Crops Analysis | September 14, 2021

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Corn ­

Price action: December corn futures rose 7 cents to $5.20 1/4 a bushel, the contract’s highest closing price since $5.24 on Sept. 3.

Fundamental analysis: Corn futures rebounded from yesterday’s declines after an unexpected decline in weekly USDA crop ratings suggested higher- than-normal temperatures recently in the Midwest may be crimping yield potential. USDA yesterday reported 58% of the U.S. corn crop in “good” or “excellent” condition at the start of this week, down from 59% the previous week. The good-to-excellent reading was expected to hold unchanged. When USDA's weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop slipped 1.5 points to 353.8.

The Midwest is expected to experience “much-warmer-than-usual temperatures” through this week, with highs ranging from the middle 70s Fahrenheit through the 80s, with some lower 90s in southern areas, according to World Weather Inc. Warm, dry conditions in early September have accelerated crop maturity, though the heat may hinder final stages of development for corn and soybeans, crop consultant Michael Cordonnier said. He raised his U.S. average corn yield estimate by 0.5 bu. to 176 bu. per acre, 0.3 bu. under USDA’s latest projection.

“I am not quite as optimistic as the USDA,” Cordonnier said in his weekly report. “It is possible the corn yield might decline a little in future (USDA) reports.”

Also today, Cargill Inc. said it restarted its Westwego, Louisiana, grain export terminal and yesterday unloaded its first grain barge since Hurricane Ida forced a shutdown of the facility two weeks ago, Reuters reported. Power was restored at Cargill's damaged terminal in Reserve, Louisiana, but the company is still assessing storm damage and developing “phased reopening plans,” a spokeswoman said.

Technical analysis: Futures’ ability to bounce back quickly from a dip below $5.00 after a mostly bearish USDA Crop Production report last week appears to have shored up the market’s technical posture to some extent, though prices are still in a four-week downtrend. Key chart levels for December futures include the 200-day moving average around $5.06 and last Friday’s low at $4.97 1/2. Upside levels to watch include last week’s high at $5.26 1/4 and resistance at $5.30.

What to do: Wait on a price recovery to get current with advised 2021-crop sales if you are behind. Catch up on the advised hedges.  

Hedgers: You have hedges covering 10% of expected 2021-crop production in December corn futures at $5.22. You should have 40% of expected 2021-crop production forward-priced for harvest delivery.

Cash-only marketers: You should have 40% of expected 2021-crop production forward-priced for harvest delivery.

 

Soybeans

Price action: November futures slid 2 1/4 cents to $12.82 1/2 a bushel. December soymeal fell $3.40 to $341.80 per ton, while December soyoil rose 88 points to 56.87 cents a pound.

Fundamental analysis: Soybean futures seemed to get an early boost from yesterday’s USDA Crop Progress report, although it showed the overall condition rating unchanged at 57% “good” to “excellent.” USDA also said 38% of the crop was dropping leaves, above the five-year average of 29%, which may have spurred buying on speculation the crop might not “finish” as well as previously thought.

Traders await tomorrow’s NOPA crush report, which is expected to show a drop in crushing activity during August. U.S. processors crushed 153.44 million bushels of soybeans last month, based on the average analyst estimate. That figure would be down from month- and year-ago levels of 155.11 million and 165.06 million, respectively.

Canadian government estimates of the country’s main field crops, released today, didn’t seem to greatly affect soybeans, although the latest figure, at 5.886 million metric tons, fell 7.4% short of last year. However, the canola production forecast at 12.782 million fell 34.4% below year-ago levels, implying a significant reduction in that country’s canola oil production in the coming months. The numbers sparked buying in soyoil, as well as active oil-versus-meal spreading.

Technical analysis: November soybeans closed close to its 10-day moving average, which bulls may find somewhat comforting. However, November faces considerable resistance at its 20- and 40-day moving averages at $13.03 and $13.27 1/2, respectively. Last Friday’s low at $12.62 3/4 likely marks initial support is backed by the June 25 low at $12.59 3/4 and the June 17 low at $12.40 1/2.

Soymeal bulls seemed to have momentum on their side after having watched the October contract rebound from support at last Wednesday’s low of $332.50, but today’s weak close carried prices back below its 10-day moving average at $338.30. Additional resistance is marked by the confluence of the 20-day moving average and summer downtrend line near $346.00. Additional support is seen around $327.70, a level most recently traded last November.

Although October soyoil posted a very strong showing today, it failed at 10-day moving average resistance near 57.44. Stiffer resistance is layered between that point and its 40-day moving average at 60.74. Last Friday’s low at 55.19 represents initial support, with backing from the June 18 low at 52.44.

