Crop Analysis (VIP) -- January 28, 2013

January 28, 2013 08:58 AM
 

Corn

Price action: Corn futures firmed with the open of pit trading and extended gains into the close to end just off session highs and 5 3/4 to 8 1/2 cents higher in most contracts.

Fundamental analysis: Spillover support from soybeans helped the corn market to move into positive territory this morning. The market gained a bit of momentum as the day progressed when weekly export inspections came in above expectations and Gulf basis levels firmed for near-term delivery today. This gives some tentative hope export demand may be improving.

The market also benefited from some midday weather model updates that were less favorable for rain in Argentina over the 6- to 10-day forecast. The near-term forecast calls for dry conditions in Argentina and southern Brazil.

Technical analysis: March corn futures have been consolidating in a narrow trading range since mid-January and today was no exception. The boundaries of this range are support at last week's low of $7.14 1/2 and resistance at the monthly high of $7.35.

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 were choppy today but gained upward momentum around mid-morning and finished 4 3/4 to 7 1/2 cents higher. Meal also ended higher, but soyoil closed mixed amid spreading.

Fundamental analysis: Futures started the overnight session with gains due to concerns about dry conditions in southern Brazil and continued strong demand, but weakened ahead of the start of open-outcry trade. Soybeans remained weaker despite news that China purchased 220,000 MT of soybeans for 2013-14. But as the day progressed and near-term forecasts remained hot and dry for southern Brazil, buying in soybean futures improved and nearby futures returned to near earlier highs.

But today's back-and-forth price action signals traders anticipate demand for U.S. soybeans to slow soon as Brazilian beans become more readily available next month.

Technical analysis: March soybean futures posted an upside day of trade on the daily chart. Near-term boundaries for the contract are resistance at last week's high of $14.60 3/4 and support at last week's low of $14.15. A move above resistance would make bulls' next target the December high of $15.01 1/4, while key support lies at the January low of $13.51 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: Similar to the neighboring corn and soybean markets, wheat futures were choppy today but firmed around mid-morning to post slight gains in most contracts. Chicago and Kansas City wheat closed mostly 2 to 3 cents higher, with Minneapolis marginally to 2 cents higher.

Fundamental analysis: Wheat futures largely took their cue from neighboring pits, as the market lacked fresh news to excite bulls or bears. Choppy outside markets also contributed to the two-sided trade in wheat futures, as crude oil was firmer and gold was lower.

Traders, however, were reminded by the recent improvement in export demand as weekly wheat inspections of 22.283 million bu. came in above expectations. Traders also digested news Russia's exportable grain supplies have tightened considerably, as exports last month from the country declined. Still, wheat futures need a constant dose of fresh demand news to keep bulls interested.

Technical analysis: Near-term boundaries for March Chicago wheat futures are resistance at the January high of $7.99 3/4 and support at the January low of $7.36 1/4. Closes above resistance would make bulls' next target the $8.30 level, while violation of support would have bears targeting the June low of $6.69 1/4.

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 traded on both sides of unchanged today, but the market ended high-range with gains of 29 to 57 points.

Fundamental analysis: Cotton futures benefited from news demand at Chinese state reserve auctions has declined even further. For the week ended Jan. 25, just 29% of the offered stocks were sold, compared to 55% the week prior. The quality of the cotton is said to be poor. This is expected to result in increased demand for U.S. fiber, though the recent price rally through long-standing areas of resistance has added a note of caution. Traders will watch to see how cotton demand fares at prices over 80 cents; such levels have trimmed demand in the past.

Technical analysis: March cotton futures remain within the market's uptrend since the start of the year. Resistance is layered every 0.5 cent higher to last week's spike high of 84.00 cents. Former resistance at 80.00 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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