of 25,100 running bales (RB), down from 145,800 RB the previous week. Top buyers included Taiwan (5,800 RB), China (5,700 RB) and Turkey (4,800 RB). Weekly exports totaled 183,000 RB, primarily to China (88,800 RB), Pakistan (27,300 RB) and Mexico (24,400 RB).
U.S. cotton harvest weather is expected to improve for a while after recent precipitation in the Delta and Southeast, but more rain is likely next week, World Weather said. Texas harvest progress will advance well due to limited precipitation potentials.
Technical analysis: Cotton bulls and bears are on a level near-term technical playing field, with bulls still working on an uptrend on the daily bar chart. The next upside objective for bulls is to close December futures above resistance at this week’s high of 91.85 cents. The next downside objective for bears is to close prices below solid technical support at 82.50 cents. First resistance is seen at today’s high of 88.82 cents, then 90.00 cents. First support is seen at today’s low of 85.64 cents, then 85.00 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.
