Crops Analysis | November 30, 2022
Corn
Price action: March corn fell 2 1/2 cents to $6.67, below the 10-day moving average and nearer the session low.
Fundamental analysis: Corn faded from overnight gains and ended lower as ongoing concern over slow export demand outweighed bullish outside markets, including the crude oil’s rally this week. Crude futures surged after China eased Covid restrictions in some parts of the country, boosting hopes the country’s economic growth will improve. Public demonstrations were reported to have increased in China today after a lull on Tuesday, as security forces were deployed in major Chinese cities.
U.S. ethanol production averaged 1.108 million barrels per day (bpd) during the week ended Nov. 25, down 23,000 bpd from the previous week and down 1.6% from the same week last year. Ethanol stocks rose 105,000 barrels to 22.934 million barrels. USDA’s weekly export sales report Thursday is expected to show net U.S. corn sales of 475,000 MT to 1.0 MMT, compared to 1.85 MMT the previous week.
Technical analysis: March futures traded an 8 1/4-cent range, dropping below the 10-day moving average near $6.67 1/2 and making a low just below support at $6.64 1/2 before rebounding modestly. The $6.64 1/2 level remains initial support. Further support is seen at the 100-day moving average at $6.60 3/4. Conversely, session highs were marked just above the 20-day moving average near $6.70 1/2, at $6.72 1/2. Rally attempts will continue to encounter resistance at the 20-day moving average, as well as at $6.73, $6.76 1/2 and the 40-day moving average at $6.81 3/4. Although corn futures have had an extended period of consolidation, a neutral to slightly bullish technical outlook remains with significant downside likely to remain limited.
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 10 cents to $14.69 1/2, the contract’s highest close since Sept. 20. January soymeal rose $9.20 to $417.70, the contract’s highest close since Nov. 1. January soyoil fell 110 points to 71.88 cents.
Fundamental analysis: Soybean futures ended at the highest levels in over two months behind a rally in soymeal, further indications of strong demand and concerns adverse South American weather may crimp yield prospects. Sharp gains in crude oil futures and weakness in the U.S. dollar also supported prices. China has appeared to step up purchases of U.S. soybeans late this month after a relative lull. Early today, USDA reported a daily sale of 136,000 MT of soybeans for delivery to China during the 2022-23 marketing year. Today’s announcement follows a Nov. 23 sale of 110,000 MT of soybeans to China.
Argentina’s weather remains concerning amid persistent dryness, World Weather Inc. said. Soil moisture “is still short in much of the country outside of some southern and a few eastern and northern areas,” the forecaster said. Rain today and Thursday “should not be great enough to prevent crop stress from returning this weekend and especially next week when temperatures are hot and the soil dries out.” Crop conditions are better in Brazil, but soil moisture is short in areas including southern Mato Grosso and northern Mato Grosso do Sul into western Goias. “Some crops may see rising levels of stress,” World Weather said.
Technical analysis: Soybean futures’ near-term technical posture took a bullish turn after the January contract closed above the previous high for the month and posted a second consecutive monthly gain. Initial resistance comes in around today’s high of $14.78, and a push above that level may prompt bulls to target $15.00 and the September high of $15.12 1/4. Longer-term upside targets include the contract high of $15.87 3/4, posted June 9. Initial support includes today’s low of $14.57 1/4 and the 200-day moving average at $14.49. January soybeans are approaching overbought levels, settling today around 61 on the Relative Strength Index, which may eventually lead to short-term corrective selloffs.
Bulls also strengthened an edge in soymeal and soyoil, with upside targets in January soymeal including the October high of $430.00 and the contract high of $437.40, posted Sept. 20.
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.
Price action: March SRW wheat rose 14 cents to $7.95 1/2 and March HRW wheat gained 12 3/4 cents to $8.99 3/4, both near session highs. March spring wheat rose 8 1/2 cents to $9.43.
Fundamental analysis: Winter wheat futures rose on short covering and bargain hunting in the wake of a drop to three-month lows earlier this week. A sharp pullback in the U.S. dollar and strength in crude oil also supported grain markets. U.S. weather leans slightly bullish for wheat, as World Weather said precipitation in the HRW belt is expected to be “quite limited” over the next week. Some showers will occur in northern areas and the greatest shower activity is expected in central and southern Oklahoma. Temperatures will be warm at times, but not for long enough to stimulate much wheat emergence or establishment.
The U.S. winter wheat crop continues to show modest improvement but USDA crop ratings remain near historic lows. Late Tuesday, USDA reported 34% of U.S. winter wheat crop in either “good” or “excellent” condition as of last Sunday, up from 32% a week earlier and just above market expectations. When USDA’s final weekly crop condition ratings of the fall are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop jumped 11.3 points to 280.3, though that was still 51.9 points below the five-year average for the end of November. The SRW crop improved 2.8 points to 360.2, which was still 14.5 points below average.
Thursday’s weekly USDA export sales report is expected to show net U.S. wheat sales of 300,000 to 625,000 MT for the 2022-23 marketing year and sales of zero to 100,000 MT in the 2023-24 marketing year.
Technical analysis: Winter wheat futures bears hold 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 $8.20 1/4. First support is seen at today’s low of $7.81 1/2 and then at this week’s low of $7.73 1/4.
HRW bulls' next upside objective is closing March futures above solid 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 this week’s high of $9.13 1/4 and then at $9.25. First support is seen at this week’s low of $8.84 1/4 and then at $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 closed up the 400-point daily limit at 84.61 cents. December and May contracts also closed limit-up.
Fundamental analysis: Cotton futures rose sharply as U.S. dollar weakness and easing concern over China spurred short covering and bargain hunting. Strength in outside markets such as crude oil, which is up over $4 so far this week, also boosted cotton futures. Protests against Covid lockdowns in China stirred worries over demand this week, but the country appears to be easing restrictions in some cities, suggesting the world’s second-largest economy and major cotton importer will see improved economic growth. Additionally, cotton futures are heading into a historically strong period. March cotton post a gain in December in 17 of the past 20 years, based on a Pro Farmer study.
Thursday’s weekly USDA export sales report will be closely scrutinized by traders. Recent U.S. cotton sales abroad have been unimpressive, including some sales cancellations from China.
Technical analysis: Cotton bears still hold a near-term technical advantage. The next upside price objective for bulls is to close in March futures above resistance at 87.50 cents. The next downside objective for bears is closing March below solid support at 75.00 cents. First resistance is seen at 85.00 cents, then 86.00 cents. First support is seen at 82.50 cents, then 81.00 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.
