Crops Analysis | September 16, 2021
Price action: Corn futures sagged after USDA’s weekly export sales report proved disappointing. December futures slid 4 cents to $5.29 1/2 a bushel.
Fundamental analysis: This morning’s release of the weekly USDA Export Sales report indicated net U.S. corn export sales for the week ended Sept. 9 totaled 246,600 metric tons (MT), with Mexico being the lead buyer at 154,300 MT. The total fell well below trade expectations ranging from 500,000 MT to 1 million metric tons (MMT). The results also raised fresh concerns about the domestic industry’s recovery from the damage done by Hurricane Ida. Traders may also be anticipating increasing seasonal pressure on the cash and futures markets, since the harvest is now underway in southern areas and will soon be marching northward. The soybean market’s inability to sustain early gains, along with slipping prices in the energy sector, probably encouraged selling in corn as well.
Technical analysis: The mid-range close in December futures seemed to leave bulls with the short-term technical advantage, particularly after bulls were able to push prices above resistance at both the 10-day moving average (now at $5.19 1/2) and the short-term downtrend drawn across the contract’s August highs. The extended downtrend line places initial support around $5.21 1/2, with layered support down to the psychologically important $5.00 level. Initial resistance is marked by yesterday’s $5.34 1/2 high, with stiffer resistance marked by the 40-day moving average at $5.44 1/2. Additional resistance is likely at $5.58.
What to do: Wait on an extended price recovery to get current with advised 2021-crop sales if you are behind. Catch up on the advised hedges. We are targeting a return to the mid-$5 level to increase 2021-crop sales.
Hedgers: You have hedges covering 101% 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 soybeans closed up 1 1/2 cents at $12.96 a bushel. December soybean meal closed up $4.50 at $344.10 per ton. December soyoil fell 153 points to 56.84 cents per pound.
Fundamental analysis: Moderate selling pressure in corn futures market limited buying interest in soybean futures. Soybean bulls were disappointed that better-than-expected weekly USDA export sales data failed to provide much support today. Net weekly U.S. soybean sales totaled 1.26 MMT, primarily for China (945,200 MT) and “unknown” destinations (163,000 MT). Expectations ranged from 600,000 MT to 1.4 MMT. Also today, USDA reported U.S. soybean sales of 132,000 metric tons (MT) for delivery to China during the 2021-22 marketing year. A stronger U.S. dollar index today also worked to squelch buyer interest in the soybean complex.
The Midwest U.S. weather forecast 10 days out leans a bit bearish, projecting generally warm, dry conditions but still prospects for rain, which may boost soybean maturation and improve early-harvest conditions, World Weather Inc. said today.
Technical analysis: The soybean bears have the overall near-term technical advantage. Prices are in a three-month-old downtrend on the daily chart. The next near-term upside technical objective for the soybean bulls is closing November prices above solid resistance at $13.25. The next downside price objective for the bears is closing prices below solid technical support at the June low of $12.40 1/2.
Soymeal bears have the solid overall near-term technical advantage. Prices are in a four-month-old downtrend on the daily bar chart. The next upside price objective for the meal bulls is to produce a close in December futures above solid technical resistance at $355.70. The next downside price objective for the bears is closing prices below solid technical support at $325.00.
December soyoil prices scored a bearish “outside day” down, though market bulls still retain a slight overall near-term advantage. Prices are in a six-week-old downtrend on the daily bar chart. The next upside price objective for the bean oil bulls is closing December above solid technical resistance at 60.00 cents, while bears' downside objectives include a close below solid technical support at the June low of 51.98 cents.
What to do: Wait on an extended price recovery to get current with advised 2021-crop sales if you are behind. Catch up on the advised hedges. We are targeting a return to the mid-$13 level to increase 2021-crop sales.
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.
Price action: December SRW futures rose 3/4 cent to $7.13 a bushel, the highest closing price since $7.19 3/4 on Sept. 7. December HRW futures rose 4 1/2 cents to $7.20 1/2. December spring wheat futures rose 1 3/4 cents to $9.06 1/2.
Fundamental analysis: Wheat futures ended mixed after ongoing concern over tightening global supplies pushed prices earlier in the day to the highest levels in over a week. USDA’s weekly export sales report came out at the high end of expectations, with net U.S. sales for the week ended Sept. 9 totaling 617,100 MT, a marketing-year high and up 59% from the previous week. Total U.S. wheat exports so far this marketing year still lag last year’s levels at this point by about 17%.
Futures climbed overnight following reports Strategie Grains lowered its European Union soft wheat crop estimate for 2021 by 1.8% to 129.1 MMT and cut its EU soft wheat export forecast by 5.2% to 31.0 MMT. The consultant also reduced its forecast for global wheat production 1.5%, to 739.4 MMT. Earlier this week, Statistics Canada released a lower-than-expected forecast for Canadian wheat production and France lowered its soft wheat crop estimate.
Technical analysis: Winter wheat bulls and bears are on a level near-term playing field, though prices have been trending lower for four weeks. Upside price objectives in December SRW futures include a close above solid technical resistance at $7.33 1/4. Downside objectives include a December close below support at last week’s low of $6.77.
In December HRW futures, upside objectives include a close above resistance around $7.35, while downside objectives include a close below support at this month’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.
Price action:
December cotton futures fell 86 points to 92.51 cents a pound, down 1.1% from 93.50 at the end of last week and the lowest closing price since 92.30 on Sept. 1.
Fundamental analysis: Cotton futures settled at the lowest levels in over two weeks as strength in the U.S. dollar overshadowed strong export numbers. USDA reported net U.S. cotton sales for the week ending Sept. 9 totaling 284,800 running bales (RB), down 37% from the previous week but up 9% from the prior four-week average. China was the lead buyer at 183,900 RB. Exports of 237,500 RB were up 53% from the previous week and up 27% from the four-week average. But the U.S. dollar index rose to the highest level in nearly three weeks, muting bullish impact of USDA’s numbers. A stronger dollar makes U.S. commodities more expensive for foreign buyers.
Technical analysis: Cotton market bulls retain a near-term technical advantage, though upward momentum appears to have stalled as the U.S. harvest nears. Upside objectives in December futures include a close above resistance at the contract high of 96.71 cents, while downside objectives include a close below solid support at 90.00 cents. First resistance is seen at 94.00 cents, then at 95.00 cents. First support is seen at this week’s low of 92.51 cents, 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.
