Crops Analysis | September 20, 2021
Price action: Corn futures finished midrange, with the December contract down 5 1/2 cents at $5.21 3/4 a bushel.
Fundamental analysis: Corn futures got caught in a broad-based selloff in the commodity and equity markets today, triggered by concern over the potential collapse of a Chinese property developer. But all things considered, corn didn’t perform too poorly given the weight of the outside market pressure and heavy selling in the soybean and soyoil markets.
While loses could have been worse for corn today, bear spreading signals a weakening market. With harvest activity ramping up, December corn could continue to perform worse than deferred contracts amid farmer and commercial hedge pressure.
Weekly export inspections improved from the previous week to 15.9 million bushels. Still, that figure was around half of last year’s level for this week. Early in the 2021-22 marketing year, corn inspections are running 70% below year-ago levels. Given reduced loadings at the U.S. Gulf due to damage from Hurricane Ida, corn inspections will remain limited for the time being. Plus, soybeans should seasonally dominate Gulf loadings through fall.
Technical analysis: Near-term boundaries for December corn futures are the Sept. 10 low at $4.97 1/2 and last week’s high at $5.37 1/2. If bears can force a downside breakout from this range it would point the contract at least another 15 to 30 cents lower. If bulls can force an upside breakout, it could spark a return to the $5.50 to $5.60 area where there’s stiffer resistance.
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 fell 21 1/2 cents to $12.62 1/2 a bushel, near the session low and the lowest settlement since $12.52 3/4 on June 17. December soybean meal fell $2.40 to $339.80 per ton. December soybean oil fell 139 points to 54.87 cents a pound, after hitting a three-month low.
Fundamental analysis: It was a “risk-off” trading day in commodity markets, as global stocks tumbled on concern over financial troubles in China. If the global stock and financial markets continue to sell off this week, upside in the grain futures will be limited. The recent appreciation of the U.S. dollar is also a bearish force working against U.S. grains and soybeans.
China is reportedly buying soybeans from Brazil, as U.S. shipments have shrunk the past few weeks. Grain terminals at the U.S. Gulf are not expected to be fully operational for several more weeks due to damage from Hurricane Ida. U.S. soybeans inspected for export during the week ended Sept. 16 totaled 275,169 MT, up from an upwardly revised 193,429 MT the previous week but well under the 1.39 MMT shipped at this time last year, USDA said today.
Technical analysis: The soybean bears have the firm overall near-term technical advantage. Prices are in a 3 1/2-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.
Soybean meal 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 $350.00. The next downside price objective for the bears is closing prices below solid technical support at $325.00.
Soyoil bulls and bears are on a level overall near-term technical playing field. Prices are in a two-month-old downtrend on the daily bar chart. The next upside price objective for the bean oil bulls is pushing and closing December prices above solid technical resistance at 60.00 cents. Bears' next downside technical price objective is pushing and closing prices 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 fell 8 cents to $7.00 3/4 a bushel. December HRW futures fell 13 cents to $7.00. December spring wheat futures fell 6 1/2 to $8.94.
Fundamental analysis: HRW led wheat futures lower as the market absorbed spillover pressure from weakness in global stock markets and bellwether commodities like crude oil. Grain futures were also pressured by dollar strength, as the U.S. dollar index rose near a one-month high. Export activity and U.S. Plains weather will be key drivers for wheat prices the next few weeks. Earlier today, USDA reported U.S. wheat inspected for export during the week ended Sept. 16 totaling 563,390 MT, down from an upwardly revised 567,438 MT the previous week and near the upper end of expectations.
Dry conditions are an increasing concern on the U.S. Plains as winter wheat planting accelerates. World Weather Inc. projects a “continued dry bias” in the Plains and western Corn Belt, as well as Canada’s Prairies, the next two weeks. “No drought relief is expected, and that is fine for harvesting, but not good for future wheat planting, emergence or establishment,” the forecaster said.
USDA’s weekly crop progress report this afternoon is expected to show winter wheat plantings at 22% completed, based on a Reuters survey of analysts. The crop was 12% seeded as of Sept. 12, up from 5% the previous week and up from the five-year average of 8% for that date.
Technical analysis: Winter wheat’s technical standing softened recently, with December SRW closing below its 100-day moving average, currently about $7.02, for the first time since July 14. Earlier today, December SRW futures fell as low as $6.95 3/4, the lowest intraday price since $6.95 1/4 on Sept. 15. Chart levels to watch include last week’s low at $6.77.
December HRW wheat’s technical posture appears slightly stronger, with key downside levels including the 100-day moving average around $6.76 and last week’s low at $6.70 1/4, as well as last week’s high at $7.23.
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 plunged 331 points, or 3.5%, to 89.02 cents a pound, the contract’s lowest close since July 21.
Fundamental analysis: Cotton futures plunged as concern over potential financial contagion in China sent global stock markets and key commodities, including crude oil, tumbling. The U.S. dollar index climbed to its highest level in almost a month. While cotton demand remains firm, a big U.S. crop is expected this year and the potential collapse of property developer China Evergrande raises questions over the economic outlook. USDA will update cotton harvest progress this afternoon. As of Sept. 12, the U.S. crop was 5% harvested, below the five-year average of 8% harvested for that date.
Technical analysis: December futures closed below 90.00 cents for the first time since Aug. 3 and broke an uptrend that began in late March, substantially weakening the market’s technical outlook. Prices have slumped 8% from the contract high of 96.71 cents hit on Aug. 17. Key downside levels to watch include the 100-day moving average around 88.55 cents, as well as 83.37 cents, the June low.
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.
