Crop Analysis (VIP) -- February 14, 2013

February 14, 2013 08:40 AM


Price action: Corn futures spent most of the day in negative territory, but the market never dipped more than a few cents lower and ended steady to 1 cent lower in most contracts.

Fundamental analysis: Heavy losses in the soybean market and strong gains in the U.S. dollar index kept bears in control of the corn market today. But pressure was limited by some signs export demand may be improving from its recent dismal level. Weekly export sales of 225,400 MT for 2012-13 and 59,600 MT for 2013-14, while not impressive, were a welcome improvement from recent weeks. Plus, Gulf basis levels firmed this morning for immediate delivery. Basis levels around the country are also strong thanks to tight supplies.

But considering expectations for South America to produce a large corn crop (the Argentine Buenos Aires Cereal Exchange today pegged the country's corn crop at a record-large 25 MMT), any improvement would likely only be enough to help the market put in a low after a 10-day decline.

Technical analysis: March corn futures remain within a downtrend toward the January low of $6.78. Initial resistance is at the psychological $7.00 level, followed by the February high of $7.46 1/4.

Hedgers: 100% sold on 2012-crop in the cash market -- 10% for March 2013 delivery. No 2013-crop sales recommended yet.

Cash-only marketers: 75% sold on 2012-crop --10% for March 2013 delivery; 15% for May 2013 delivery. No 2013-crop sales recommended yet.



Price action: Soybean futures finished mostly 5 to 7 cents lower, which was near the middle of today's trading range.

Fundamental analysis: Soybean futures were lightly pressured through the overnight and early morning hours by strong gains in the U.S. dollar index and a lack of bullish "reason" for traders to be buyers. A very disappointing weekly export sale figure added to the price pressure and kept bulls on their heels the entire session.

For the week ended Feb. 7, there were net sales reductions of 109,200 MT for 2012-13 and sales of 345,000 MT for 2013-14. China canceled 230,600 MT of old-crop sales, while unknown destinations canceled 146,500 MT. China was, however, a buyer of 355,000 MT of soybeans for 2013-14. The old-crop cancellations by China and "unknown" add to traders' concerns that the U.S. sales pace will slow dramatically as South American supplies get closer to hitting the world market.

Technical analysis: March soybean futures are still well above key support at the January low of $13.51 1/2. November soybean futures traded below the January low today, but stopped 1 1/2 cents shy of key support at the November low of $12.55 1/4.

Hedgers: 100% sold on 2012-crop in the cash market. No futures/options positions at this time. No 2013-crop sales advised yet.

Cash-only marketers: 75% sold on 2012-crop production for harvest delivery. No 2013-crop sales advised yet.



Price action: Wheat futures saw two-sided trade today. Chicago wheat ended mid-range and 2 to 3 1/2 cents lower for the day. Kansas City closed roughly 4 to 5 cents lower, while Minneapolis ended around 3 to 5 cents lower today.

Fundamental analysis: Wheat futures saw an early boost from weekly export sales tallies that signaled U.S. wheat prices may have finally dropped far enough to be competitive on the global export market. But this quickly gave way to profit-taking as dollar strength encouraged a risk-off attitude across the commodity sector today.

Rain in the forecast for next week in the Southern and Central Plains also made it difficult for wheat to find buyers, though the most recent Drought Monitor signals little change to the extensive drought footprint across the Plains (see "Evening Report" for more).

Technical analysis: March Chicago wheat futures were little changed for the day. Thus, near-term support remains at the psychological $7.00 mark, while the Jan. 31 high of $7.91 is initial resistance, followed by the January high of $7.99 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.



Price action: Cotton futures finished 13 to 42 points higher, which was a mid-range close.

Fundamental analysis: Cotton futures were initially pressured by sharp gains in the U.S. dollar index today. But strong weekly export sales performance encouraged light buying interest. For the week ended Feb. 7, cotton export sales totaled 185,700 running bales for 2012-13 and 171,500 running bales for 2013-14. The strong export sales signal the sharp price rally didn't cause importers to shy away from U.S. cotton as some fear will happen. Instead, it appears to have sparked some increased buying, signaling foreign buyers may fear even stronger prices.

Technical analysis: The 80.00-cent level is key near-term support for March cotton futures. A close below that mark would open downside risk to the August high at 78.02 cents. To the upside, strong resistance stands at the January high of 84.00 cents. A push above that level after a short consolidation period could be explosive.

Hedgers: 50% priced on expected 2012-crop production in the cash market.

Cash-only marketers: 50% priced on expected 2012-crop production in the cash market.




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