Crop Analysis (VIP) -- April 18, 2013

April 18, 2013 09:25 AM
 

Corn

Price action: Corn futures got off to a firmer start, but this eventually gave way to profit-taking, which picked up as the day progressed. Old-crop futures ended 11 1/2 to 16 cents lower; September settled 7 1/4 cents lower and new-crop corn closed with 5 1/2- to 6-cent losses.

Fundamental analysis: While the corn market got an early boost from ideas USDA's March 28 projection for corn plantings of 97.3 million acres is likely too high given the current weather situation, demand concerns eventually took hold. While weekly corn export sales were decent, they still represent relatively light export demand. Export commitments lag year-ago by 54%. Also, a 1- to 5-cent slide in Gulf basis levels for near-term delivery at midday added to such concerns.

Plus, there are increasing concerns about the Chinese bird flu situation and the likely reduction in the country's feed needs -- including corn. (See "Evening Report" for more.)

Technical analysis: May corn futures continue to chop in between the April high and low of $6.79 and $6.26 1/2, which are near-term levels of resistance and support, respectively.

Hedgers: 100% sold on 2012-crop in the cash market. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 75% sold on 2012-crop production. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

 

Soybeans

Price action: Soybean futures softened into the close to finish mid-range. May through August futures ended 7 1/4 to 10 cents higher, with the rest of the market up 3 1/4 to 6 1/4 cents.

Fundamental analysis: Early support was tied to weakness in the dollar index and indications that demand for U.S. beans was better than expected. This morning USDA announced China has booked 252,000 MT of beans for 2013-14 and Gulf basis firmed today to signal demand for old-crop was also strong. Meanwhile, weekly export sales of 339,400 MT for 2012-13 and 227,400 MT for 2013-14 came within expectations.

Spreading with corn was also beneficial for soybean futures today despite signals the start of corn planting would be delayed into May for the heart of the Corn Belt. This raises the risk some acres will be switched to soybeans -- especially in the northwest portion of the Belt.

Technical analysis: November soybean futures need to move above last week's high of $12.48 to break the trend of lower highs. Meanwhile, support lies at this week's low of $12.02 1/4. A return above the November low of $12.55 1/4 would signal a near-term low is in the works.

Hedgers: 100% sold on 2012-crop in the cash market. 50% of expected 2013-crop production is hedged in November soybean futures at $12.19. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 75% sold on 2012-crop production. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

 

Wheat

Price action: Wheat futures softened into the close to finish steady to 2 1/2 cents lower in Chicago, with Kansas City ending 1 1/2 to 2 1/2 cents higher. Minneapolis wheat finished steady to 3 1/2 cents higher in all but the front-month contract, which ended 9 1/2 cents higher.

Fundamental analysis: Futures were supported in early trade by a weaker tone in the U.S. dollar index and by an impressive weekly export sales tally. The report showed sales of 552,100 MT for 2012-13 and an impressive 1.123 MMT booked for 2013-14. China was the lead buyer of new-crop wheat with purchases of 840,000 MT (that alone topped traders' expectations for both marketing years).

Futures saw some profit-taking in late trade, but traders are keeping a close eye on the weather. Another blast of freezing temps are in the forecast for the Central and Southern Plains overnight and snow in areas of the Northern Plains will keep producers from advancing spring wheat planting efforts.

Technical analysis: July Chicago wheat futures finished in the lower half of today's trading range but remained confined within the boundaries of the last two week's trading range -- which extends from $7.20 1/2 to $6.93 3/4.

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: Cotton futures settled low-range with losses of 63 to 125 points. Nearby contracts were the downside leaders.

Fundamental analysis: Cotton futures were pressured by news China will make more high-quality cotton available to textile mills, including the first sales of 2012 domestic cotton as well as 2011 imported cotton. The government also raised its purchase cap for mills from two months of needs to eight months.

This news overshadowed another strong weekly export sales report that showed 211,200 RB in sales for 2012-13 and 36,000 RB for 2013-14. Old-crop sales were up 44% from the week prior and 53% from the four-week average, with China as the lead buyer.

Technical analysis: May cotton futures saw an inside day of trade as the market continued its steady to lower consolidation action of recent weeks. Yesterday's low of 82.97 cents is near-term support, followed by the bottom of the February trading range at 81.35 cents.

Hedgers: 100% sold on old-crop in the cash market. 50% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 85% sold on old-crop. 50% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

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