Price action: Corn futures turned in a corrective day of price action. September corn futures closed 13 1/2 cents lower, while the December through July 2013 contracts were 5 1/4 to 8 3/4 cents lower. Far-deferred futures ended narrowly mixed.
Fundamental analysis: Corn traders took some profits out of the market today. But losses were limited and corrective in nature amid supply concerns. The weather forecast shows very little hope for any meaningful precip, meaning the crop will remain under stress and yield prospects will shrink.
But traders are starting to also focus on the demand side amid some warning signs high prices are slowing demand. Those warning signs have come from ethanol, feed demand and exports.
Technical analysis: December corn futures posted a new contract high of $8.20 1/2 before turning lower. That level is initial resistance, followed by the psychological $8.25 and $8.50 marks. Last week's low at $7.45 1/2 is initial solid support.
Hedgers: 100% sold on 2011-crop in the cash market. 40% of expected 2012-crop production is covered in Dec. $6.50 put options for 31 1/2 cents. 35% cash forward sold on expected 2012-crop production -- 25% for harvest delivery; 10% for March 2013 delivery.
Cash-only marketers: 100% sold on 2011-crop. 35% forward priced on expected 2012-crop production -- 10% for harvest delivery; 10% for March 2013 delivery; and 15% for May 2013 delivery.
Price action: Soybean futures favored a firmer tone most of the day, but saw periods of profit-taking. That profit-taking increased into the close, with the August through November contracts ending 2 1/2 to 10 1/2 cents lower to post a low-range close, while deferred contracts favored a firmer tone.
Fundamental analysis: While traders remain focused on the weather, the lack of fresh news resulted in some late-session profit-taking. Signs of rationing in the corn market provided thoughts the same was happening to soybeans, but there have been no clear-cut signs that end-users have slowed soybean use. Until there are signs soybean prices have risen enough to curb demand, the downside is limited and there is more near-term upside potential.
There is also heightened concern about the near-term forecast, which is hot and mostly dry, as moisture requirements are on the rise as the crop is trying to fill pods.
Technical analysis: November soybeans saw trade above resistance at yesterday's high of $16.48, but ended near session lows. Key resistance stands at the contract high of $16.91 1/2, with support at last week's low of $15.36. Breaking out from either side of the range could direct the next big price move.
Hedgers: 100% sold on old-crop in the cash market. 25% of expected 2012-crop production is covered in Nov. $14.00 put options for 42 3/8 cents. 50% of expected 2012-crop production is sold via cash forward contract for harvest delivery.
Cash-only marketers: 100% sold on old-crop. 50% sold on expected 2012-crop production for harvest delivery.
Price action: Wheat futures enjoyed early gains on spillover from corn, but as corn weakened, buying dried up in the wheat pit. Wheat became the eventual leader to the downside with the September through March contracts at all three exchanges ending 20-plus cents lower.
Fundamental analysis: Early support also came from news Russia's ag ministry lowered its estimate of the 2012 grain crop to 80 million metric tons (MMT) from the previous range of 80 MMT to 85 MMT, and talk the estimate could decline further if drought conditions persist.
Adding to late-session weakness was ideas hedge-related pressure will pick up as spring wheat harvest gains momentum. As of Sunday, 28% of the crop was harvested.
Technical analysis: September Chicago wheat futures came within a 1/4 cent of resistance at yesterday's high of $9.19 3/4 before turning lower. Sell stops were triggered on the move below $9.00. The low-range close gives bears the upper hand to start overnight trade.
Hedgers: 75% cash sold on 2012-crop for harvest delivery. 100% sold on 2011-crop in the cash market.
Cash-only marketers: 75% of 2012-crop production is sold for harvest delivery. 100% sold on 2011-crop.
Price action: October cotton futures ended 4 points lower, while deferred contracts were 30 to 92 points higher. Futures finished mostly mid-range.
Fundamental analysis: Cotton futures were supported by weakness in the U.S. dollar today. That provided light support, but the upside was limited to mild short-covering. There are some worries with falling crop condition ratings amid persistent heat and dryness, especially in western cotton areas, but with crop ratings well above year-ago, the level of concern is limited.
Technical analysis: December cotton futures continue to chop in a relatively narrow range, especially over the past month. While the July low and high represent initial support and resistance, stronger boundaries are the June low (also the contract low) of 64.61 cents and the June high at 74.80 cents.
Hedgers: 100% sold on old-crop in the cash market. 50% priced on expected new-crop production via cash forward contract for harvest delivery.
Cash-only marketers:s100% sold on old-crop. 50% priced on expected new-crop production via forward contract for harvest delivery.