Crop Analysis (VIP) -- February 28, 2013

February 28, 2013 08:32 AM
 

 

Corn

Price action: Corn futures closed in the upper end of today's range with gains of 5 to 10 cents through the September contract, while new-crop futures were mostly 2 to 3 cents higher.

Fundamental analysis: Much of the support for corn came on spillover from strong gains in the soybean market. But a weekly export sales total that bested traders' expectations and end-of-the-month short-covering also were supportive.

Weekly export sales of 302,600 MT for 2012-13 and 210,000 MT for 2013-14 were better than expected. Still, it's unlikely export demand will be a source of sustained support in the corn market as the overall export pace remains weak.

There were no deliveries against March corn futures to begin the two-week delivery process. Given the strong cash market, no deliveries are anticipated moving forward.

Technical analysis: May corn futures closed above psychological $7.00 mark today. To signal a short-term low is in place, a close above the September low of $7.06 3/4, which served as the bottom of the extended, choppy range until mid-December, is needed.

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.

 

Soybeans

Price action: Soybean futures enjoyed strong gains throughout the day, though most contracts did settle well off their highs. Old-crop futures ended 7 1/2 to 16 3/4 cents higher, with nearbys leading gains. Soymeal also enjoyed strong gains while soyoil futures faced moderate pressure.

Fundamental analysis: Soybean futures received an early boost from this morning's weekly export sales tallies of 689,000 MT for 2012-13 and 482,000 MT for 2013-14. The primary buyer in these impressive sales was China, which signals it is growing impatient waiting for South American shipping delays to be sorted out. Adding to the still-strong demand story for U.S. soy, China also made a daily purchase for 123,000 MT of new-crop beans.

This, in turn, raises concerns about very tight U.S. supplies, especially as a rebound in production for 2013-14 by no means is a sure thing. Recent precip in the Corn Belt does improve production prospects, however.

Ahead of the close, the market brushed off news the Buenos Aires Cereals Exchange trimmed its Argentine soybean production by 1.5 MMT to 48.5 as this would still be the third largest bean crop on record.

Technical analysis: May soybean futures settled well off their highs, signaling the market may have a difficult time finding sustained buying interest going forward. Tough resistance remains at last week's high of $14.97, while near-term support is at Tuesday's low of $14.20 1/2.

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.

 

Wheat

Price action: Wheat futures traded double-digit higher for much of the morning, but the market backed well off these levels after midday to settle fractionally to 3 1/2 cents higher in Chicago. Kansas City posted gains around 6 to 9 cents, while Minneapolis wheat posted gains ranging from 2 3/4 to 12 1/2 cents.

Fundamental analysis: Wheat futures benefited from month-end positioning on ideas the downside has been overdone of late. Adding to such ideas are recent signs export demand may finally be improving after the February price break. Weekly wheat export sales matched expectations today, but the tally was a welcome improvement relative to recent tallies.

The wheat market also benefited from a reminder of tightening Black Sea region supplies. Russia's ag minister said the government may have to compete against exporters as it buys grain from the southern breadbasket region to replenish depleted government reserves.

Technical analysis: May soybean futures nearly matched yesterday's trading range, which means support remains at this week's low of $6.97 3/4. The contract needs closes above the January low of $7.45 1/4 to signal a low may be in place.

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.

 

Cotton

Price action: Cotton futures settled 83 to 114 points higher in old-crop contracts, which was in the upper half of today's range but well off session highs. New-crop contracts were steady to 51 points higher.

Fundamental analysis: Old-crop cotton futures were supported by weekly exports sales. While 2012-13 sales at 152,900 bales were 11% below the previous week, traders are encouraged demand has dropped despite prices being at the highest level since May of last year. Until there are signs the price rally has curbed demand, there's more upside potential.

USDA also reported weekly sales of 80,800 bales for 2013-14. But the bigger support for new-crop contracts is coming from expectations for a sharp drop in planted acres and an anticipated drawdown in cotton stocks during 2013-14.

Technical analysis: May cotton futures posted a potential upside breakout from the month-long consolidation range by closing above the Feb. 20 high at 85.24 cents. But consecutive higher closes above this level are needed to confirm a breakout. A quick drop back below it could signal a bull trap.

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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