Crop Analysis (VIP) -- December 31, 2013

December 31, 2013 07:46 AM


Price action:
Corn futures did not stray much more than a penny or two from unchanged today, and the market ended 1/4 to 1 3/4 cents lower for the day.

Fundamental outlook: Both buying and selling interest were light to wrap up the year. Rains in Argentina overnight and the forecast for more precip this week gave bears a slight advantage today. But selling was also limited by the forecast for heat to continue in the country. A late selloff in the soybean market caused corn to settle near session lows.

News UkrAgroConsult raised its corn production estimate for Ukraine by 500,000 MT to 26 MMT favored market bears, as did strength in the U.S. dollar index.

On the other hand, strong export demand has limited the market's downside. Traders in nearby contracts have thus far shown little urgency to test contract-low support.

Technical outlook: Tough support is tightly layered from the November low of $4.20 to the contract low at $4.18 1/2. The December high of $4.40 3/4 is initial resistance, followed by the November high of 4.49 1/2.

Hedgers: 25% of 2013-crop production is sold in the cash market. Be prepared to advance sales on an overdue bounce.

Cash-only marketers: 25% sold on 2013-crop. Be prepared to advance sales on a bounce.



Price action: Soybean futures posted double-digit losses across all contracts with January futures leading the decline with a loss of 15 3/4 cents. Futures finished at or near their lows of the day.

Fundamental outlook: Overnight rain in areas of Argentina had soybean futures on the defensive throughout the day. In addition, forecasts call for continuing chances for showers across that country over the next six to ten days, easing worries about forecasts for high temperatures. Traders continue to look for a record-large harvest out of South America, but steady export business continues to support futures.

Technical outlook: January soybean futures were under pressure throughout today's trade and slumped at the close, posting their lowest close since Nov. 11. In the process futures broke through the bottom of the trading channel which has supported selloffs since then. That makes the $13.20 area resistance with $12.80 the next level of support..

Hedgers: 100% sold in the cash market on 2013-crop production. We'll manage risk on the board the remainder of the marketing year.

Cash-only marketers: 75% sold on 2013-crop production.



Price action: Wheat futures were choppy in overnight trade but favored a firmer tone in daytime trade. SRW wheat ended around 4 cents higher, while HRW closed roughly 2 to 4 cents higher and HRS posted gains around 4 to 5 cents.

Fundamental outlook: Wheat futures benefited from short-covering as funds lightened their short exposure to the market as they closed their books for 2013. However, bears still hold the clear near-term advantage; bulls have a lot of work ahead of them in 2014 to reclaim momentum.

There was little fresh news for the market to digest today, with slight strength in the U.S. dollar index limiting buying interest. But the ability of the wheat market to shrug off spillover from widespread selling in the commodity sector is somewhat encouraging.

Technical outlook: March SRW wheat bounced after posting a contract low of $5.99 in overnight trade. The fact that the slip below $6.00 didn't trigger sell stops signals it could be a strong level of support. But if violated, next support comes from the weekly continuation chart, which is layered from $5.90 area to the December 2011 low of $5.77 1/4.

Hedgers: 75% sold on 2013-crop in the cash market. No 2014-crop sales are advised.

Cash-only marketers: 50% sold on 2013-crop. No 2014-crop sales are advised at this time.


Price action: Cotton futures generally enjoyed followthrough from yesterday's gains to post slight gains for the day.

Fundamental outlook: Focus in the market was on evening positions as traders closed their books on 2013. Slight strength in the U.S. dollar index limited buying, as did weakness in the raw commodity sector.

Traders will return on Thursday to begin establishing positions for 2014, but they will have to wait until Friday for the Weekly Export Sales Report.

Technical outlook: March cotton futures posted a weekly high of 85.29 cents and a weekly high close. Cotton futures posted strong gains for December and while sharply off the August highs, still posted year-on-year gains.

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

Cash-only marketers: 50% sold on 2013-crop production.

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