Crops Analysis | October 6, 2022
Price action: December corn fell 8 1/2 cents to $6.75 1/2, the contract’s lowest close since Sept. 29.
Fundamental analysis: Corn closed at a low for the week as generally favorable Midwest weather fuels increasing harvest pressure and a dollar near 20-year highs raises concern demand for commodities may be pinched. World Weather Inc. expects a continuation of mostly dry conditions throughout the next two weeks. Rain expected Tuesday into next Thursday and more expected Oct. 15-16 but will likely cause only temporary interruptions to fieldwork. Sluggish export demand also weighed on corn. USDA today reported net U.S. corn sales totaling 227,000 MT during the week ended Sept. 29, down from 512,000 MT the previous week and under trade expectations ranging from 350,000 to 800,000 MT. Weekly exports totaled 629,800 MT.
While drier weather through much of the U.S. helps harvest progress, it’s also contributing to barge traffic problems as the middle Mississippi, lower Missouri, Ohio, and Illinois rivers are all currently below flood stage, with further declines expected next week. Barge freight has reached historical levels as reduced water levels have slowed river shipments at normal capacities, which could in turn lead to a decrease in export prospects.
Technical analysis: December corn traded a 13 3/4-cent range, holding mostly below the 20-day moving average at $6.80 1/4 and testing support at $6.77 1/4 as well as the 10-day moving average near $6.75. Continued attempts lower will find next support at $6.70 1/2, as well as at the technically significant 40-day moving average at $6.64 3/4 and 100-day moving average at $6.60 3/4. Resistance stands at $6.89, and $6.94 1/4, followed by $7.00 3/4. A close above the $7.00 level will likely find bulls aiming for further gains.
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 11 3/4 cents to $13.58, the contract’s lowest closing price since July 25. December soymeal fell $5.10 to $393.40, the lowest close since July 22. December soyoil rose 48 points to 66.02 cents, a two-week high close.
Fundamental analysis: Soybean futures sank to a 2 1/2-month low as the soy complex joined a slump in grain futures fueled by strength in the U.S. dollar and increasing U.S. harvest pressure. Uninspiring export demand and prospects for a large South American crop are longer-term bearish, which may burden soybean prices in the days leading up to USDA’s next Crop Production update Oct. 12. Early today, USDA reported net weekly U.S. soybean sales totaling 777,100 MT, with top buyers including Mexico (233,400 MT) and China (157,100 MT, including decreases of 5,400 MT). Sales were down from 1.003 MMT a week ago but within expectations ranging from 500,000 MT to 1.2 MMT. Export commitments are running 9.3% ahead of a year-ago, versus 10.4% ahead of last week.
Brazilian farmers are expected to increase soybean planted area by 3.4% to a record 42.9 million hectares, according to the initial forecast from Conab. The Brazilian crop estimating agency forecasts the 2022-23 Brazilian soybean crop at a record 152.4 MMT, which would be up 21.3% from this year.
Technical analysis: Soybean futures’ near-term bias has turned increasingly bearish after the November contract broke under the August intraday low at $13.56 and extended a downtrend that’s run for over three weeks. November futures are trading under all major short- and mid-term moving averages and the recent chart breakdowns may further fund-driven selling that takes prices well under $13.50, today’s intraday low. November futures mostly filled a gap created with a July 26 rally, with only the $13.49 1/4 to $13.50 area unfilled. Continued downside may have bears targeting $13.00 and the July low at $12.88 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.
Fundamental analysis: Winter wheat futures fell a fourth straight session on pressure from a strong dollar and soft export numbers, as well as general risk aversion in global markets. USDA reported net weekly wheat sales of 229,400 MT, down from 279,800 MT last week and at the low end of trade expectations ranging from 200,000 to 450,000 MT. Export commitments are running 4.3% behind a year-ago, compared with 3.5% ahead of last week.
Dryness in the Plains remains a concern as winter wheat planting progress, raising concern over proper establishment of the crop. A large section of the U.S. Central and Southern Plains “continues to suffer from varying levels of drought or abnormally dry conditions,” World Weather Inc. said today. “The crops are going into the ground where moisture is lacking. Both short-term crop establishment and long-term development conditions are less than favorable to poor. Abundant precipitation will be needed in the coming months to reverse the dryness and improve production potentials for this season’s crop.”
Technical analysis: Six-week uptrends remain intact for winter wheat futures giving bulls a slight near-term technical advantage. SRW bulls' next upside objective is closing December futures above solid resistance at the September high of $9.45 3/4. Bears' next downside objective is closing prices below solid support at $8.00. First resistance is seen at $9.00, then Wednesday’s high of $9.19 3/4. First support is seen at $8.70 and then at $8.60.
HRW bulls' next upside objective is closing December futures above solid resistance at $10.50. Bears' next downside objective is closing prices below solid support at $9.00. First resistance is seen at $9.80 then today’s high of $9.95. First support is seen at $9.50, then at $9.40.
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 33 points to 82.90 cents, the contract’s lowest close since September 2021.
Fundamental analysis: Cotton futures fell to the lowest level in over a year as strength in the U.S. dollar and ongoing economic uncertainty fueled concerns over weaker demand for commodities. The World Trade Organization this week lowered its projection of world exports and imports next year to an increase of 1%, down from its earlier projection of 3.4%.
Early today, USDA reported net U.S. cotton sales of 121,200 running bales (RB) for 2022-23, primarily for Pakistan (69,400 RB) and Turkey (14,000 RB). Net sales of 48,500 RB for 2023-24 were primarily for Pakistan (22,900 RB) and Guatemala (10,100 RB). Exports of 209,600 RB were primarily to China (78,400 RB), Turkey (25,400 RB) and Pakistan (21,200 RB).
Technical analysis: Bears hold a solid near-term technical advantage in cotton with prices in a six-week downtrend. The next upside objective for bulls is to close December futures above resistance at this week’s high of 90.52 cents. The next downside objective for bears is to close prices below solid support at 80.00 cents. First resistance is seen at today’s high of 85.28 cents and then at 87.00 cents. First support is seen at today’s low of 82.10 cents and then at 81.00 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.
