Crops Analysis | November 29, 2022
Corn
Price action: March corn futures fell 1 3/4 cents to $6.69 1/2, after rising earlier to the highest level in over a week.
Fundamental analysis: Corn futures faded from earlier gains amid weakness in wheat prices, strength in the U.S. dollar and sluggish exports. Hopes that China will ease Covid lockdowns contributed to price strength earlier today, but the corn market continues to struggle to sustain rallies with U.S. exports lagging sharply behind year-ago levels. Increasing concern over dry weather in South America may limit price downside. Crop consultant Dr. Michael Cordonnier lowered his estimate for Argentina’s corn crop by 1 MMT, to 49 MMT, citing “problematic” weather and early growing conditions. “The dry weather and late frosts got the crop off to a rocky start,” Cordonnier said. “Some of the earliest planted corn is now starting to pollinate as the weather remains generally dry and temperatures heat up.” Cordonnier kept his estimate for Brazil’s corn crop unchanged at 125.5 MMT.
Technical analysis: The corn market’s technical posture remained mostly neutral with a slight upward near-term bias. March futures briefly pushed above last week’s high and the 20-day moving average at $6.72 1/2 but failed to generate substantial buying interest and prices faded to just above today’s low of $6.68. Initial resistance is seen at the 20-day moving average, as well as the 40- and 50-day moving averages, which converge around $6.82 1/2 to $6.82 3/4. Initial support comes in at the 100-day moving average at $6.60 1/4 and last week’s low at $6.58 1/4.
March corn pushed slightly above the 20-day moving average around $6.72 3/4 and last week’s high at $6.73 to reach $6.73 3/4, the contract’s highest intraday price since Nov. 18. Further resistance is marked by the 40-day moving average at $6.82 1/2.
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 2 1/4 cents to $14.59 1/2, the contract’s highest close since Nov. 4. January soymeal fell $4.10 to $407.60. January soyoil fell 14 points to 72.98 cents.
Fundamental analysis: Nearby soybean futures ended at the highest level in over three weeks amid demand optimism and easing concerns over Covid lockdown protests in China. Soymeal posted a corrective pullback from Monday’s gains. South American weather is also emerging as a price-supportive factor. In Argentina, widespread rain fell today and further rains are expected through Thursday, but that will bring only temporary relief from dryness before warm to hot and mostly dry weather returns Friday through early next week, World Weather Inc. said. “Soil moisture is short in much of the country outside of some southern and a few eastern and northern areas and rain this week may not be great enough to prevent crop stress from returning this weekend or early next week when the soil dries out again is increasingly concerning,” the forecaster said. In Brazil, limited rainfall in western and far southern crop areas has raised concerns, “but the bottom line for most of the nation’s crops remains generally good,” World Weather said.
Technical analysis: The soybean, meal and bean oil futures bulls all have a near-term technical advantage. Next near-term upside technical objective for the soybean bulls is closing January prices above solid resistance at the November high of $14.69. The next downside price objective for the bears is closing prices below solid technical support at $14.00. First resistance is seen at $14.69 and then at $14.85. First support is seen at $14.35 and then at this week’s low of $14.24.
The next upside price objective for the meal bulls is to produce a close in March futures above solid technical resistance at the October high of $419.10. The next downside price objective for the bears is closing prices below solid technical support at the November low of $394.50. First resistance comes in at this week’s high of $410.70 and then at $415.00. First support is seen at this week’s low of $401.40 and then at $400.00.
The next upside price objective for the bean oil bulls is closing March prices above solid technical resistance at the November high of 73.50 cents. Bean oil bears' next downside technical price objective is closing prices below solid technical support at 65.00 cents. First resistance is seen at today’s high of 72.49 cents and then at 73.50 cents. First support is seen at 70.00 cents and then at this week’s low of 68.63 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: Anticipation of improving winter wheat prospects seemed to undermine wheat futures. Problems with the USDA’s reporting system delayed the release of Monday’s Crop Progress report to this afternoon. Analysts expect the winter wheat crop’s “good” to “excellent” rating to improve one percentage point to 33%. While winter wheat conditions, particularly for HRW, are low by historical standards, the recent upward trend in condition ratings suggests the 2023 U.S. crop’s outlook may not be as dire as once feared. The recent renewal of the Ukraine grain export agreement is likely undercutting prices as well. Having wheat futures decline despite the recent dive by the U.S. dollar index seemingly confirms this point. The latest CFTC report indicating increased fund presence on the short side of the wheat markets also looks negative.
Technical analysis: Bears still own the short-term technical advantage in March SRW futures. Initial resistance at today’s high of $7.92 is backed by the psychological $8.00 level, as well as the 10-, 20- and 40-day moving averages near $8.13 1/2, $8.34 1/2 and $8.59 1/2, respectively. Monday’s low of $7.73 1/4 looks like tentative initial support. Stronger support is likely at the August low of $7.60 1/4, with further backing from the contract’s January low at $7.48 3/4.
March HRW and HRS charts look similar, with stiff resistance looming above the market and little support appearing likely just below Monday’s lows.
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 166 points to 80.61 cents, up from a four-week closing low Monday.
Fundamental analysis: Cotton futures rose in a corrective, short-covering bounce from Monday’s declines, supported by early weakness in the U.S. dollar and strength in crude oil prices. Beliefs China may loosen Covid restrictions following widespread public protests contributed to cotton’s strength, though slower Chinese demand and prospect for more export cancelations likely will limit price upside. Last week, 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.
Technical analysis: Cotton bears continue to hold a near-term technical advantage, with prices still trending down sharply from a high for the month at 91.85, posted Nov. 16. Initial support is seen at Monday’s low of 77.50 cents. A break under that level may prompt bears to target a gap created Nov. 2 on 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 to 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.
