Crops Analysis | November 7, 2022
Corn
Price action: December corn fell 5 1/4 cents to $6.75 3/4, the contract’s lowest close since $6.75 1/2 on Oct. 6.
Fundamental analysis: Corn fell to the lowest level in over four weeks amid sluggish demand as traders looked ahead to USDA’s monthly Crop Production and Supply & Demand updates Wednesday. Earlier today, USDA reported corn inspected for export at 231,458 MT (9.1 million bu.) for the week ended Nov. 3, down from 445,693 MT the week prior and below trade expectations ranging from 300,000 to 600,000 MT. Corn inspections so far in 2022-23 are running 27.5% behind a year-ago, compared to 23.4% behind last week.
USDA will update harvest progress as of Nov. 6 after the close, with analysts expecting 86% to be complete, according to a Rueters poll. Last week’s progress, as of Oct. 30, reported 76% of harvest was completed, up 15% from the week prior. Also today, Ukraine’s agricultural ministry said the country has exported almost 14.3 MMT of grain so far in the 2022-23 season, down 31% from the 20.6 MMT exported by the same stage of the previous season, agriculture ministry data showed. Exports since July 1 included 5.4 MMT of wheat, 7.7 MMT of corn and 1.2 MMT of barley.
USDA’s Nov. 9 Crop Production and Supply & Demand Reports are expected to feature only minor adjustments. USDA is expected to lower its estimate for U.S. corn production to 13.887 billion bu. from 13.895 billion bu., based on a Reuters survey of analysts. Ending U.S. stocks in 2022-23 are expected to be reported near 1.207 billion bu., up from 1.172 billion bu. in an October forecast.
Technical analysis: December futures traded a narrow, 5 1/4 cent range, testing support at $6.77 3/4 and ultimately finishing the session below the level. Next support stands at $6.74 3/4 as well as $6.71. Bears hold the near-term technical advantage as solid resistance stands at the 40-day moving average near $6.82 3/4, along with the 10-day near $6.84 1/4, and 20-day at $6.85 1/2. Further resistance currently stands at $6.88 ¼ and $6.91 1/2. Strong psychological resistance remains at $7.00.
What to do: Get current with advised sales. Wait to make additional 2022-crop sales.
Hedgers: You should have 50% of 2022-crop sold for harvest delivery.
Cash-only marketers: You should have 50% of 2022-crop sold for harvest delivery.
Price action: January soybeans fell 12 cents to $14.50 1/2, after earlier reaching a six-week high at $14.69. December soymeal fell $1.40 to $419.00. December soyoil fell 84 points to 76.33 cents, after earlier nearing a five-month high.
Fundamental analysis: Soybeans fell from an initial climb to six-week highs amid demand concerns after China denied it was easing its strict zero-Covid policy. China will persevere with its “dynamic-clearing” approach to Covid-19 cases as soon as they emerge, Chinese health officials said Saturday. Speculation grew last week China would relax its zero-Covid policy, after a former disease control official said Beijing would make “substantial” changes to its policy in the coming months. China scaled back its overall soybean purchases this year, raising concern over longer-term demand for U.S. beans even through recent export activity has been strong. China imported 4.14 MMT of soybeans in October, down 46% from September, don 19% from the same month in 2021 and matching the lowest for any month since October 2014. Through the first 10 months of this year, China imported 73.18 MMT of soybeans, down 7.4% from the same period last year.
Also today, USDA reported soybeans inspected for export at 2.591 MMT (95.2 million bu.) for the week ended Nov. 3, up from 2.586 MMT the previous week and slightly above trade expectations ranging from 1.5 to 2.5 MMT. USDA later today is expected to report the U.S. soybean harvest at 94% complete as of Sunday, up from 88% the previous week.
Technical analysis: Bulls retain a technical advantage in soybeans even though today’s soft close slowed upside momentum slightly. January futures remain in a sharp uptrend for over a week, and a break above Friday’s high earlier today may have bulls targeting other key upside targets, including $14.80 to $14.82, $15.00 and the September high of $15.12 1/4. January futures also held above support at the 200-day moving average at $14.44 1/4. Further downside support comes in at the 40-, 50- and 100-day moving averages, which converge at $14.16 1/2 to $14.18 1/4. December soyoil’s bullish momentum also slowed today, though the market remains in a steep uptrend for over a month and today reached 77.80 cents, near the contract high of 79.29 cents, posted June 8.
