Crop Analysis (VIP) -- March 14, 2013

March 14, 2013 09:40 AM
 

 

Corn

Price action: March corn futures expired down 8 1/2 cents at $7.32 3/4. Other contracts were 2 1/4 to 6 1/4 cents higher, which was near session highs.

Fundamental analysis: March corn futures went off the board at a premium to other contracts, giving May futures an upside target to chase. Old-crop corn futures continue to be supported by tight supplies. Meanwhile, new-crop corn futures were pulled higher by the strength in old-crop contracts.

Weekly export sales were stronger than expected at 282,300 MT for 2012-13 and 371,000 MT for 2013-14. More important, however, China showed up as a buyer of 111,000 MT of old-crop corn and 191,000 MT of new-crop corn for the week.

Technical analysis: May corn futures are basing on top of the psychological $7.00 mark. If the contract can springboard from that level, the February high at $7.47 1/2 would be bulls' target. A close below $7.00 would point the contract toward support around $6.80.

Hedgers: 100% sold on 2012-crop in the cash market. No 2013-crop sales advised yet.

Cash-only marketers: 75% sold on 2012-crop, including 15% for May 2013 delivery. No 2013-crop sales recommended yet.

 

Soybeans

Price action: March soybean futures expired 17 3/4 cents lower at $14.57 1/4. May through September futures ended 6 1/2 to 11 1/2 cents lower, with new-crop contracts mostly 2 to 3 cents lower.

Fundamental analysis: Bull spread unwinding was seen in the soybean market again today, with additional pressure coming from an unwinding of long soybean/short corn spreads. Key tomorrow will be whether traders view the downside as overdone as today marked the three straight day of losses.

Additional pressure came form expectations demand for U.S. soybeans would slow soon as beans begin to readily arrive at ports, although shipping delays linger. This morning's weekly export sales report did not show a marked slowdown in demand for old-crop beans, with sales of 657,700 MT reported and sales of 126,000 MT reported for 2013-14. China was the buyer of 183,500 MT of old-crop beans and 126,000 MT of new-crop beans for the week.

Technical analysis: November soybean futures spent most of the day pivoting around support at yesterday's low of $12.56. Important support lies at the February low of $12.47 1/4, with initial resistance at last week's high of $12.82.

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 closed mostly 7 to 14 cents higher in Chicago, mostly 9 to 14 cents higher in Kansas City and 4 to 7 cents higher in Minneapolis. March contracts at all three exchanges expired today.

Fundamental analysis: Wheat futures were supported by stronger-than-anticipated weekly export sales. For the week ended March 8, USDA reported sales of 888,500 MT for 2012-13 and 198,500 MT for 2013-14. The sharp pickup in export sales activity signals U.S. prices are a "value" buy despite recent sharp gains in the U.S. dollar.

While the dollar has been rallying, it was under pressure much of today, which added to the firmer tone in wheat futures. Currently, U.S. wheat prices are about the cheapest around the world, but if the dollar continues to rally, it would hurt the competitiveness of U.S. wheat.

Technical analysis: May Chicago wheat futures pushed through downtrending resistance from the November swing highs today. Consecutive higher closes above that downtrend would suggest an extended correction is underway. The next two key hurdles for bulls are the March 1 reaction high at $7.26 3/4 and the January low at $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.

 

Cotton

Price action: May and July cotton futures closed 228 and 201 points higher, respectively. New-crop contracts were 90 to 133 points higher.

Fundamental analysis: Old-crop cotton futures were supported by weekly export sales. For the week ended March 7, USDA reported 2012-13 sales of 187,600 bales and new-crop sales of 40,500 bales. With export sales staying strong despite the strong price surge, there is no indication prices are choking off demand.

While attention in old-crop cotton is on demand, the new-crop focus is plantings. With new-crop cotton futures surging, while new-crop corn and soybeans are struggling to find buyers, some are wondering if the cotton market is getting back some of the acreage that was expected to be lost this year. But as long as old-crop futures are leading the way, new-crop cotton contracts will continue to strengthen.

Technical analysis: May cotton futures closed above 90.70 cents today, making 91.60 cents next resistance. Above that, the February 2012 high at 98.73 cents would be bulls' target.

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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