Crops Analysis (VIP) -- April 28, 2014

April 28, 2014 09:36 AM
 

Corn

Price action: Corn futures closed fractionally to 1 cent higher in the May through July 2015 contacts. Funds were net even, neither buyers or sellers, on the day.

Fundamental analysis: Corn futures favored the plus side of trading on the continuing storms, rains, and cold temperatures expected over the Corn Belt well into next week. While it is still early to worry about planting delays, the current weather outlook does not look promising for a strong pickup in planting any time soon. Another rise in tensions in Ukraine contributed to some of the strength in futures today.

However, traders were disappointed in today's weekly export inspections report. The figure came in below expectations and well under the previous week's total. USDA reported 1,156,332 MT were inspected for the week ended April 24, down 476,818 MT from the previous week. But the corn export pace is still hotter than required to hit USDA's current projection for the current marketing year.

Technical analysis: Corn futures continue to trade above the $5.00 level after reestablishing it as support last week. July futures posted their highest close of 2014 with the contract's 1-cent higher performance today. The $5.20 area continues to offer resistance. The $5.05 area is providing support along with the 14-day moving average at $5.06 3/4.

Hedgers: 70% sold on old-crop. 30% of expected 2014-crop is sold via forward contract for harvest delivery.

Cash-only marketers: 60% sold on old-crop. 30% of expected 2014-crop is sold via forward contract for harvest delivery.

 

Soybeans

Price action: May and July soybean futures closed 10 1/4 and 5 3/4 cents higher, respectively. The August through July 2015 contract ended 1/4 to 2 1/4 cents lower. That was a mid-range close for the day. Funds were quiet today, buying a net 1,000 contracts (5 million bu.) of soybeans. Funds also bought a net 1,000 contracts of soymeal and sold a net 1,000 contracts of soyoil.

Fundamental analysis: Nearby soybean futures saw followthrough buying interest after a strong close last Friday. Tight supplies and some talk China's appetite for soybeans will increase by summer after crush margins improve provided fundamental support. But much of the strength in old-crop beans continues to come from speculative money flowing into the long side of the market as investors favor soybeans.

New-crop soybeans were supported through overnight trade and part of the day session by spillover from old-crop. But as nearby contracts trimmed gains, new-crop contracts were mildly pressured by corn planting delays and the cool, wet forecast into May. Traders feel the longer corn planting delays extend, the greater the odds that soybeans will hold onto the bulk of their record March planting intentions.

Technical analysis: July soybean futures have moved back into the uptrend from the January low after dipping below it during the middle of last week. Contract-high resistance is at $15.21. The uptrend is initial support, followed by last week's low at $14.60 1/2.

Hedgers: 25% of expected 2014-crop is sold via forward contract for harvest delivery. 100% sold in the cash market on 2013-crop production.

Cash-only marketers: 25% of expected 2014-crop is sold via forward contract for harvest delivery. 90% priced on old-crop.

 

Wheat

Price action: Wheat futures saw a choppy day of trade and ended mixed for the SRW wheat market. HRW wheat finished roughly 2 to 7 cents higher. HRS wheat closed 2 3/4 to 4 1/2 cents higher. Funds bought a net 5,000 contracts (25 million bu.) of SRW wheat today. Over the past three days funds have increased their net long exposure by 12,000 contracts (60 million bu.) in SRW wheat.

Fundamental analysis: Wheat futures were supported overnight and at times today by the weather as well as mounting geo-political tensions. Weekend rains largely missed the Southern Plains and the region is expected to remain dry this week. Meanwhile, HRS wheat country is dealing with cold, wet conditions that are slowing planting efforts. USDA's update this afternoon is expected to reflect additional condition declines for the winter wheat crop as well as slow planting progress of the spring wheat crop.

Russia is back in focus this week as the U.S. has increased sanctions on the nation, again raising the possibility of Black Sea shipping disruptions. But traders are hesitant to build too much risk premium into the market.

Technical analysis: May SRW wheat futures again chopped around the key $7.00 mark and finished just above it, keeping that level as support. Resistance stands at the April high of $7.11, followed by the 2014 high of $7.23 1/2.

Hedgers: 75% of expected 2014-crop production is sold via cash forward contract sale for harvest delivery. 100% sold on 2013-crop.

Cash-only marketers: 60% of expected 2014-crop production is sold via forward contract sale for harvest delivery. 90% sold on old-crop.

 

Cotton

Price action: Cotton futures ended 57 and 102 points lower in the May and July contracts, respectively. Deferred months saw limited trading interest today and ended 2 to 13 cents higher for the day.

Fundamental analysis: Nearby cotton futures saw mild profit-taking today as traders took advantage of recent gains. But buying and selling interest was limited in deferred months as traders awaited USDA's update on cotton planting progress. Bulls had a slight advantage in new-crop contracts as traders remain concerned about long-lasting and extensive drought in the Southern Plains -- especially in Texas -- and its impact on the crop.

The market brushed off news that Chinese companies plan to launch six textile projects in Uzbekistan at the end of 2015, as this is more of a long-term market factor.

Technical analysis: While May cotton futures saw a downside day of trade, the contract remains in the upper portion of its recent consolidated trading range stretching from the April low of 88.63 cents to this month's rough triple-top high of 93.23 cents. These levels are support and resistance, respectively.

Hedgers: 50% of expected 2014-crop production is sold via forward contract for harvest delivery. 100% sold on old-crop.

Cash-only marketers: 50% of expected 2014-crop production is sold via forward contract for harvest delivery. 90% sold on old-crop.

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