Crops Analysis | September 22, 2022
Price action: December corn rose 2 3/4 cents to $6.88 1/4, nearer the session high.
Fundamental analysis: Corn futures posted modest gains with support from continued strength in wheat markets and ongoing concern over supply disruptions in the Black Sea region. A reduced outlook for Argentina’s corn crop also supported prices. Argentina’s Rosario grain exchange slashed its estimate for the country’s corn production by 2 million MT, to 56 million MT, citing drought. Frost and freezing temperatures reported in the north-central Corn Belt overnight may have had some impact on summer crops, World Weather Inc. said. “However, much of the cold was not quite intense enough to induce a kill for summer crops,” the forecaster said.
USDA reported net U.S. corn sales of 182,300 MT for the week ended Sept. 15, down sharply from 583,100 MT the previous week and well below trade expectations for 400,000 to 850,000 MT. Exports totaled 563,000 MT, primarily to Mexico (259,000 MT), China (142,300 MT) and Japan (137,000 MT). Also today, USDA reported daily corn sales of 105,000 MT for delivery to Mexico and 101,600 MT to “unknown destinations,” both during the 2022-23 marketing year.
Technical analysis: December corn traded a 9 1/2-cent range, finding a low at $6.81 1/2 just below the 10-day moving average at $6.85 1/2, which should continue to provide near-term support. Other support levels include $6.77, the 20-day moving average at $6.76 3/4 and $6.68 1/2. Bulls lacked momentum in testing resistance at $6.96 1/4 to ultimately make a push through psychological resistance at $7.00. A breach of $7.00 would find bulls facing additional resistance at $7.07 and again at $7.15 1/2.
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 4 1/4 cents to $14.57, a low close for the week. December soymeal fell $9.90 to $428.90 after earlier hitting a contract high at $443.80. December soyoil rose 146 points to 66.46 cents.
Fundamental analysis: Soybean futures fell a second day on a combination of disappointing export numbers, a stronger South American crop outlook and a sharp downturn in soymeal. USDA early today reported net weekly U.S. soybean sales of 446,400 MT for 2022-23, which included China (152,500 MT, including 55,000 MT switched from unknown destinations and decreases of 138,200 MT). Sales were down sharply from 843,000 MT the previous week and fell short of expectations ranging from 500,000 MT to 1.0 MMT.
U.S. export commitments so far in 2022-23 are running 9.9% ahead of a year-ago, down from 11.8% ahead as of last week, but USDA estimates exports for the full year will drop 2.8% from 2021-22 to 2.085 billion bu. Also today, the Rosario Grain Exchange raised its Argentina soybean crop forecast by 1 MMT to 48 MMT as it now expects 200,000 hectares originally intended for corn to be switched to soybeans.
Technical analysis: Soybeans retain a bullish bias with prices still trending up since late July and November futures trading above most key moving averages but have settled into a sideways consolidation pattern that may continue for the near-term. The market’s ability to hold 100-day moving average support at $14.47 1/2 today should be encouraging to bulls. Upside objectives include closing November futures above solid resistance at the September high of $15.08 3/4, followed by the contract high of $15.84 3/4 posted June 9. Further near-term support comes in at the 20- and 40-day moving averages at $14.38 and $14.29, respectively, as well as trendline support around $13.98.
Soymeal futures may be flashing a bearish signal. The December contract surged to a contract high at $443.80 earlier today before reversing course to post a bearish “outside day” lower on the daily bar chart. Strong followthrough selling pressure Friday would confirm a more significantly bearish “key reversal” lower and could offer an early clue that a near-term market top is in place.
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 7 cents to $9.10 3/4, the contract’s highest closing price since June 29. December HRW wheat gained 12 1/2 cents to $9.79 1/2. December spring wheat rose 13 1/2 cents to $9.77 3/4.
Fundamental analysis: Winter wheat futures climbed to the highest levels in nearly three months as strong charts and concerns over the war in Ukraine offset disappointing export sales and a jump in the U.S. dollar index to a 20-year high. Prices remained supported by fears over potential disruptions to Black Sea grain supplies after Russian President Vladimir Putin on Wednesday ordered a Russian mobilization to fight in Ukraine and hinted he was prepared to use nuclear weapons.
Early today, USDA reported net weekly U.S. wheat sales totaling 183,500 MT for 2022-23, including China (134,300 MT, including 130,000 MT switched from unknown destinations). Sales were down from 217,300 MT the previous week and fell short of expectations ranging from 200,000 to 500,000 MT. Also today the International Grains Council (IGC) raised its forecast for 2022-23 global wheat production by 14 MMT, to 792 MMT, reflecting an upward revision for the Russian wheat crop. SovEcon also raised its outlook for Russia’s 2022 wheat crop, to 100 MMT from 94.7 MMT. The Rosario Grain Exchange cut its Argentine wheat crop estimate by 1.2 MMT, to 16.5 MMT.
Technical analysis: Bulls retain the upper hand in winter wheat with four-week uptrends in place on the daily bar charts. SRW 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 this week’s low of $8.19 1/4. First resistance is seen at today’s high of $9.22 1/2, then $9.35. First support is seen at today’s low of $8.91, then Wednesday’s low of $8.73.
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 $8.75. First resistance is seen at today’s high of $9.89 3/4, then at $10.00. First support is seen at today’s low of $9.51 3/4, then $9.35.
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 38 points to 96.54 cents, near the middle of today’s range.
Fundamental analysis: Cotton futures took pressure from bearish outside market forces, including a surge in the U.S. dollar index to another 20-year high and weakness in U.S. equities in the wake of the Federal Reserve aggressive efforts to subdue inflation. Other central banks are also tightening monetary policy, raising the prospect of a global recession that could crimp demand for commodities. These elements are likely to continue to limit buying interest in cotton futures in the near term.
USDA reported weekly export sales totaling 32,400 running bales (RB) for 2022-23, primarily for Pakistan (27,800 RB), El Salvador (8,600 RB) and Guatemala (6,000 RB). Sales were down sharply from 100,300 RB the previous week. USDA also reported sales reductions for China (11,400 RB). Exports of 232,300 RB were primarily to China (73,000 RB), Vietnam (33,200 RB) and Mexico (27,100 RB).
Technical analysis: Cotton futures bears hold a near-term technical advantage with prices in a four-week downtrend on the daily bar chart. The next upside objective for bulls is to close December futures above resistance 102.50 cents. The next downside objective for bears is to close prices below solid support at the July low of 82.54 cents. First resistance is seen at 98.00 cents, then 100.00 cents. First support is seen at 95.00 cents, then at this week’s low of 92.38 cents.
What to do: Get current with advised 2022-crop sales and hedges.
Hedgers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production. You should also have 30% of 2022-crop hedged in December futures at 99.58 cents.
Cash-only marketers: You should be 70% forward-priced for harvest delivery on expected 2022-crop production.
