Price action: Corn futures saw two-sided trade today with bulls holding a slight advantage most of the day. Trader activity was very active heading into the close and futures ended mid-range in a narrowly mixed trading range.
Fundamental analysis: The weather rally gave signs of sputtering today as all the "easy" money is already in the market. Driving buying interest is worrisome heat and dryness and resulting dire condition of the corn crop. Record-setting heat this week is stressing the crop that is already rated 38% "poor" to "very poor."
Light pressure came from rain in the forecast for the eastern Corn Belt (though this would at best slow yield deterioration) and rumors China was canceling corn purchases. Also, market participants are growing cautious as they know weather rallies often conclude before crop concerns peak.
Technical analysis: December corn futures hit a contract high of high of $7.89 today, making next resistance the all-time high of $7.99 3/4 posted in June 2011 on the weekly continuation chart. Psychological support is at $7.50.
Hedgers: 40% of expected 2012-crop production is covered in Dec. $6.50 put options for 31 1/2 cents. 35% cash forward sold on expected 2012-crop production -- 25% for harvest delivery; 10% for March 2013 delivery. 90% sold on old-crop in the cash market.
Cash-only marketers: 90% sold on old-crop. 35% forward priced on expected 2012-crop production -- 10% for harvest delivery; 10% for March 2013 delivery; and 15% for May 2013 delivery.
Price action: Soybean futures capped off a choppy day of trade by coming off the session lows for a mixed close. Meal was higher and soyoil ended lower amid spreading.
Fundamental analysis: Weather remains front-and-center in traders' minds, but even when the news is bullish (continued hot and dry weather), futures are vulnerable to periods of profit-taking. Traders responded today to the overbought situation of the market by reevaluating positions.
The late-session recovery sets the stage for a stronger start to the upcoming session, especially given that extended weather models show very little precip in the forecast the remainder of the month -- setting the crop up for a tough start to the critical pod-filling month of August. Yesterday's crop condition report showed further deterioration of the crop, which caused some to further lower their yield projections. See "Evening Report" for Dr. Cordonnier's latest assessment.
Technical analysis: November beans gapped above the $16.00 level and extended gains to $16.07, but the contract didn't spent very much time above this psychological level today. But the higher-high and mid-range close signals bulls still have the near-term advantage.
Hedgers: 25% of expected 2012-crop production is covered in Nov. $14.00 put options for 42 3/8 cents. 50% of expected 2012-crop production is sold via cash forward contract for harvest delivery. 90% sold on old-crop in the cash market.
Cash-only marketers: 85% sold on old-crop. 50% sold on expected 2012- crop production via forward contract for harvest delivery.
Price action: Wheat futures were choppy today, with Chicago softening late to end mixed. Kansas City and Minneapolis ended with slight to mostly moderate gains.
Fundamental analysis: As corn and soybean futures softened in late trade, Chicago wheat followed amid profit-taking. But pressure was limited by ongoing weather concerns that have raised competition between corn and wheat as a feed ingredient. Also, global weather worries continue to take center stage, as late-season rains are raising concerns about yield and quality losses in areas of Europe and hot temps are once gain raising concern about prospects in Russia. Dryness is also an issue in Australia.
Technical analysis: September Chicago wheat futures came within 1 1/2 cents of the key $9.00 level and were hit with profit-taking pressure. The contract respected support at yesterday's low of $8.56 1/4, which keeps the uptrend clearly intact. Closes above $9.00 would make bulls' next target the contract high of $9.63 1/4.
Hedgers: 75% cash sold on 2012-crop for harvest delivery. 100% sold on 2011-crop in the cash market.
Cash-only marketers: 75% of 2012-crop production is sold for harvest delivery. 100% sold on 2011-crop.
Price action: Cotton futures settled low-range with losses of 204 to 242 points today.
Fundamental analysis: As domestic and global cotton supplies are expected to be plentiful, cotton futures continue to struggle to find buyers. Emphasizing this, USDA yesterday raised its "good" to "excellent" cotton rating by one percentage point to 45% -- markedly above last year's rating of 28% in these categories. This reminder of cotton's weak fundamentals along with dollar strength left the market vulnerable to profit-taking on dollar strength today.
Also, Federal Reserve Chairman Ben Bernanke talked about the weak U.S. and global economy in his address of the Senate Banking Committee today. This has demand-damaging implications and thus was an additional source of pressue on cotton futures. See "Evening Report" for more.
Technical analysis: December cotton futures settled in the lower half of their recent consolidation trading range. Its parameters are last week's low of 69.66 cents on the downside and the June high 74.80 cents on the upside.
Hedgers: 100% sold on old-crop in the cash market. 50% priced on expected new-crop production via cash forward contract for harvest delivery.
Cash-only marketers:100% sold on old-crop. 50% priced on expected new-crop production via forward contract for harvest delivery.