Crop Analysis (VIP) -- August 22, 2013

August 22, 2013 09:59 AM
 

Corn

Price action: Corn futures extended losses into the close, with the front-month contract ending 10 1/2 cents lower and new-crop futures mostly around 18 cents lower.

Fundamental analysis: Timely rains in the central Corn Belt triggered profit taking in new-crop futures this morning, setting off double-digit losses into the close. Perceived dryness in key parts of the Corn Belt had added strength to futures yesterday.

Traders are also keeping a close eye on results from the Pro Farmer Midwest Crop Tour. More variable yields are being reported as scouts head across Iowa and into Minnesota today. Check "Evening Report" for more.

Meanwhile, Gulf basis moved a penny higher for immediate delivery to $1.25 over September futures signaling tightening supplies. This morning's weekly export sales data was largely ignored by the market, but reflects increased interest in new-crop corn.

Technical analysis: December corn futures posted a downside day of trade on the charts. The low-range close gives bears more momentum heading into overnight trade. Support is at the August low of $4.45 3/4.

Hedgers: 100% sold on 2012-crop in the cash market. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 100% sold on old-crop. 25% of expected 2013-crop production is sold via forward contract for harvest delivery.

 

Soybeans

Price action: Nearby soybean futures led today's decline by posting double-digit losses. Far deferred futures saw lighter losses.

Fundamental analysis: Unimpressive pod counts reported by Pro Farmer Midwest Crop Tour scouts helped to limit early pressure on futures, but rains moving across the Belt eventually led to price pressure. Pod counts in Iowa were, "very low" according to western Tour Director Chip Flory and the same held true in Illinois where surveys recorded pod counts falling short of the three-year average peg. See "Evening Report" for more.

Despite weaker-than-anticipated export sales, sendouts of 926,000 MT suggest healthy demand for new-crop beans. Gulf soybean basis was steady today to remain at a lofty $1.40 over November futures for immediate delivery.

Technical analysis: November soybeans futures remain in the uptrend established from the August low, but have seen choppy price action so far this week. The contract is building momentum for the next trending move.

Hedgers: 50% of expected 2013-crop production is sold via a forward-price cash contract for harvest delivery. 100% sold on 2012-crop in the cash market.

Cash-only marketers: 50% of expected 2013-crop production is sold via a forward-price cash contract for harvest delivery. 100% sold on 2012-crop in the cash market.

 

Wheat

Price action: Wheat futures saw spillover from the corn market and ended mostly 6 to 9 cents lower across all flavors.

Fundamental analysis: Wheat futures are under spillover pressure from softening corn futures. This morning's weekly export sales report showed sales of 494,000 MT for 2013-14 -- matching traders' expectations. Quality concerns over FSU wheat sendouts are keeping buyers of U.S. wheat on the line for now. Meanwhile, a change in export policy has slowed the flow of Argentine wheat out of South America. However, concerns persist that U.S. wheat may lose out as it is priced at a premium to other global suppliers as a result of recent strength in the U.S. dollar index.

Technical analysis: December SRW wheat futures posted a downside day of trade on the daily chart. The low-range close gives bears more momentum heading into overnight trade. Support is at the August low of $6.35 1/2.

Hedgers: 50% of 2013-crop is sold in the cash market. 100% sold on of 2012-crop.

Cash-only marketers: 25% of 2013-crop is sold. 100% sold on 2012-crop.

 

Cotton

Price action: Cotton futures ended mostly 30- to 40-points higher on short-covering. The December contract ended 6 points lower.

Fundamental analysis: Following recent sharp losses, traders reevaluated positions and that resulted in some "uninspired" short-covering. This morning's weekly export sales data showed sales of 81,000 running bales, which limited buying as it reflects softening demand -- especially from China.

Technical analysis: December cotton futures pivoted around support at yesterday's low and have a negative posture. Next support is at the June low of 81.72 cents.

Hedgers: 50% of expected 2013-crop production is hedged in December cotton futures at 83.87 cents. 50% of expected 2013-crop production is also sold via cash forward contract for harvest delivery. 100% sold on 2012-crop in the cash market.

Cash-only marketers: 50% of expected 2013-crop production is sold via cash forward contract for harvest delivery. 100% sold on 2012-crop.

 

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