Crop Analysis (VIP) -- January 29, 2013

January 29, 2013 09:13 AM
 

Corn

Price action: Corn futures were choppy throughout the day and finished mixed. March through July futures closed steady to 3/4 cents higher, with the rest of the market mostly 3 cents lower.

Fundamental analysis: With little fresh news for the market to digest, corn was vulnerable to spillover from neighboring pits, although it saw limited buying on strength in the bean pit or help from weakness in the U.S. dollar index. This signals traders are comfortable with prices chopping in the current three-week consolidation range -- at least until fresh news emerges.

Traders are also keeping a close eye on the Argentine crop situation. Hot and dry weather this week is stressing pollinating corn, but rains are expected this weekend to stabilize the crops.

Technical analysis: March corn futures spent the day pivoting around the $7.30 level and need closes above the January high of $7.35 to reopen upside potential to $7.50. Support lies at last week's low of $7.14 1/2.

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 saw choppy trade today and futures firmed into the close to end 2 3/4 to 6 3/4 cents higher for the day. Soymeal ended with gains while soyoil ended with slight losses amid spread trading.

Fundamental analysis: Soybean futures benefited from concerns about heat and dryness in southern Brazil and Argentina, though conditions remain favorable in northern locations of Brazil. Already there are logistical concerns about getting harvested supplies shipped, though this is likely still several weeks away.

Meanwhile, historically high basis levels in the U.S. keep the tight supply and strong demand situation in focus. The market has grown accustomed to frequent daily sales announcements to China and basis levels on the Illinois River have risen notably, signaling farmer reluctance (or inability) to sell beans.

Technical analysis: March Chicago wheat futures were little changed for the day. This means resistance is still in place at the January high of $14.60 3/4, while last week's low of $14.15 is near-term support.

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 saw choppy trade today, but bears had the advantage into the close. Chicago and Kansas City wheat ended roughly 1 to 3 cents lower, while Minneapolis wheat finished mostly 3 to 6 cents lower.

Fundamental analysis: Wheat futures enjoyed light gains for much of the morning thanks to a reminder of tight supplies. The Palmer Drought Index and state condition reports reflected the yield-negative effects of widespread, long-lasting drought across the Wheat Belt. Comments by Russia's ag minister that the country will trim its 2012-13 grain export forecast by 1.5 MMT and news Japan plans to increase its feed wheat reserves by 44% were also price-friendly.

But traders need proof the U.S. is seeing an uptick in export business before they will be willing to actively add long wheat positions. While there have been some signs export demand is improving, these have not been consistent signals. Lacking this, wheat was vulnerable to profit-taking today.

Technical analysis: March Chicago wheat futures remain within the bounds of their recent trading range, the parameters of which are last week's low and high of $7.63 and 7.99 3/4, respectively.

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 posted strong gains of 116 to 194 points to finish mid- to high-range for the day.

Fundamental analysis: Futures were supported by expectations cotton stands to lose acres to corn and soybeans this spring, which offer producers a better return on their investment. Additional support continues to come from the recent uptick in demand, although there is some talk that higher prices have started to slow demand for U.S. cotton. As a result, traders will gauge weekly export sales data closely.

Technical analysis: March cotton futures posted an upside day of trade on the daily chart and finished mid-range. Futures tested resistance at last week's high of 84.00 cents. Closing above that level would open significant fresh upside potential. Support is now at the August high of 78.02 cents.

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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