Crop Analysis (VIP) -- February 20, 2014

February 20, 2014 08:26 AM
 

Corn

Price action:
Corn futures closed 1/2 to 2 cents higher in the 2014 contracts while 2015 contracts finished narrowly mixed. Nearbys finished near their highs of the day. Funds bought 6,000 contracts (30 million bu.) today.

Fundamental analysis: Corn futures opened weaker on profit-taking following recent gains and the stronger U.S. dollar index. The USDA annual outlook conference filled a news vacuum. USDA data came in about as expected as it decreased 2014-crop plantings by 3.5% to 92 million acres, down from its previous baseline figure of 93.5 million acres. If achieved it would be the lowest total planted acres since 2011.

Traders will turn their attention to tomorrow's weekly export sales report, which is delayed due to the Monday holiday. Traders continue to look for confirmation of strong export demand.

Technical analysis: March futures moved lower at the open on profit taking, but uncovered support as it neared the old resistance area of $4.50. That attracted buying and futures probed higher, marking a new high for this move. Futures are testing the wide resistance area from $4.50 to $4.62. The next level of resistance starts only 3 cents higher at $4.65.

Hedgers: 60% sold in the cash market on 2013-crop. 20% of expected 2014-crop production is sold via cash forward contract sale for harvest delivery.

Cash-only marketers: 50% sold in the cash market on 2013-crop. 20% of expected 2014-crop production is sold via cash forward contract sale for harvest delivery.

 

Soybeans

Price action: Soybean futures opened weaker but moved higher through the day to finished near their highs. Contracts closed 4 to 11 cents higher, led by deferred contracts. Funds bought 4,000 contracts (20 million bu.) today.

Fundamental analysis: Soybean futures opened lower on follow-through profit-taking and on the stronger U.S. dollar index. The main news today came from USDA's annual outlook conference which pegged projected 2014 soybean plantings at a record 79.5 million acres. That was up from USDA's previous estimate. But that figure was less than expected by the trade and 2014-crop futures led the price rebound.

The trade will turn its attention to the weekly export sales data tomorrow, delayed due to the Monday holiday. Traders are looking for a continuation of strong export sales. They are also watching news of port congestion developing in Brazil, as it helps to keep demand coming to the U.S. -- at least for now.

Technical analysis: March soybean futures opened lower but found support at the late-January/February steep uptrend line and moved higher. This suggests the $13.40 area will act as support. Resistance sits at yesterday's high of $13.71.3/4.

Hedgers: 100% sold in the cash market on 2013-crop production. 10% of expected 2014-crop production is sold via cash forward contract sale for harvest delivery.

Cash-only marketers: 90% priced on old-crop. 10% of expected 2014-crop production is sold via cash forward contract sale for harvest delivery.

 

Wheat

Price action: Wheat futures closed mixed after trading lower most of the day. Contracts tended to finish near their highs for the day. SRW wheat futures closed 4 cents lower in the March contract but unchanged to 3/4 cents higher in deferred contracts. HRW wheat futures finished 3/4 cent lower in the March and 1 1/2 to 2 cents higher in deferred contracts. HRS closed 2 1/4 cents lower in the front contract and mixed in deferred contracts.

Fundamental analysis: Futures opened lower on profit-taking and the stronger U.S. dollar index. However, trader concerns over potential damage to the crop from the winter storm moving across the nation's midsection lightened the selling. Futures trimmed losses as the initial selling failed to attract follow-through selling.

USDA now pegs the nation's total 2014 planted wheat seedings at 55.5 million acres, down from its earlier estimate of 57 million acres. That was seen as supportive of deferred contracts which moved higher in thin trading.

Technical analysis: March SRW wheat futures found support at the previous resistance area of $6.10. Futures finished upper range leaving yesterday's high near $6.21 as resistance. Next hefty resistance starts at $6.50. The uptrend line offers support at $6.00.

Hedgers: 100% sold on 2013-crop in the cash market. 35% of expected 2014-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 75% sold on old-crop. 35% of expected 2014-crop production is sold via cash forward contract for harvest delivery.

 

Cotton

Price action: Cotton futures finished 10 to 60 points lower through the October contract. The December contract forward ended 16 to 23 points higher.

Fundamental analysis: Old-crop cotton futures faced mild followthrough selling today following a low-range close yesterday. Traders are taking profits out of the market after recent strong price gains, though selling interest is limited amid bullish old-crop fundamentals and expectations USDA will eventually cut its 2013-14 ending stocks forecast.

Tomorrow's price action will be guided by weekly export sales. Traders will continue to watch for signs the runup in price has slowed demand.

Technical analysis: March cotton futures closed just beneath uptending support from the November low. Consecutive lower closes below this uptrend could signal a deeper correction is underway. But it would take a violation of the last corrective pullback at 83.66 cents to signal potential major topping action.

Hedgers: 75% of 2013-crop is sold in the cash market. 25% of expected 2014-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 75% of 2013-crop is sold. 25% of expected 2014-crop production is forward sold for harvest delivery.

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