Price action: Corn futures saw mixed trade this morning, but the market firmed with the open of pit trading and futures ultimately settled 6 1/2 cents higher in the March contract and around 3 cents higher in other months.
Fundamental analysis: Corn futures enjoyed some short-covering today, encouraged by the recently improved technical posture of the market as well as signs export demand is improving -- albeit marginally. Firmer Gulf basis levels this morning along with reports private Chinese feedmills have bought around 600,000 MT of 2013-crop U.S. corn on the recent price drop contributed to this idea. In addition, basis levels around the country remain historically high.
But expectations for a large 2013-14 crop and for South American supplies to soon ease concerns about tight old-crop carryover limited buying interest to short-covering.
Technical analysis: December corn futures posted a third consecutive higher close today, but thus far this has been just a corrective move in a downtrend. But the contract is nearing three key levels of resistance, a move through which could signal a major shift is underway. First, the contract must move through downtrending support drawn off the highs since December which intersects around $5.64 tomorrow, closely followed by the January low of $5.70, which also marks a 25% retracement of the decline from the September high to the March low. The 50-day moving average is also on course to intersect in that vicinity.
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.
Price action: March soybean futures ended 25 cents lower. The May through August contracts were 8 1/4 to 10 3/4 cents lower. New-crop contracts ended mixed to mostly lower.
Fundamental analysis: Traders are anticipating a slowdown in demand for U.S. soybeans, which pressured old-crop futures today. While there's still lots of congestion at Brazilian ports, new-crop South American supplies are expected to freely flow onto the world market soon -- barring labor disruptions. This led to an unwinding of long soybean/short corn spreads today.
Additionally, unwinding of bull spreads pressured old-crop futures and limited selling in new-crop contracts. But given tight old-crop stocks and expectations for a record crop this year, old-crop futures should remain at a hefty premium to new-crop contracts.
Technical analysis: Uptrending support from the January and February lows remains intact for May soybean futures. Violation of that trendline, which intersects at $14.37 1/2 Wednesday and rises roughly 2 1/2 cents per day thereafter would signal a short-term top is in place. The contract must push through tough resistance at $14.99 1/4 to accelerate the uptrend.
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.
Price action: Chicago wheat futures followed corn's lead and firmed to a 2 to 6 1/2 cent higher close. Kansas City and Minneapolis ended mostly 1 to 3 cents lower.
Fundamental analysis: Without its own fresh news to digest, buying interest in the wheat market was limited. Traders in the Chicago wheat market are keeping a close eye on corn prices, especially since nearby wheat contracts continue to trade at a discount to nearby corn futures. This is a reflection of lackluster wheat demand, as traders aren't concerned the current price relationship favors wheat for traditional corn uses.
Kansas City wheat was pressured by recent moisture improvements across the Central and Southern Plains and forecasts for more rains next week. Traders also noted upbeat weekly reports that noted wheat in Kansas is greening thanks to recent moisture.
Technical analysis: May Chicago wheat futures posted an inside day of trade on the daily chart but staged a high-range close, which bodes well for bulls in overnight trade. But the market has a lot of work ahead to signal a near-term low is in place. To confirm a low has been posted, the contract needs closes above the January low of $7.45 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.
Price action: Cotton futures ended mixed amid bull spreading, with the May through December contracts up 17 to 71 points and deferred 1 to 16 points lower.
Fundamental analysis: Bull spreading was the dominant feature in the cotton market today as there was little fresh news to digest. Strength in old-crop futures is coming from expectations demand will remain strong. While new-crop futures were mostly weaker today, uptrends remain in place and today's losses were seen as corrective in nature. Traders expect a sharp reduction in new-crop U.S. acreage to tighten carryover in the marketing year ahead.
Technical analysis: December cotton futures posted an upside day of trade on the daily charts and have completed a 62% retracement of the decline from the 2012 high to the 2012 low. This makes bulls' next target the 75% retracement at 89.67 cents. Support lies at the 50% retracement level at 83.34 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.