Crop Analysis (VIP) -- Advice -- March 27, 2013

March 27, 2013 09:44 AM
 

Corn

Advice: Hedgers and cash-only marketers are advised to sell 10% of expected 2013-crop production via cash forward contract sale for harvest delivery.

Price action: Corn futures were choppy into the close today, with nearbys ending 3 3/4 to 5 cents higher, September closing 3/4 cent lower and new-crop futures settling steady to 1 cent lower amid bull spreading.

Fundamental analysis: Traders brushed off reports that corn from Argentina was on its way to the U.S. Southeast and more may be on the way. Given the tight supply situation, traders say they aren't surprised by additional corn imports to fill the void. Instead, today's focus was largely on evening positions ahead of tomorrow's key USDA reports.

For old-crop, the Quarterly Grain Stocks Report will provide the market with the usage pace for the first half of the marketing year, while new-crop futures will be focused on the acreage projection.

Technical analysis: December corn futures settled mid-range after posting a weekly high of $5.73 3/4, which is initial resistance. Support lies at last week's low of $5.56.

Hedgers: NEW ADVICE: Make a 10% cash forward contract sale for harvest delivery on expected 2013-crop production. 100% sold on 2012-crop in the cash market.

Cash-only marketers: NEW ADVICE: Make a 10% cash forward contract sale for harvest delivery on expected 2013-crop production. 75% sold on 2012-crop production.

 

Soybeans

Advice: Hedgers and cash-only marketers are advised to sell 10% of expected 2013-crop production via cash forward contract sale for harvest delivery.

Price action: Soybean futures were choppy in early trade, but the market firmed as the day progressed and futures ended high-range with old-crop beans 3 1/4 to 6 cents higher and new-crop around a penny higher. Soymeal finished with slight gains while soyoil closed mixed.

Fundamental analysis: Action in the soybean market again revolved around readying for USDA's reports tomorrow, which are expected to reflect the tight stocks situation, but also an increase in soybean plantings for 2013, which could potentially ease tight supplies.

Upside potential remains limited by the fact that South American bean supplies will likely soon flood the market, significantly slowing export demand for U.S. soy. Traders will watch tomorrow's weekly export sales update for signs this has started.

Technical analysis: May soybean futures closed above near-term resistance at last week's high of $14.51 1/2. Bulls' next target is the March high of $14.84 3/4 followed by the 2013 high of $14.97.

Hedgers: NEW ADVICE: Make a 10% cash forward contract sale for harvest delivery on expected 2013-crop production. 100% sold on 2012-crop in the cash market.

Cash-only marketers: NEW ADVICE: Make a 10% cash forward contract sale for harvest delivery on expected 2013-crop production. 75% sold on 2012-crop production.

 

Wheat

Price action: Wheat futures saw two-sided trade today, but bulls held the advantage into the close. Chicago wheat settled 2 1/4 to 5 1/4 cents higher, while Kansas City ended with gains around 4 cents. Minneapolis settled roughly 2 to 4 cents higher.

Fundamental analysis: The winter wheat crop is beginning to get a bit more attention as weekly crop condition updates will begin again next week. This should give a better idea of what damage the ongoing drought and recent freeze events have had on the crop. The market is also concerned about the possibility of a winter storm on the Central Plains next week.

The market also benefited from news Egypt says it has wheat stocks of 2.116 MMT from local and international markets (enough for 85 days), and that the country is in the process of negotiating another 237,000 MT for import.

Otherwise, traders focused on reducing risk ahead of USDA's key Prospective Plantings and Quarterly Grain Stocks Reports tomorrow.

Technical analysis: May Chicago wheat futures continued in their recent uptrend toward the January low of $7.45 1/4, closely followed by the psychological $7.50 mark. Strong support remains at the psychological $7.00 level, followed by the March low of $6.81.

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: Cotton futures were choppy today, but rallied into the close to finish 49 to 47 points higher in the May and July contracts, respectively, with October up 14 points. Deferred-month contracts ended 2 to 5 points higher.

Fundamental analysis: Early pressure in cotton futures came from strength in the U.S. dollar index, but futures reversed course on indications China will continue to buy cotton to build its stockpiles. China's plan is to continue buying domestically produced cotton this year, but traders believe that will lead to greater demand for international sources. Traders' focus tomorrow will be on evening positions ahead of the Prospective Plantings Report, as traders look for planted U.S. cotton acreage to be down sharply from last year at near 10.08 million acres.

Technical analysis: May cotton futures posted an inside day up on the daily chart. The high-range close gives bulls more momentum heading into tomorrow's session. Initial resistance is at yesterday's high of 88.88 cents, with support at this week's low of 86.12 cents. Closes back above 90.00 cents would signal a near-term low has been posted and make bulls' next target the March high of 93.93 cents.

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

Cash-only marketers: 85% sold on old-crop. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

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