Crops Analysis | October 3, 2022
Price action: December corn rose 3 1/4 cents to $6.80 3/4, the contract's highest close since Sept. 22.
Fundamental analysis: Corn climbed overnight on followthrough buying spurred by Friday’s lower-than-expected USDA stocks data but trimmed gains later in the day as wheat markets faded from initial strength. Surging crude oil futures provided support as traders anticipate OPEC+ may announce production cuts of up to a million barrels per day this week. Persisting tensions between Russia and Ukraine continue to add uncertainty over grain supplies as well as the threat of the use of nuclear weapons.
Lighter than usual precipitation during the next 10 days to two weeks is expected in the U.S. central and eastern Midwest, Delta, and southeastern states, which should speed harvest. Areas in the central and southwestern Plains will receive some rain in the second half of this week and into the weekend, which will aid in winter wheat plantings, emergence, and establishment, although amounts will not be great enough to eliminate long term moisture deficits.
Also today, USDA reported 661,658 MT (26.0 million bu.) of corn inspected for export during the week ended Sept. 29, up from 549,608 MT the previous week. Trade expectations ranged from 400,000 to 700,000 MT. USDA updates weekly harvest progress later today. According to a Reuters poll, corn harvest is expected to be 22% complete at the start of this week, up from 12 a week earlier%
Technical analysis: December corn finished mid-range, just above the 20-day moving average at $6.78 3/4 as well as the 10-day at $6.77 1/2. The 100-day moving average at $6.62 3/4 marks support, along with $6.65 3/4 and $6.54. Resistance was untested and stands at $6.92 3/4, $7.08 and $7.19. Psychological resistance will stand at $7.00 in the event of an enhanced bull run.
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 9 1/4 cents to $13.74, after dropping earlier to an eight-week intraday low of $13.61 /4. December soymeal rose $2.30 to $405.30 after tumbling to a six-week low earlier, and December soyoil rose 178 points to 63.34 cents.
Fundamental analysis: Soybeans rose in a corrective rebound from sharp losses Friday, with over a $4 rally in crude oil futures providing support for the soy complex. November soybeans dropped to a two-month closing low Friday after USDA reported a higher-than-expected quarterly stocks figure Friday, but the market saw little followthrough selling pressure today as focus shifted to outside markets. Also, USDA earlier today reported daily soybean sales totaling 110,000 MT to “unknown destinations” for 2022-23. That market the first U.S. soybean sale to unknown destinations since Sept. 1.
USDA also reported 575,200 MT (21.1 million bu.) of soybeans inspected for export during the week ended Sept. 29, up from 291,413 MT the previous week. Trade expectations ranged from 250,000 to 700,000 MT. Traders await USDA’s monthly oilseed crushing and weekly harvest progress updates later today. USDA last week reported the U.S. soybean harvest at 8% complete as of Sept. 15, up from 3% a week earlier but behind the 13% average for the past five years. Traders expect USDA to report August soybean crush totaled 175.6 million bu., based on a Bloomberg survey, which would be down 5.7 million bu. (3.1%) from July but up 7.3 million bu. (4.3%) versus last year.
Technical analysis: Soybean technicals retain a neutral to bearish near-term bias after last Friday’s chart breakdown that send November futures sharply under an uptrend line that held since late July. The lack of followthrough downside today suggests that selling interest may be limited amid uncertainty in outside markets. Key downside levels beyond November soybeans’ $13.61 1/4 lower today include the August intraday low at $13.56, followed by a gap in the daily bar chart created July 26 between $13.49 1/4 and $13.58 1/4. A push under those support levels would have bears targeting the $13.00 mark. Upside chart levels to watch include the $14.00 area and the 10-day moving average at $14.20.
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: Wheat futures fell under mild corrective selling and profit-taking after bullish USDA crop data sent prices near three-month highs Friday. Early today, USDA reported 667,577 MT of U.S. wheat inspected for export during the week ended Sept. 29, just above trade expectations and up from 589,207 MT reported the previous week. Still, the overall pace of U.S. wheat sales remains sluggish from a recent historical perspective. Shipments are running 2.7% behind year-ago, compared with 4.4% behind year-ago last week. USDA later today is expected to report 44% of the U.S. winter wheat crop planted as of Sunday, compared to 31% last week and 46% planted last year at this time.
Technical analysis: Six-week uptrends are in place for winter wheat and bulls hold a near-term technical advantage. SRW 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 $8.50. First resistance is seen at today’s high of $9.38 3/4 and then the September high of $9.45 3/4. First support is seen at $9.00 and then at $8.85.
HRW bulls' next upside price objective is closing December prices above solid resistance at $10.50. Bears' next downside objective is closing prices below solid technical support at $9.00. First resistance is seen at the September high of $10.10 3/4 and then at $10.25. First support is seen at today’s low of $9.81 1/4 and then at Friday’s low of $9.63 1/2.
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 114 points to 84.20 cents, the contract’s lowest closing price since July 14.
Fundamental analysis: Cotton extended losses despite supportive outside markets, as the U.S. dollar pulled back from a recent rally and crude oil futures climbed on expectations for production cuts. Cotton harvest continues to accelerate. However, too much rain in the Carolinas and Virginia during the weekend from Hurricane Ian has likely stalled progress. World Weather noted reduced fiber quality could result from the storm in addition to prospects of crop loss due to cotton fiber being strung out of the bolls to the ground. The forecaster said production loss should be low, but some is expected. However, fiber quality remains the largest issue. Dry weather in the U.S. Delta and southeastern states in the next week to 10 days will help crop conditions recently burdened by too much rain, with expected rains in West Texas providing a boost for late season boll development.
Technical analysis: December cotton traded a 348-point range, testing support at 83.98, with next support at 82.61, just out of reach for bears. The July 15 low at 82.54 will remain a target for the bear camp as well. A break below the level will be met with further support at 81.63. Bulls lacked momentum to test resistance levels which remain at 86.33, 87.31 as well as 88.68. The 10-day moving average, currently at 89.90 will remain a level of significance as well in an attempt to the upside.
What to do: Get current with advised 2022-crop sales and hedges.
Hedgers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production. You should also have 30% of 2022-crop hedged in December futures at 99.58 cents.
Cash-only marketers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production.
