Crops Analysis | October 27, 2022
Corn
Price action: December corn fell 2 3/4 cents to $6.82 1/4, on the lower half of today’s range.
Fundamental analysis: Corn futures faded after trading sideways to firmer overnight as disappointing export numbers underscored a weak demand performance so far in the 2022-23 marketing year. A rebound in the U.S. dollar also encouraged selling. USDA reported net U.S. corn sales of 264,000 MT during the week ended Oct. 20, down from 408,300 MT the previous week and below trade expectations ranging from 350,000 MT to 1.0 MMT. Export commitments are 52.7% behind a year-ago compared to 52.1% behind last week. Uncertainty over a possible extension of a deal allowing Ukraine grain exports from Black Sea ports continued to underpin prices. Russian officials continued to convey resistance to an extension to the deal, which expires Nov. 19, according to Reuters. Foreign Ministry Spokeswoman Maria Zakharova said today the West had not taken sufficient steps to ease sanctions on Russia's logistics, payments and insurance industries to facilitate Russia's exports, Reuters reported.
Low levels on the Mississippi River and other major U.S. waterborne grain transport routes remain concerning. Rains this week have led to a short-term rise for the Mississippi and lower Missouri, but the increase won’t be big enough to meaningfully improve barge traffic, World Weather said. Additional rain in the Delta and Tennessee River Basin this weekend will have similar impact.
Technical analysis: Corn’s near-term technicals remained largely neutral, thought the December contract posted an intraday high of $6.89 1/4 and closed slightly above the 40-day moving average of $6.81. Downside attempts will be met with continued support around today’s low of $6.82 1/4, followed by $6.76. Initial resistance lies at the 10-day moving average of $6.83 1/2, followed by the 20-day moving average at $6.85, with additional resistance at $6.88 3/4, $6.92 1/2 and $6.95 1/4. Strong psychological resistance continues to stand 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 rose 1/2 cent to $13.82 1/4, while January futures rose 1/2 cent to $13.93 1/2. December soymeal gained $6.70 to $415.40, while December soyoil fell 112 points to 72.30 cents.
Fundamental analysis: Soybeans ended with modest gains following two-sided trading, with support stemming from strength in soymeal, easing harvest pressure and strong demand. Weekly export sales fell sharply from the previous week’s exceptionally strong number, but demand from foreign buyers continues to exceed last year’s pace. Early today, net weekly soybean sales totaled 1.026 MMT, down from 2.336 MMT the previous week and at the low end of trade expectations ranging from 800,000 MT to 1.6 MMT. China led buyers at 1.116 MMT and there were net sales reductions of 487,000 MT for unknown destinations. Export commitments so far in 20222-23 are running 4.7% ahead of a year-ago, versus 5% ahead last week.
Price upside in soybeans likely will be limited over the longer-term by mostly favorable early season crop conditions in Brazil, though parts of Argentina remain dry. Rain through Tuesday will improve planting conditions across the driest areas in northern Brazil, with central and southern Brazil and Paraguay also expected to receive rain, World Weather said today. Planting will probably be temporarily delayed before drier weather Nov. 2-10 allows summer crop seeding to quickly increase, the forecaster said.
Technical analysis: Soybean futures’ near-term technical posture remains largely neutral, as the November contract settled around the middle of this month’s trading range of $13.50 to $14.14. Prices have potential to move higher if November futures can break above resistance around $13.97, which coincides with a trendline drawn from a three-month high of $15.08 3/4 posted Sept. 13. A push above $13.97 and/or the $14.00 level, could compel bulls to target the 40-day moving average at $14.05 1/4 and the October high at $14.14. Initial support comes in at this week’s low of $13.66, followed by last week’s low of $13.57 and the October low of $13.50.
December soyoil faded after posting a four-month intraday high at 73.97 cents earlier today, but the market remains in a steep uptrend since late September. Bulls are likely targeting the contract high of 79.28 cents, posted June 8.
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.
Advice: 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.
Price action: December SRW wheat fell 2 cents to $8.38 1/2 and December HRW wheat fell 8 1/2 cents to $9.32 1/4, both near the session lows. December spring wheat fell 1 1/2 cents to $9.50 1/2.
Fundamental analysis: Wheat futures faded from initial strength tied to stronger than expected export numbers and ongoing concern over global grain supplies. USDA reported net weekly U.S. wheat sales of 533,200 MT, up sharply from 163,100 MT the previous week and the second-largest weekly figure of the 2022-23 marketing year. Trade expectations ranged from 100,000 to 450,000 MT. However, the overall export pace remains soft in part because the U.S. is uncompetitively priced on the global market. U.S. export commitments so farm in 2022-23 are running 10.5% below year-ago levels. A rebound in the U.S. dollar index from five-week lows today also muted buying interest.
Weather in U.S. wheat regions is mostly neutral for the markets. World Weather said a weather disturbance today into Friday will bring another round of rain to far southern parts of the Plains, such as central and southern Oklahoma and the southern portion of the Texas Panhandle. The expected rain “will be… beneficial for further improvement of field conditions for winter wheat germination and establishment,” the forecaster said. However, “the need for greater moisture continues” for wheat areas to the north. A larger storm system is expected in the region Nov. 3-5, potentially bringing greater coverage of meaningful precipitation.
Technical analysis: Winter wheat bears hold a near-term technical advantage with prices are in fledgling downtrends on the daily bar charts. 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 today’s high of $8.58, then $8.63. First support is seen at this week’s low of $8.24, then $8.15.
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 $9.55 3/4, then last week’s high of $9.69 1/4. First support is seen at this week’s low of $9.23, then at $9.10.
What to do: Wait on an extended price rally to increase cash sales.
Hedgers: NEW ADVICE: 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 fell 271 points to 75.11 cents, the lowest settlement for a nearby contract since December 2020, based on continuation charts.
Fundamental analysis: Cotton futures extended a steep slide propelled by a rebound in the U.S. dollar and concern over demand from top global buyers such as China. Weak export numbers reinforced those concerns. USDA reported net weekly U.S. cotton sales of 68,400 running bales (RB) for 2022-23, down from 84,500 RB the previous week. Top buyers included Pakistan (53,200 RB), Vietnam (36,200 RB) and Taiwan (14,500 RB). Exports of 177,600 RB were primarily to China (85,000 RB), Mexico (21,200 RB) and Pakistan (19,100 RB). Export commitments so far in 2022-23 are running 0.1% ahead of year-ago levels, compared to 4.5% ahead the previous week. USDA forecasts total 2022-23 cotton exports will fall 14.5% from a year ago to 12.5 million bales.
World Weather said it expects rain to fall infrequently in West Texas cotton country the next 10 days, which may slow crop maturation and raise concern over fiber quality. Both the U.S. Delta and the Southeast will also see a little rain periodically, but no damage to cotton fiber is expected in any of these areas. The Delta will be wettest this weekend and the Texas Rolling Plains will get significant rain later today and Friday.
Technical analysis: Cotton bears hold a strong near-term technical advantage, with prices are in a two-month downtrend on the daily bar chart. The next upside objective for bulls is to close December futures above resistance at 82.50 cents. The next downside objective for bears is to close prices below solid support at 70.00 cents. First resistance is seen at today’s high of 78.10 cents, then 80.00 cents. First support is seen at 74.00 cents, then 73.00 cents.
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.
