Price action: New-crop corn futures traded lower ahead of the release of USDA's Supply & Demand Report, slumped after its release and then surged to close near the day's highs. Old-crop contracts closed 7 cents higher, with the December through July contracts 5 1/2 to 6 cents higher.
Fundamental analysis: A better-than-expected weekly export sales report lifted futures in the early going. USDA reported corn sales of 392,000 MT for 2012-13 and 657,800 MT for 2013-14, which were well above expectations. In addition, USDA announced a daily new-crop corn sale to China for 120,000 MT, further reminding traders prices are at "value" levels.
USDA's Supply & Demand Report was supportive for nearby futures as it reflected a tightening supply situation by pegging 2012-13 carryover at 729 million bushels. But USDA raised new-crop carryover more than expected to 1.959 billion bushels. The trade absorbed the negative news for new-crop futures and then firmed on concern over forecasts for above-normal temperatures due for the bulk of the Corn Belt during the heart of pollination.
Technical analysis: December corn futures have posted three consecutive closes above the 9-day moving average and posted its first close above resistance at the mid-June low of $5.25 3/4. The gap area just above $5.50 is bulls next target. But it takes a close above the June high of $5.73 1/2 to confirm a low has been posted.
Hedgers: 100% sold on 2012-crop in the cash market. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.
Cash-only marketers: 100% sold on old-crop. 25% of expected 2013-crop production is sold via forward contract for harvest delivery.
Price action: Soybean futures initially reacted negatively to USDA's reports, but short-covering ultimately helped futures to finish 3 1/2 to 9 1/2 cents higher, with the July contract leading gains. Soyoil posted losses for the day, while soymeal ended higher.
Fundamental analysis: USDA's Supply & Demand Report came in on the bearish side of pre-report expectations, but traders viewed the initial selloff reaction as overdone considering still-tight old-crop supplies and growing season uncertainty. USDA left its old-crop carryover projection at a still-tight 125 million bu., but it raised its new-crop carryover projection by 30 million bu. from June to 295 million bushels.
Nevertheless, the forecast for above-normal temps in the weeks ahead and a very slow development pace for the crop prevented traders from pushing prices lower. Signs prices are again attracting some export demand are also encouraging to that end.
Technical analysis: November soybean futures ended high range and just short of near-term resistance at yesterday's high of $12.95, closely followed by the $13.00 mark. Support is layered from the March high of $12.82 1/4 to the April high of $12.40 1/4.
Hedgers: 100% sold on 2012-crop in the cash market. 20% forward priced on expected 2013-crop production for harvest delivery.
Cash-only marketers: 100% sold on old-crop. 20% of expected 2013-crop production is sold via forward contract for harvest delivery.
Price action: Wheat futures saw a highly choppy day of trade, with Chicago ending 3 1/4 to 7 1/4 cents higher, while Kansas City and Minneapolis futures were mostly 1 to 2 cents lower.
Fundamental analysis: Traders' initial reaction to USDA's reports was positive due to the tightening of new-crop carryover. While USDA raised the size of the wheat crop more than expected, it also raised the export forecast to reflect strong sales to China. But in the end, wheat futures came off their session highs on profit-taking.
Early gains came from news that China's state grain buyer expects its wheat imports to rise by 73% in 2013-14 to 5 MMT. Also this morning, USDA's weekly export sales report showed sales well above expectations at 1,473,300 MT, which were primarily to China.
Improved demand could help wheat futures put in a harvest low, especially with harvest expected to wrap up in Kansas this week. But to build on recent gains, wheat needs spillover from neighboring corn and soybean markets.
Technical analysis: September Chicago wheat futures spiked resistance at $6.90 but settled mid-range. Importantly, futures closed back above old-support-turned-resistance at the May low of $6.81 1/2. A high-range close for the week would strongly suggest the market is working on a seasonal low.
Hedgers: 50% of 2013-crop is sold in the cash market. 100% sold on of 2012-crop.
Cash-only marketers: 25% of 2013-crop sale is sold. 100% sold on 2012-crop.
Price action: Cotton futures softened on USDA's report data and ended low-range with losses of 146 to 212 points through the July 2014 contract. Far deferred months saw losses of 72 to 94 points.
Fundamental analysis: Cotton futures came under heavy pressure as USDA's Supply & Demand Report favored market bears. USDA raised both its old- and new-crop carryover projection by 300 million bales from last month, to 3.9 million bales and 2.9 million bales, respectively. The increase to new-crop carryover was slightly less than anticipated. USDA also raised its global cotton carryover projection by 1.85 MMT from June to 94.34 MMT, which is an increase of 8.76 MMT from year-ago.
Pressure also stemmed from light weekly cotton export sales of 32,700 RB for 2012-13 (a marketing-year low) and sales of 58,000 RB for 2013-14. USDA also trimmed its cotton export forecast for the current marketing year.
Technical analysis: December cotton futures posted a bearish reversal today, but the contract respected uptrending support drawn off the lows since June, which intersects around 84 cents tomorrow. Today's high of 87.11 cents is resistance.
Hedgers: 50% of expected 2013-crop production is hedged in December cotton futures at 83.87 cents. 50% of expected 2013-crop production is also sold via cash forward contract for harvest delivery. 100% sold on old-crop in the cash market.
Cash-only marketers: 85% sold on old-crop. 50% of expected 2013-crop production is sold via cash forward contract for harvest delivery.