Crops Analysis | November 23, 2022
Corn
Price action: March corn futures rose 7 cents to $6.66 1/4, back above the 10-day moving average at $6.64 1/2 after making a low just below the 100-day moving average at $6.58 1/2.
Fundamental analysis: Corn futures ended slightly higher in light volume ahead of the Thanksgiving holiday. A weaker U.S. dollar supported grain prices, muting the impact of weakness in crude oil and concern over increasing Covid cases in China. Further support stemmed from reports Mexico may allow exceptions to the country’s U.S. corn import ban, easing restrictions on genetically modified yellow corn for livestock feed use. That followed a recent announcement from Mexico of an immediate ban on genetically engineered corn. A potential U.S. railroad strike in early December remains a risk after some unions voted down a deal the White House brokered in September. Of note is a comment made by the Brotherhood of Railroad Signalmen (BRS) president that no progress whatsoever has been made in negotiations with railroads since the union rejected the tentative labor agreement Oct. 26.
U.S. ethanol production averaged 1.041 million barrels per day (bpd) during the week ended Nov. 18, up 30,000 bpd from the previous week. Ethanol stocks rose to 22.8 million barrels from 21.3 million barrels the previous week.
USDA’s weekly export sales report will be delayed until Friday due to Thanksgiving. Traders expect net U.S. corn sales for the week ended Nov. 17 between 1.7 to 2.5 MMT, compared to 1.17 MMT the previous week.
Technical analysis: March corn traded a 7 1/2-cent range, marking a low just below the 100-day moving average near $6.58 1/2, a technically significant level that will continue to act as support. However, a breach of the level would find further support at $6.56 1/2, along with $6.53 3/4, and $6.48 3/4. The session high was made slightly above the 10-day moving average near $6.64 1/2, a level that will continue to serve as resistance in addition to $6.69 1/2, and $6.72.
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 rose 6 1/4 cents to $14.36, after falling as low as $14.22 1/4 earlier in the session. January soymeal rose $2.40 to $407.40. January soyoil rose 76 points to 72.20 cents.
Fundamental analysis: Soybeans rebounded from overnight weakness and ended higher behind signs of continuing strong export demand and increasing concern persistent dryness in Argentina could crimp yield potential. Early today, USDA reported a daily sale of 110,000 MT of soybeans for delivery to China during the 2022-23 marketing year. It marked China’s first USDA-announced soybean purchase since Nov. 9 and followed strong recent export readings underscoring U.S. farmers’ still-favorable position on the global market before fresh South American supplies become available later this year. A week ago, USDA reported net weekly U.S. soybean sales totaling 3.03 MMT for the week ended Nov. 10, the largest one-week figure excluding marketing year rollovers since September 2020. On Friday, USDA is expected to report net weekly soybean sales of 500,000 MT to 1.70 MMT, based on the Reuters survey.
In Argentina, much-needed rain fell in some crop areas the past week, World Weather Inc. said. “However, many central parts of the nation were missed by the greatest rainfall for the second week in a row, leaving soil conditions much too dry for crops. Hotter temperatures and limited rainfall in this coming week will likely translate into more serious crop stress and greater concern about the long-term outlook in those areas.”
Technical analysis: Soybean futures retain a mostly neutral near-term technical posture with the January contract settling around the middle of this month’s trading range. The lead contract overnight dropped under the 20-day moving average at $14.35 but held above 50-day moving average support at $14.19 3/4. Further support lies at the 40- and 100-day moving averages, which converge at $14.13 to $14.13 3/4. Initial resistance comes in at this week’s high of $14.43 1/2 and the 200-day moving average at $14.48 1/2, followed by this month’s high of $14.69.
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 recovered from overnight declines to end firmer following two-sided pre-holiday trading. Bulls were encouraged by strong losses in the U.S. dollar index, partially offset by plunging crude oil futures. Reports that U.S. buyers imported European wheat due to high U.S. prices and favorable ocean shipping rates were cited as an early source of pressure.
Little relief from dryness is expected in the west-central U.S. high Plains, but rain is expected late this week and into the weekend from the Texas Panhandle through Oklahoma and northern Texas resulting in improved crop development potential for wheat in those areas, World Weather said. Winter crops in the northwestern U.S. are dormant and will likely remain that way for a while, despite some warming. Limited new crop development is also expected in the central U.S. Plains.
USDA’s weekly export sales report is expected to show net U.S. wheat sales at 250,000 to 600,000 MT, compared to 290,300 MT reported last week.
Technical analysis: Winter wheat bears have a firm near-term technical advantage, with prices in six-week downtrends on daily bar charts. SRW bulls' next upside objective is closing March futures above solid resistance at $9.00. Bears' next downside objective is closing prices below solid support at the August low of $7.60 1/4. First resistance is seen at this week’s high of $8.27 and then at $8.40. First support is seen at $8.00 and then at $7.85.
HRW bulls' next upside objective is closing March futures above solid resistance at $10.00. Bears' next downside objective is closing prices below solid technical support at $9.00. First resistance is seen at this week’s high of $9.31 1/4 and then at $9.40. First support is seen at $9.00 and then at $8.85.
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: March cotton rose 48 points to 82.90 cents, near the session high.
Fundamental analysis: Tepid short covering supported cotton futures following Tuesday’s drop to a three-week low, with weakness in the U.S. dollar adding support. The market still faces bearish headwinds, with crude oil dropping sharply today and Covid cases spiking in China, fueling fears of a slowdown in demand. Traders will study USDA’s weekly export sales report Friday morning to gauge demand, particularly from China.
Technical analysis: Cotton futures bears hold a near-term technical advantage. The next upside price objective for bulls is to close March futures above resistance at the November high of 89.92 cents. The next downside objective for bears is to close prices below solid support at the October low of 70.10 cents. First resistance is seen at this week’s high of 83.47 cents and then at 85.00 cents. First support is seen at today’s low of 80.33 cents and then at this week’s low of 79.30 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.