December soyoil extended recent gains, climbing near a five-month high at 77.80 cents.
What to do: Get current with advised cash sales. Wait to make additional sales.
Hedgers: You should be 60% sold for harvest delivery on 2022-crop production.
Cash-only marketers: You should be 60% sold for harvest delivery on 2022-crop production.
Fundamental analysis: Selling interest was limited in wheat as the U.S. dollar index extended a sharp drop and crude oil rallied. Export reading continued soft. USDA earlier today reported U.S. wheat inspected for export at 180,991 MT for the week ended Nov. 3, up from 137,082 MT the previous week but below trade expectations. USDA will update its weekly crop condition ratings this afternoon. The agency is expected to rate the U.S. winter wheat crop condition at 30% good to excellent. A week ago, USDA’ initial rating for the crop was at 28% in the same categories and at a record low. Winter wheat planted as of Sunday is expected at 93% compared to 87% planted last week at the same time.
Traders are looking ahead to USDA’s monthly Supply & Demand Report on Wednesday. No big changes are expected for the wheat balance sheet. Estimated global wheat supplies for 2022-23, already at a six-year low, may be trimmed further to about 266.52 MMT from 267.54 MMT.
Technical analysis: Winter wheat bears hold a near-term technical advantage. SRW bulls' next upside objective is closing December futures above solid resistance at this week’s high of $9.04. Bears' next downside objective is closing prices below solid support at $8.00. First resistance is seen at today’s high of $8.63 3/4 and then $8.75. First support is seen at today’s low of $8.34. then at the October low of $8.22 1/2.
HRW bulls' next upside objective is closing December futures above solid resistance at $10.00. Bears' next downside objective is closing prices below solid support at $9.00. First resistance is seen at today’s high of $9.71 3/4 and then at last week’s high of $9.91. First support is seen at today’s low of $9.40 1/4 and then at $9.25.
What to do: Wait on an extended price rally to increase cash sales.
Hedgers: December SRW futures hit our buy stop at $8.50 to exit the 15% 2022-crop hedge. We registered a 67-cent loss on the position. 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: December cotton rose 56 points to 87.49 cents, the contract’s highest close since Oct. 11.
Fundamental analysis: Cotton extended last week’s sharp gains despite reports China denied it was considering easing its strict zero-COVID policy as the country reported its highest number of new infections in six months. Outside markets delivered support as the U.S. dollar turned lower and crude oil futures reached a four-week high. Further support likely came from a smaller crop in Pakistan due to recent flooding, in addition to concerns surrounding possible damages from Subtropical Storm, Nicole.
The U.S. Delta and the Southeast will be dry most often through the next two weeks and harvesting should advance well with a significant exception Thursday into Saturday when Subtropical Storm Nicole brings heavy rain to many areas from the northern Florida Peninsula and southern into eastern Georgia to southern Virginia, World Weather Inc. said. Unharvested cotton will be vulnerable to quality declines from the rain with much of the cotton in the Carolinas and southern Virginia likely to be harvested before the rain arrives while a larger part of Georgia’s crop may be unharvested.
USDA, in its Crop Production update Wednesday, is expected to trim estimated U.S. production on by 190,000 bales to 13.62 running bales.
Technical analysis: December cotton traded a 340-point range, dipping below the 40-day moving average near 85.85, but was able to hold above the level at the end of the session. Further attempts to the upside will encounter resistance at 89.45, as well as 91.97, and 96.07. Conversely, a break back below the 40-day moving average will find bears realizing support at 82.83 along with the 20-day moving average near 80.22, and again at 78.73, with the 10-day moving average around 78.63 and 76.21 also serving as near-term support.
What to do: Wait on an extended corrective rebound to get current with advised 2022-crop sales.
Hedgers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production.
Cash-only marketers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production.
