Crops Analysis | October 24, 2022
Corn
Price action: December corn fell 2 3/4 cents to $6.81 1/2, around the middle of the day’s range.
Fundamental analysis: Corn futures fell amid pressure from a strong dollar, soft export demand and an accelerating U.S. harvest. USDA later today is expected to report the corn harvest at 62% complete as of Sunday, up from 45% a week earlier, based on a Reuters poll of analysts. Unusually dry conditions have sped up harvest throughout the Midwest. However, World Weather expects rain for part sof the Midwest and Delta over the next 10 days. The moisture could delay fieldwork but also replenish depleted soil moisture and produce some runoff that may raise record-low Mississippi River level, which have slowed barge movement to the Gulf of Mexico export market.
Early today, USDA reported 470,623 MT (18.5 million bu.) of corn inspected for export during the week ended Oct. 20, up from 459,696 MT the previous week. Trade expectations ranged from 300,000 to 650,000 MT.
Technical analysis: December corn traded a narrow, 9 1/4 cent range, making a high at the 10-day moving average at $6.86 1/2 and trading below the technically significant 40-day moving average at $6.80 1/2 in addition to support at $6.78 1/2. Both levels will continue to stand as support. Further attempts to the downside will encounter support at $6.73 and $6.68 1/2. The 100-day moving average at $6.55 1/2 remains strong technical support. Conversely, resistance will continue to stand at the 10-day moving average, as well as $6.88 3/4, $6.93 1/2, and $6.99. Strong psychological resistance stands 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: November soybeans fell 23 1/2 cents to $13.72, the contract’s lowest settlement since Oct. 18. December soymeal fell $9.20 to $408.70. December soyoil rose 37 points to 71.87 cents, the contract’s highest close since June 16.
Fundamental analysis: Soybean futures fell amid pressure from the expanding harvest and longer-term concerns over China and demand in the wake of Xi Jinping's confirmation over the weekend for a precedent-breaking third term as president. China has been an active buyer of U.S. soybeans in recent weeks but could soon shift to rely more on South America supplies. China imported 7.72 MMT of soybeans in September, up 840,000 MT (12.2%) from August and 550,000 MT (7.7%) more than last year. However, through the first nine months of the year, China imported 69.04 MMT, down 6.6% from the same period last year.
Earlier today, USDA reported 2.89 MT (106.1 million bu.) of soybeans inspected for export during the week ended Oct. 20, up from 1.92 MT the previous week and the largest weekly figure since November 2021. USDA’s weekly crop progress report later today is expected to show the U.S. soybean harvest 77% complete as of Sunday, up from 63% a week earlier, based on the Reuters survey. A week ago, USDA reported the soybean crop was 63% harvested as of Oct. 16, up from 44% a week earlier and ahead of the 52% average for that date the previous five years.
Technical analysis: Soybeans retain a neutral-to-slightly-bearish near-term technical posture as the November contract closed below the 10- and 20-day moving averages at $13.84 and $13.82 3/4, respectively. The market remains in a six-week downtrend, but prices over the past two weeks have shifted into more of a sideways pattern, but followthrough weakness Tuesday may prompt bears to target support at last week’s low of $13.57, followed by the low for the month at $13.50. Resistance at last week’s high of $13.98 1/2 and at the June 24 low of $13.99 1/4 is reinforced by the psychological $14.00 level. Trendline resistance comes in around $14.07.
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.
Price action: December SRW wheat fell 12 cents to $8.38 3/4. December HRW wheat dropped 10 1/4 cents to $9.38. December spring wheat futures fell 3 3/4 cents to $9.57 3/4.
Fundamental analysis: Wheat futures fell on U.S. dollar strength, weak export demand and prospects for moisture relief in the parched U.S. Plains. Some pressure was also attributed to optimism a deal to allow Ukrainian grain exports would be extended beyond next month. Ukraine said seven vessels sailed off from its ports on Sunday carrying grain bound for Asia and Europe but accused Russia of blocking the full implementation of Black Sea grain deal, Reuters reported.
Weather in U.S. wheat country has been a mixed bag recently. Better rain chances in the U.S. Plains states in the coming days are bearish for wheat futures. However, World Weather noted unusually hot and windy weather in the central U.S. over the weekend and temperatures in the 80s and 90s Fahrenheit likely led to soil moisture losses and stress to recently seeded winter wheat. But some U.S. HRW wheat areas may receive rain this week.
USDA reported a disappointing 125,582 MT of U.S. wheat inspected for export during the week ended Oct. 20, down from 233,937 MT the previous week and the lowest weekly total since 2008. USDA will update winter seeding progress after today’s close. Traders expect about 81% of the crop was seeded as of Sunday, compared to 69% last week at the same time.
Technical analysis: Winter wheat bears have near-term technical advantage. SRW bulls' next upside objective is closing December futures above solid resistance at the October high of $9.49 3/4. Bears' next downside objective is closing prices below solid support at $8.00. First resistance is seen at Friday’s high of $8.63, then last week’s high of $8.77 3/4. First support is seen at the October low of $8.32 3/4 and then at $8.25.
HRW bulls' next upside objective is closing December prices above solid resistance at $10.00. Bears' next downside objective is closing prices below solid support at $9.00. First resistance is seen at $9.60 1/2, then at last week’s high of $9.69 1/4. First support is seen at the October low of $9.29 and then at $9.20.
What to do: Get current with advised hedges. Wait on a corrective rebound to increase cash sales.
Hedgers: You have 15% of 2022-crop hedged in short December SRW futures at $7.83. 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 fell 300 points to 76.13 cents, the lowest close for a nearby contract since December 2020, based on continuation charts.
Fundamental analysis: Cotton futures were pressured by outside markets, as the U.S. dollar remains strong and crude oil futures weakened. Concern over slower demand from China also weighed on the market as Xi Jinping's confirmation over the weekend for a third term as president raised the prospect the country will continue its zero-COVID policies. Weaker-than-expected U.S. and European manufacturing data contributed to market pessimism over the economic outlook.
Some rain will fall infrequently in West Texas during the next 10 days, which may slow crop maturation and raise concern over fiber quality, World Weather said. The forecaster added that both the U.S. Delta and Southeast will also see a little rain periodically, but no damage to cotton is expected in any of these areas.
Technical analysis: December cotton traded a 467-point range, falling below and holding a close below support at 76.64. Additional support remains at 74.16 as well as 72.51. Upside attempts, however, will encounter resistance first at 80.77, then at 82.42, and again at 84.90. Bears continue to solidly own the near-term technical advantage.
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.