What to do: Wait on a price recovery to get current with advised 2021-crop sales if you are behind. Catch up on the advised hedges. 

Hedgers: You have hedges covering 10% of expected 2021-crop production in November soybean futures at $12.73 1/2. You should have 40% of expected 2021-crop production forward-priced for harvest delivery.

Cash-only marketers: You should have 40% of expected 2021-crop production forward-priced for harvest delivery.

 

Wheat

Price action: December SRW wheat rose 13 3/4 cents to $7.00 3/4 a bushel and closed near the session high. December HRW wheat rose 15 1/2 cents to $7.01 3/4. Spring wheat futures also climbed, with December up 11 1/4 cents to $8.87 1/4.

Fundamental analysis: Short-covering helped push wheat futures higher following recent losses. Gains in the corn futures were also supportive for wheat. Traders are watching the hot and dry weather conditions in the U.S. Plains during the planting season for the winter wheat crop, and presently deeming it as supportive, especially after USDA reduced its U.S. wheat ending stocks forecast for 2021-22 by 1.9%, to an eight-year low.

Also today, Statistics Canada reported Canada’s wheat production is projected to decrease 38% year-over-year to 21.7 MMT in 2021, on lower anticipated yields (down 32.6% to 35.2 bu. per acre) and less harvested area (down 8.5% to 22.7 million acres). The decrease in wheat area is largely attributable to spring wheat, which in addition to having less seeded area in 2021, has been impacted by drought conditions in Western Canada. Meantime, France’s agriculture ministry today lowered its soft wheat crop estimate by 1.7% to 36.06 million metric tons (MMT), due to heavy summer rains. Still, this year’s crop would be up 8.1% from the five-year average.

Monday afternoon USDA reported 12% of the U.S. winter wheat crop was planted as of Sept. 12, up from 5% a week earlier and higher than the five-year average of 8%.

Technical analysis: SRW wheat bears still have the slight overall near-term technical advantage. Prices have been trending lower for four weeks. SRW bulls' next upside price objective is closing December prices above solid technical resistance at last week’s high of $7.33 1/4. Bears' next downside breakout objective is closing prices below solid technical support at $6.70.

HRW bulls and bears are back on a level overall near-term technical playing field. However, prices are still in a four-week-old downtrend on the daily bar chart. The HRW bulls’ next upside price objective is closing December prices above solid technical resistance at $7.25. The bears' next downside objective is closing prices below solid technical support at last week’s low of $6.70 1/4.

What to do: Make sure you are current with advised sales. Spring wheat producers should adjust sales levels based on expected production levels.

Hedgers: You should be 70% priced in the cash market on 2021-crop. You should also have 20% of expected 2022-crop production forward-priced for harvest delivery next year.

Cash-only marketers: You should be 70% priced on 2021-crop. You should also have 20% of expected 2022-crop production forward-priced for harvest delivery next year.

 

Cotton

Price action: December cotton closed up 85 points at 93.66 cents today and near the session high.

Fundamental analysis: Sellers remain scarce in the cotton futures market, with big fund traders still net-long the market in a major lopsided fashion. Such may be a bearish element down the road but that’s not the case not at present. The weaker U.S. dollar index today also worked in favor of the cotton market bulls.

Traders are keeping an eye on Tropical Storm Nicholas, which is bringing heavy rains and flooding from Texas and the southern Delta into Alabama and northern Georgia. This situation probably also limited selling interest in the cotton futures market today.

USDA’s weekly crop progress report on Monday afternoon showed the U.S. cotton crop in 64% good to excellent condition (versus 61% last week), 96% setting bolls, 36% bolls opening and 5% harvested.

Reuters reported today Fitch Solutions said it expects cotton production in India to fall by 1% year-on-year to 28.3 million 480-lb. bales in 2021-22 due to slack rains during July and August. Rainfall in Gujarat, the country's top producing state, is almost 30% below its long-term average as of mid-September.

Technical analysis: The cotton bulls have the solid overall near-term technical advantage. Prices are in a 4.5-month-old uptrend on the daily bar chart. The next upside price objective for the cotton bulls is to produce a close in December futures above solid technical resistance at the contract high of 96.71 cents. The next downside price objective for the cotton bears is to close prices below solid technical support at 90.00 cents. First resistance is at 94.00 cents and then at 95.00 cents. First support is at this week’s low of 92.51 cents and then at the September low of 92.01 cents.

What to do: Get current with advised 2020- and 2021-crop sales.

Hedgers: You should be 75% forward-priced on expected 2021-crop production for harvest delivery. 

Cash-only marketers: You should be 75% forward-priced on expected 2021-crop production for harvest delivery.

 

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