Crops Analysis | November 18, 2021
Price action: Corn futures finished low-range with losses around 2 cents. December corn dropped 2 1/4 cents to $5.73.
Fundamental analysis: Corn futures were unable to sustain gains from overnight and early in daytime trade, largely because support from soybeans and wheat faded. As those markets turned lower, corn followed to the downside. Funds were sellers on the day, though they weren’t active on the short side.
Net U.S. corn export sales totaled 904,600 MT for the week ended Nov. 11, with Canada the leading buyer. Exports of 1.168 MMT were up sharply from the four-week average and a marketing-year high. Total corn export commitments for 2021-22 are running 6% behind year-ago, though 47% ahead of the five-year average.
Corn basis remains firm at interior locations, reflecting a pickup in exporter demand. Basis from ethanol plants is also firm as production remains high. Limited farmer sales at current price levels have exporters and processors competing for supplies to source near-term needs.
Technical analysis: December corn futures continued to consolidate following last week’s price strength. Key near-term resistance is the Nov. 2 high at $5.86, followed by the August high at $5.94 1/4 and the psychological $6.00 mark. Near-term support starts at the 10-day moving average at $5.67 and extends to last week’s low at $5.47 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 fell 11 3/4 cents to $12.65 1/4, down from yesterday’s seven-week high. January soybean meal fell $5.00 to $363.60 per ton, near the session low. January soybean oil rose 20 points to 59.18 cents.
Fundamental analysis: Soybeans and soymeal futures fell under profit-taking pressure in the wake of breakout rallies over the past week. Continued favorable growing weather in South American soybean regions is longer-term bearish factor for the soybean complex, with Brazil projected to harvest a record soybean crop in 2022.
USDA early today reported net weekly U.S. soybean sales totaling 1.383 MMT, up 13% from the previous week but down 20% from the average for the previous four weeks. Sales were at the upper end of trade expectations. China was a lead buyer at 727,500 MT. Today’s weekly export sales report follows USDA’s daily sales announcements over the previous four trading days of soybean sales totaling 814,000 MT--for China and “unknown destinations.”
Technical analysis: The soybean bears have the overall near-term technical advantage. However, a five-month downtrend on the daily chart has been negated, which suggests a market bottom is in place. The next near-term upside objective for soybean bulls is closing January futures above resistance at $13.00. The next downside price objective for bears is closing January below solid support at $12.00. First resistance is seen at this week’s high of $12.89 1/4, then at 13.00. First support is seen at yesterday’s low of $12.50 3/4, then at this week’s low of $12.38.
Soybean meal bulls have the overall near-term technical advantage, as prices have been trending up for five weeks. The next upside price objective for bulls is to produce a March futures close above solid resistance at the July high of $385.50. The next downside objective for bears is closing prices below solid support at $350.00. First resistance comes in at today’s high of $368.80, then at this week’s high of $371.90. First support is seen at $358.50, then at this week’s low of $350.60.
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 is closing March futures above solid resistance at 61.00 cents. Bears' next downside price objective is closing prices below solid support at the September low of 54.30 cents. First resistance is seen at this week’s high of 59.96 cents, then at 61.00 cents. First support is seen at the Nov. 16 low of 57.86 cents, then at the November low of 57.06 cents.
What to do: Get current with advised sales.
Hedgers: You should be 75% sold on 2021-crop in the cash market. You should also have 10% of expected 2022-crop sold for harvest delivery next year.
Cash-only marketers: You should be 60% sold on 2021-crop. You should also have 10% of expected 2022-crop sold for harvest delivery next year.
Price action: March SRW wheat fell 2 1/4 cents to $8.20 after reaching a contract high earlier today at $8.54. March HRW wheat fell 6 cents to $8.30 1/2, down from a contract high earlier at $8.53 1/4. March spring wheat futures fell 10 3/4 cents to $10.19 3/4.
Fundamental analysis: Winter wheat futures saw an early climb to multi-year highs but profit-taking developed late in trading. Prices surged earlier on signs of improved U.S. exports and ongoing concern over tightening global supplies. USDA reported net weekly U.S. wheat sales at 399,100 MMT, up 40% from the previous week and up 21% from the average for the previous four weeks. Expectations ranged from 250,000 to 500,000 MT. Wheat exports of 310,900 MT were up 15% from the previous week and up 65% from the four-week average.
More reminders of the world’s shrinking supply position emerged today. The International Grains Council (IGC) cut its forecast for 2021-22 global wheat production, partly on a diminished outlook for Iran’s crop. In its monthly update, the IGC reduced its 2021-22 world wheat crop outlook by 4 MMT, or 0.5%, to 777 MMT. Consultancy Strategie Grains reduced its outlook for 2021-22 EU soft wheat exports by 1.6 MMT, to 30.4 MMT, reflecting expectations that high prices will reduce demand.
In the U.S., there appears to be little relief ahead for dryness-stressed winter wheat in the U.S. Plains. Major HRW areas of the Southern Plains have elevated odds of above-normal temperatures and below-normal precipitation from December through February, according to the National Weather Service’s (NWS) latest 90-day outlook. Little rain is expected the next two weeks in top HRW states, World Weather Inc. said. “However, there will be some rain, including today in eastern crop areas, which will lead to some localized temporary rise in topsoil moisture,” the forecaster said.
Technical analysis: The bearish reversal lower posted today in HRW and SRW futures may lead to pressure on prices in coming days and stir talk the markets may have posted a near-term top. March SRW posted a contract high for six consecutive days, with December reaching the highest price since December 2012. But winter wheat futures remain in a steep, 2 1/2-month uptrend on the daily bar charts. SRW bulls' next upside price objective is closing March futures above solid resistance at $8.75. Support is seen at this week’s low of $8.19 1/2 and at $8.10.
In March HRW futures, bulls’ next upside objective is a close above solid resistance at $8.65. First support is seen at this week’s low of $8.18 3/4 and 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 fell 211 points to 117.59 cents per pound, while March futures fell 178 points to 115.14 cents.
Fundamental analysis: Cotton futures fell sharply after USDA’s weekly export sales report showed weaker buying from China and a general downtick in demand. Net U.S. cotton sales for the week ended Nov. 11 totaled 136,700 running bales (RB) for 2021-22, up 7% from the previous week but down 46% from the average for the previous four weeks. Top buyers included Vietnam (40,400 RB), Turkey (30,800 RB) China (13,500 RB) and Nicaragua (13,200 RB). By contrast, China bought 78,800 RB during the week ended Nov. 4. Exports of 77,900 RB were down 11% from the previous week and 24% below the prior four-week average.
Weakness in crude oil prices also burdened cotton futures. Nymex crude futures sank to a six-week low following reports China may release strategic oil reserves to ease high prices. Lower crude prices make polyester, an alternative for cotton, less expensive.
Technical analysis: Cotton market bulls retain a near-term advantage despite today’s losses, with futures still in a sharp two-month uptrend. But a push below this week’s March futures low at 113.61 cents and the 20-day moving average at 111.45 cents could spark ramped-up selling and raise the question of whether a near-term top is developing. March futures posted a contract high at 118.50 yesterday.
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.
