Crops Analysis | November 28, 2022
Corn
Price action: March corn was unchanged at $6.71 1/2, after falling earlier as low as $6.71 1/4.
Fundamental analysis: Corn gapped lower overnight as widespread protests in China over strict Covid lockdowns rattled global markets, sparking a sharp strengthening in the U.S. dollar and sending crude oil futures below $74 to an 11-month low. The protests added a new political dimension to investor concerns after months of stringent measures to curb the virus in one of the world's largest importers of raw materials just as global economic headwinds mount and recession fears grow, Reuters reported. Strength in the soy complex, led by soymeal, helped pull corn off its lows by late morning. Weak export data had little effect. USDA reported corn inspected for export during the week ended Nov. 24 at 302,350 MT (11.9 million bu.), down from 499,068 MT last week and below trade expectations ranging from 400,000 to 850,000 MT.
Also today, AgRural reported 88% of Brazil’s first crop corn was planted, slightly behind in comparison to last year’s pace of 93% for the same time period. In general, Brazil’s first corn planting, which typically comprises 25% of the country’s production in a given year, has progressed without major setbacks, but low rainfall in certain areas has some farmers “on alert.” World Weather predicts nearly widespread rain Thursday into next week will help boost soil moisture in the driest areas of western and central Brazil while the moisture will be timely in the remained of central and southern Brazil and Paraguay.
Technical analysis: March corn traded an 8 1/2 cent range and dipped below the 10-day moving average at $6.65 1/2 but managed to end the session above the level which will continue to serve as support. Attempts lower, however, will encounter support at the technically significant 100-day moving average at $6.60, as well as at $6.57 1/4. Conversely, upside efforts will see resistance at the 20-day moving average at $6.73 3/4, and again at the 40-day moving average at $6.82 3/4.
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 21 cents to $14.57 1/4, the contract’s highest close since Nov. 15. January soymeal gained $5.40 to $411.70, the contract’s highest close since Nov. 9. January soyoil jumped 141 points to 73.12 cents, the highest close since Nov. 15.
Fundamental analysis: Soybeans erased overnight weakness and rallied to near two-week highs as soymeal surged and crude oil rebounded from an overnight slide. Signs of continued strong export demand and concern persistent dryness in Argentine could hamper yield potential also added support. Earlier today, USDA reported a daily sale of 110,000 MT of soybeans for delivery to “unknown destinations” for delivery during the 2022-023 marketing year. Today’s announcement followed a sale of an identical amount of soybeans to China on Nov. 23. Also today, USDA reported soybeans inspected for export during the week ended Nov. 24 at 2.022 MMT (74.3 million bu.), down from 2.425 MMT last week and at the high end of trade expectations ranging from 1.8 to 2.25 MMT. Inspections are running 10% behind a year ago, compared to 10.5% behind last week.
Traders continued to monitor weather in South American, where Brazil’s conditions have been generally favorable for early-season crop develop but dryness has plagued Argentina. The past weekend brought hot, dry, and stressful crop conditions for Argentina, with exceptions in east-central and southeastern La Pampa to south-central Buenos Aires, which received rain, World Weather said. Some relief may be coming soon. “Hot, dry, and stressful conditions for crops will continue today in a large part of Argentina before nearly widespread and beneficial rain Tuesday into Thursday induces mostly temporary relief
Technical analysis: Soybean futures’ near-term technical posture took a bullish turn with today’s strong performance, with the January contract settling above the 200-day moving average, currently $14.48 3/4, for the first time since Nov. 15. January soybeans also closed above the 20-day moving average at $14.40 1/2. Continued strength may prompt bulls to target key upside levels including last week’s high at $14.64 3/4 and the intraday high for far this month at $14.69. Buy-stop orders would likely be triggered above the November high, potentially fueling a rally back to $15.00 or the September high of $15.12 1/2. Initial support comes in at the 50-day moving average at $14.19 1/4, followed by the 100- and 40-day moving averages at $14.15 3/4 and $14.15 1/4, respectively.
Soyoil and soymeal technicals also gained upward momentum, as January soyoil posted a bullish “outside day” higher, trading wider than Friday’s range and closing above the previous day’s high. January soymeal also posted an outside day higher but settled slightly under Friday’s high of $412.10.
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 fell for the seventh day in the last eight and settled at the lowest price in over three months on China concerns, poor export demand and bearish technicals. Several bearish outside markets contributed to selling pressure, with the dollar strengthening and crude oil slumping to the lowest levels since last December. Early today, USDA reported wheat inspected for export during the week ended Nov. 24 at 198,519 MT (7.3 million bu.), down from 291,427 MT last week and under trade expectations ranging from 200,000 to 400,000 MT. Shipments are running 3.8% behind a year-ago, compared with 2.2% behind a year-ago last week.
USDA will update weekly crop condition ratings after today’s close. The winter wheat crops good-to-excellent score is expected to improve slightly to 33% from 32% a week ago, based on a Reuters survey. Wheat rated “poor” to “very poor” a week ago totaled 32%, down from 34% a week earlier. World Weather said significant rain in southeastern HRW wheat production areas this weekend was helpful for raising topsoil moisture, but dryness continues in northwestern areas. “However, this is not much of an issue as of right now due to dormancy of crops,” the forecaster said. “Greater moisture could be useful for next year though.”
Technical analysis: Winter wheat bears have a solid near-term technical advantage, with prices in seven-week downtrends on daily bar charts. SRW bulls' next upside objective is closing March futures above solid resistance at $8.50. Bears' next downside objective is closing prices below solid support at the August low of $7.60 1/4. First resistance is seen at $8.00 and then at Friday’s high of $8.20 1/4. First support is seen at today’s low of $7.73 1/4 and then at $7.60 1/4.
HRW bulls' next upside objective is closing March futures above technical resistance at the November high of $9.87 1/2. Bears' next downside objective is closing prices below solid support at the August low of $8.11 3/4. First resistance is seen at today’s high of $9.13 1/4, then $9.25. First support is seen at today’s low of $8.88, then $8.75.
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 fell 123 points to 78.95 cents, the contract’s lowest settlement since Nov. 2
Fundamental analysis: Cotton futures resumed the recent downtrend as Covid-related protests in China stirred concern over the demand outlook for a top cotton buyer. Bearish outside markets also weighed on cotton futures, and U.S. equities and crude oil slumped and the dollar surged higher. Last Friday’s USDA weekly export sales report, which showed net cancellations from China totaling 109,000 bales, also continued to weigh on the cotton market. USDA reported net sales reductions for 2022-23 of 1.16 million running bales (RB) during the week ended Nov. 17, largely due to China’s cancelations. Both fundamentals and technicals signal further downside is likely this week.
Technical analysis: Cotton bears continue to hold a near-term technical advantage with prices down sharply from a high for the month at 91.85, posted Nov. 16. March futures fell as low as 77.50 cents today and beard may be targeting a gap created Nov. 2 in the daily bar chart between that day’s low of 75.50 cents and the Nov. 1 high of 74.64 cents. A break under that level could fuel a push the 70.10 cents, the low for the year.
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.
