Crop Analysis (VIP) -- January 24, 2013

January 24, 2013 08:51 AM
 

 

Corn

Price action: March and May corn futures moved into positive territory late today and ended 3 1/2 and 1 1/2 cents higher for the day, respectively. Deferred months ended 1 3/4 to 4 3/4 cents lower for the day.

Fundamental analysis: Today was another quiet news day for the corn market so action largely consisted of position evening, with bears holding the upper hand thanks to spillover from the soybean market most of the day. Light pressure also came from a forecast that is more favorable for rain and milder temps in southern Brazil and Argentina. Plus, traders anticipate another disappointing export sales report from USDA tomorrow.

Technical analysis: March corn futures continued in the sideways pattern that has characterized trade since Jan. 15. During this time the January high of $7.35 has acted as tough resistance, while $7.00 is near-term support.

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: After posting double-digit losses in morning trade, soybean futures trimmed losses to end mixed. March through September futures ended 1 to 3 cents lower, and new-crop futures settled narrowly mixed.

Fundamental analysis: Futures were lower most of the day session despite this morning's announcement of a flurry of fresh export business. USDA announced China purchased 510,000 MT of soybeans and an unknown destination bought 113,000 MT of soybeans -- all for 2013-14. But forecasts for rains to begin overnight in Argentina and southern Brazil and for beneficial conditions to continue in northern Brazil over the near-term provided early pressure in the bean pit.

Soybeans rallied to fresh session highs into the close amid short-covering, which signals traders don't want to be caught too short ahead of tomorrow's Weekly Export Sales Report.

Technical analysis: March soybean futures posted a daily low of $14.15, which is initial support. Resistance stands at this week's high of $14.60 3/4, followed by the December high of $15.01 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.

 

Wheat

Price action: Wheat futures extended early losses to finish mostly 6 to 7 cents lower in Chicago, around 8 cents lower in Kansas City and Minneapolis ended roughly 3 to 5 cents lower.

Fundamental analysis: Much of today's pressure was attributed to spillover from neighboring pits and a lack of fresh news. While drought conditions continue to be concerning in the U.S. Southern Plains, with the crop in dormancy, this isn't taking center stage. Additionally, there is some precip in the forecast this weekend for the Plains, although this isn't expected to be drought-busting event.

Wheat needs a constant dose of export news to keep bulls interested. Some scattered business has been reported this week, but no large purchases. Traders will get an update tomorrow morning via the weekly export sales data.

Technical analysis: March Chicago wheat futures posted another downside day of trade on the daily chart to post a string of daily losses and signal a near-term high may be posted. Near-term boundaries are support at this month's low of $7.36 1/4 and resistance at this month's 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.

 

Cotton

Price action: Cotton futures ended split with March through July futures 60 to 241 points higher and deferred months 4 to 34 points lower.

Fundamental analysis: Cotton futures enjoyed bull spreading today thanks to a number of factors. For one, InterterContinental Exchange expanded cotton's daily trading limit today and will ease margin requirements tomorrow. Trading volume in the March contract today was more than double the average daily trading volume of the past year, which contributed to this decision.

Cotton has benefited from increased buying interest thanks to its recently improved techical posture as well as increasing concern about world cotton supplies, especially considering U.S. cotton acres will likely be down sharply this year. Traders also readied positions for tomorrow morning's Weekly Export Sales Report. Recent export data has reflected solid cotton demand.

Technical analysis: March cotton futures closed key support at the May gap and surged higher as this triggered buy stops. This opens significant upside potential to the April low of 87.00 cents. The May gap from 80.56 cents to 79.88 cents is new support.

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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