Crop Analysis (VIP) -- August 23, 2012

August 23, 2012 10:22 AM
 

Corn

Price action: Corn futures posted a low-range close to finish 15 3/4 to 21 1/2 cents lower in the September through July contracts. Far deferred futures ended mostly around 6 to 9 cents lower.

Fundamental analysis: Traders continue to be disappointed by yield results from the Pro Farmer Midwest Crop Tour, although yield reports this morning out of Minnesota and Iowa were better. Early losses turned sharp as sell stops were triggered.

This morning's weekly export sales report showed sales of 108,400 metric tons (MT) for 2011-12 and 217,000 MT for 2012-13. Combined, the tally met traders' expectations, but traders note foreign buyers are shying away from high-priced corn to seek cheaper alternatives from South America and feed wheat.

Technical analysis: Still, no technical chart damage was done today, as December corn futures remain within the boundaries of the broad trading range outlined by support at the August low of $7.81 1/4 and the contract high of $8.49.

Hedgers: 100% sold on 2011-crop in the cash market. 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.

Cash-only marketers: 100% sold on 2011-crop. 35% forward priced on expected 2012-crop production -- 10% for harvest delivery; 10% for March 2013 delivery; and 15% for May 2013 delivery.

Soybeans

Price action: September soybeans ended 20 3/4 cents lower and November closed 12 3/4 cents lower -- both a low-range finish. But the rest of the market came off the lows to end 4 1/4 to 9 cents lower.

Fundamental analysis: Traders continue to monitor data from the Pro Farmer Midwest Crop Tour, with scouts finding some better yield potential in Iowa and Minnesota today compared to previous day's routes.

Early losses were limited by fresh demand news, but that gave way to profit-taking pressure and sell tops being triggered. This morning's weekly sales report showed sales of 132,900 metric tons (MT) for 2011-12 and 585,800 MT for 2012-13. Also this morning, USDA announced daily sales of 202,000 MT of soybeans to unknown destinations for 2012-13 and 165,000 MT of soybeans to China for 2012-13. USDA also announced daily sales of 55,000 MT of soyoil to China, with 36,000 MT for 2011-12 and 19,000 MT for 2012-13. Fresh demand news signals prices have not yet slowed demand enough to ration supplies.

Technical analysis: November soybean futures posted a key bearish reversal, with today's contract high of $17.44 3/4 initial resistance. Followthrough pressure tomorrow would confirm the bearish reversal and signal more near-term pressure could lie ahead.

Hedgers: 100% sold on old-crop in the cash market. 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.

Cash-only marketers: 100% sold on old-crop. 50% sold on expected 2012-crop production for harvest delivery.

Wheat

Price action: Wheat futures fell victim to spillover from neighboring corn and soybean markets around midday, posting double-digit losses in the 20-cent range at all three exchanges.

Fundamental analysis: Futures started the day choppy but as selling picked up in the corn and soybean markets, sell stops were eventually triggered to sharply extend losses in the wheat pit as wheat remains in a follower's role.

This morning's weekly export sales data showed sales of 468,800 metric tons (MT) for 2012-13 and 6,000 MT for 2013-14 -- coming within expectations. Sales for 2012-13 were up 19% from the previous week, with Japan the lead buyer.

Technical analysis: September Chicago wheat posted a bearish reversal. The low-range close gives bears the upper hand heading into the next session. Followthrough pressure would reopen downside risk to the August low of $8.38 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.

Cotton

Price action: Cotton futures ended narrowly mixed, with October through May contracts 1 to 19 points lower and deferreds 11 to 27 points firmer.

Fundamental analysis: China has issued an additional 400,000 metric tons (MT) of cotton import quotas to textile mills to help them source more cheap supplies due to tight domestic supplies. The government is also reportedly considering selling off its cotton reserves next month to boost supplies to the domestic market.

This morning's weekly export sales data showed cotton sales of 85,200 running bales (RB) for 2012-13 and 11,600 RB for 2013-14. China was the lead buyer for 2012-13 supplies. Export commitments are running 31% behind year-ago, which is an improvement from 34% behind the previous week.

Technical analysis: December cotton futures saw a relatively quiet day of trade compared to the grain markets, with prices generally confined to within the previous days trading range.

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.

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