Crops Analysis | October 31, 2022
Corn
Price action: December corn rose 10 3/4 cents to $6.91 1/2, to its highest closing price since Oct. 13.
Fundamental analysis: Corn gapped higher at the start of overnight trading in step with winter wheat after Russia suspended participation in the Ukraine export agreement, exacerbating concern over tight global grain supplies. However, prices faded overnight highs following reports discussions over the deal were still going on between Russia and Turkey. Since July, the agreement has resulted in more than 9 MMT in 397 ships safely leaving Ukrainian ports and helped lower global food prices, which have fallen by about 15% from a March peak, according to Reuters.
World Weather notes that U.S. weather should stay mostly favorable for harvest progress, with the biggest concern being a pattern of poor rainfall that’s keeping river levels low, limiting barge traffic. However, the forecaster predicts a round of widespread precipitation Thursday evening into Sunday that will produce improvements in soil moisture, increasing runoff.
USDA earlier today reported corn inspected for export at 422,288 MT for the week ended Oct. 27, down from 472,594 MT the previous week and around the mid-range of expectations between 225,000-650,000 MT. U.S. exports continue to lag far behind 2021-22 levels, with inspections running 23.4% behind a year ago, down from last week’s pace of 21.6% behind. USDA will update weekly harvest progress later today. Based on a Reuters poll, the corn crop was 75% complete through Sunday, up from 61% a week earlier.
Technical analysis: December futures gapped 15 3/4 cents higher in the overnight session, reaching a high of $7.00. A technically positive day, resistance was tested and held at $6.84 1/4, as well as $6.87 3/4, with the session close falling short of next resistance at $6.91 3/4. $7.00 remains strong psychological resistance. Support levels went untested and now stand at former resistance near $6.87 3/4, along with the 20-day moving average near $6.85 3/4, 10-day around $6.83 1/4, as well as the 40-day at $6.82 1/4.
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 rose 19 1/4 cents to $14.19 1/2, the contract’s highest close since Sept. 29. December soymeal rose $2.70 to $428.10, the highest close since Sept. 22. December soyoil gained 142 points to 73.21 cents.
Fundamental analysis: Soybeans ended at the highest level in over a month as the soy complex joined a rally in wheat amid escalating concern over global grain and oilseed supplies. Recent strong exports also supported soybeans. USDA earlier today reported 2.574 MT (94.6 million bu.) of soybeans inspected for export during the week ended Oct. 27, down from 2.919 MMT the previous week and at the high end of trade expectations ranging from 1.2 to 2.65 MMT. Inspections so far in 2022-23 are running 9.5% behind a year ago, compared to 11.7% behind last week. Traders will continue to watch to see if a recent uptick in China soybean purchases is sustained after the country stepped up buying in September and October.
Harvest pressure is abating with most of the U.S. crop out of the fields, even though Midwest rainfall slowed progress last week. USDA later today is expected to report harvest at 89% complete as of Sunday, up from 80% a week earlier, based on a Reuters survey. Traders will also continue to monitor weather in South America. Freezing or near-freezing temperatures were expected in parts of Argentina today and Tuesday, with readings dropping to 27 to 39 degrees Fahrenheit across central and southern areas, World Weather Inc. said. The forecaster is not anticipating a large among of permanent damage, “but some cannot be ruled out,” World Weather said.
Technical analysis: Near-term technicals for the soy complex took a bullish turn with today’s strong close, as January soybeans closed around the top of the past month’s trading range and settled above the 40-day moving average, currently $14.13 1/4, for the first time since Sept. 22. January soybeans also closed slightly above the 50-day moving average of 14.18 3/4, but just under the 100-day moving average at $14.21 1/2. Followthrough gains Tuesday could confirm an upside breakout that may have bulls targeting key upside levels including $14.50, $15.00 and the September high at $15.12 1/4. Initial support comes in at the 10- and 20-day moving averages of $13.94 3/4 and $13.92, respectively, followed by last week’s low at $13.75 1/2.
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 rose 53 cents to $8.82 1/4 and December HRW wheat gained 53 3/4 cents to $9.78 3/4, both the highest settlements since Oct. 13. December spring wheat rose 36 1/4 cents to $9.81 1/4.
Fundamental analysis: Wheat futures soared after Russia’s weekend announcement it was withdrawing from an agreement enabling grain exports from Ukraine’s Black Sea ports. Prices had little reaction to reports France is working on land route for Ukrainian crops to be shipped out of the country, land routes would carry relatively limited volumes compared to waterborne shipments. Turkey was reportedly siding with the United Nations on an extension of the agreement, which may put pressure on Russia to reconsider its suspension of the deal. The situation will remain fluid in the near term and markets are likely to remain volatile.
USDA reported wheat export inspections totaling 137,082 MT for the week ended Oct. 27, up from 133,319 MT a week earlier. Shipments are running 0.2% behind a year-ago, compared with 0.5% behind a year-ago last week. USDA later today is expected to report the U.S. winter wheat crop at 88% planted as of Sunday, up from 79% a week earlier. USDA’s initial national ratings for the crop are expected to be around 41% good-to-excellent, near a record low of 40% posted in 2012.
Technical analysis: Winter wheat bulls and bears are back on a level near-term playing field, but bulls gained momentum with today’s big gains. Fledgling downtrends on daily bar charts were negated for December SRW and HRW futures. SRW bulls' next upside objective is closing December prices above solid resistance at the October high of $9.49 3/4. Bears' next downside objective is closing prices below solid support at the October low of $8.22 1/2. First resistance is seen at today’s high of $8.93 1/4 and then at $9.00. First support is seen at today’s low of $8.53 3/4 and then at $8.40 1/4.
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 $9.82 1/2, then $10.00. First support is seen at today’s low of $9.50, then $9.34 1/2.
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 fell 11 points to 72 cents, the lowest close for a nearby contract since December 2020, based on continuation charts.
Fundamental analysis: Cotton fell to a 22-month low as the U.S. dollar strengthened for the third consecutive session and crude oil futures fell. Global recession fears continue to burden prices, driven in part by weaker-than-expected Chinese economic data that underscored the impact of strict COVID shutdowns. With harvest progress winding down in the U.S., traders will closely monitor production updates from the USDA on Nov. 9, along with export activity out of China.
World Weather cites harvest delays in the U.S. Delta over the weekend, with the moisture inducing no harm to cotton fiber quality especially with drier weather coming ahead this week. The forecaster predicts a few showers in the southeastern U.S. this week and a few may impact West Texas cotton areas this weekend into early next week, causing little impact aside from delays to fieldwork.
Technical analysis: December cotton traded a 301-point range, testing support at 71.02, but gathering strength above the level into the close. Additional support stands at 69.94 along with 67.76. Resistance remained untested today as bears continue to hold a near-term technical advantage. Attempts to the upside will encounter resistance near 74.28, as well as 76.46 and 77.54.
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.
