Crop Analysis (VIP) -- January 17, 2013

January 17, 2013 09:04 AM
 

Corn

Price action: Corn futures were under light pressure most of the day and ended mostly 4 1/4 to 7 1/4 cents lower.

Fundamental analysis: Traders in the corn market took a step back today and booked some profits after an extended, gradual price rally. News the International Grains Council raised its global corn production projection by 5 MMT from last month to 845 MMT was only partially offset by a 3 MMT cut to its carryover projection.

But ongoing concerns about tight corn carryover and an above-expectations weekly corn export sales tally of 393,300 MT for 2012-13 limited pressure.

Technical analysis: March corn futures continued to consolidate today in a narrow trading range. Near-term support lies at yesterday's high of $7.35. The market has been unable to move above that area since mid-December. Near-term support is at the January low of $6.78.

Hedgers: 100% sold on 2012-crop in the cash market -- 10% for March 2013 delivery. No 2013-crop sales recommended yet.

Cash-only marketers: 75% sold on 2012-crop --10% for March 2013 delivery; 15% for May 2013 delivery. No 2013-crop sales recommended yet.

 

Soybeans

Price action: Soybean futures saw two-sided trade today, but bears had the advantage most of the day. Futures ended well off their lows with losses around 6 cents through the August contract and 9 to 11 3/4 cents lower in deferred months. Soyoil ended with slight gains for the day, while soymeal futures ended with moderate losses.

Fundamental analysis: Today's action in the soybean market was a strong signal that impressive soy demand is already baked into prices and that a new source of support is needed to spur the next leg higher. The market was unable to find sustained buying interest today even after an impressive weekly export sales tally of nearly 1.609 MMT for 2012-13 and 180,000 MT for 2013-14 and a daily 240,000 MT soybean sale to unknown destinations for 2013-14.

Traders instead focused on booking some profits after the recent run-up in prices. It appears Argentine dryness concerns are also considered baked into prices -- for now.

Technical analysis: March soybean futures remain within their recent uptrend, with the next area of strong resistance standing at the December high of $15.01 1/4. Friday's low of $13.51 1/2 remains strong support.

Hedgers: 100% sold on 2012-crop in the cash market. No futures/options positions at this time. No 2013-crop sales advised yet.

Cash-only marketers: 75% sold on 2012-crop production for harvest delivery. No 2013-crop sales advised yet.

 

Wheat

Price action: Wheat futures favored the downside most of the day. Chicago wheat ended fractionally to 4 cents lower; Kansas City finished 1 1/4 to 5 3/4 cents lower; Minneapolis settled with losses of roughly 1 to 2 cents. This was well off most contracts' daily lows.

Fundamental analysis: Profit-taking in the corn and bean market spilled over to the wheat market today, as weekly export sales tally of 536,200 MT for 2012-13 and 38,500 MT for 2013-14 failed to excite market bulls. News Iraq purchased 300,000 MT of wheat from Australia and Canada reminded the market of the U.S.'s struggle to compete on the global wheat export market.

But selling interest was limited to profit-taking as today's Drought Monitor reflected widespread drought remains in effect for the vast majority of winter wheat country and the 90-day outlook calls drought to persist or intensify from central Nebraska south.

Technical analysis: March Chicago wheat futures were little changed for the day. Near-term support is at the psychological $8.00 mark, followed by the Dec. 19 high of $8.22 3/4. Support stands at the January low of $7.36 1/4.

Hedgers: 75% sold on 2012-crop in the cash market. No 2013-crop sales advised yet.

Cash-only marketers: 75% of 2012-crop is sold. No 2013-crop sales advised yet.

 

Cotton

Price action: Most cotton contracts enjoyed light followthrough buying today to end 35 to 51 points higher through the October contract and narrowly mixed in deferred months.

Fundamental analysis: This morning's solid cotton export tally of 339,000 RB for 2012-13 and 4,700 RB for 2013-14 encouraged light followthrough buying in cotton futures today. The tally for the current marketing year was a 73% increase from the week prior and a 36% rise from the four-week average. Plus, China was the lead buyer.

This complemented recent talk that lackluster demand for recent Chinese auctions of state reserves due to high prices for poor-quality cotton signal the mills may increase their export buys of the fiber -- especially if talk the country may allow a 1 MMT import quota for every 3 MMT in reserve purchases proves founded.

Technical analysis: March cotton futures broke through and settled above support at the December high of 77.10 cents today, turning it into near-term support. This opens upside potential to the August high of 78.02 cents.

Hedgers: 50% priced on expected 2012-crop production in the cash market.

Cash-only marketers: 50% priced on expected 2012-crop production in the cash market.

 

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