Crop Analysis (VIP) -- April 4, 2013

April 4, 2013 10:00 AM
 

 

Corn

Price action: Old-crop corn futures ended low-range with losses around 11 cents. September corn finished down 4 cents, while new-crop settled steady to 3 cents higher.

Fundamental analysis: Old-crop corn did see trade in positive territory this morning, but this quickly gave way to profit-taking, which in turn triggered some additional technical selling as the contracts traded through weekly lows. Last Thursday's heavier-than-anticipated quarterly grain stocks estimate will likely remain a source of pressure until definitive bargain buying emerges. Today's export sales tally met expectations but did not fit the bill.

Expectations for large planted acreage in 2013 continues to limit buying interest in new-crop corn futures. However, downside risk for these contracts is also being limited by the very low soil temperatures that are delaying preparations for the coming growing season as well as lingering drought in much of the central and western Corn Belt.

Technical analysis: May corn futures hit a new 2013 low and settled just below support at the November 2012 high of $6.32. This opens downside risk to the psychological $6.00 level. The contract has a long way to go to challenge near-term resistance at the January low of $6.78 1/2.

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 moved well off their lows into the close to settle 3 1/4 to 8 1/4 cents lower in old-crop contracts, while new crop posted fractional to 2-cent gains. Soymeal ended mixed while soyoil posted moderate losses for the day.

Fundamental analysis: Strength in the U.S. dollar index and concerns that the bird flu situation in China could cause consumers to shy away from meat and poultry products -- limiting crushing demand -- weighed on old-crop beans today. Plus, the market appears headed for a test of the 2013 lows, which encouraged some technical selling.

This overshadowed another weekly export sales report that came in above expectations, signaling exporters are not yet sourcing the bulk of their needs from South America. The market needs signs that bargain buying is occurring to put in a low.

New-crop beans benefited from some bull spread unwinding heading into the close.

Technical analysis: May soybean futures appear headed for a test of strong support in the $13.45 to $13.37 3/4 area that has stemmed declines in July, November and February. Near-term resistance is at $14.00.

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.

 

Wheat

Price action: Wheat futures saw a choppy day of trade. Chicago wheat ended roughly 1 to 4 cents lower for the day; Kansas City ended with losses in the low teens and Minneapolis settled roughly 5 to 6 cents lower.

Fundamental analysis: Spillover from corn, strength in the U.S. dollar index and a disappointing weekly export sales tally weighed on the wheat market today. Significant precip in the forecast for the Central Plains and Midwest next week weighed especially heavily on the Kansas City market.

But concerns about the relatively poor shape of the U.S. winter wheat crop continues to limit downside risk for wheat futures. And today's drought monitor reflected widespread drought remains in effect for much of winter wheat country.

Technical analysis: May Chicago wheat futures traded through but were unable to close above the psychological $7.00 mark, leaving it as near-term resistance. Support remains layered from the March low of $6.81 1/2 to $6.59 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: May and July cotton futures ended well off session lows with losses of 89 and 71 points, respectively. The rest of the market settled 26 to 45 points lower for the day.

Fundamental analysis: Cotton futures have enjoyed an impressive run-up in prices since the start of the year. Today traders took a step back and booked some profits, taking advantage of strength in the U.S. dollar index. The market is also concerned about the health of the jobs market after a third consecutive week of higher jobless claims; cash-strapped consumers may spend less on clothes.

This overshadowed another solid export sales report. Cotton export sales of 148,300 RB for 2012-13 were up 4% from last week. This plus sales of 59,300 RB for 2013-14 helped export commitments improve to 1% behind year-ago, compared to 4% behind last week.

Technical analysis: May cotton futures continue to consolidate between last Thursday's low and high of 87.93 cents and 90.27 cents, respectively. An upside breakout would have bulls targeting the March 15 high of 93.93 cents. A breakout to the downside would set the stage for a challenge of the March low of 86.12 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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