Crop Analysis (VIP) -- March 21, 2013

March 21, 2013 09:44 AM
 

Corn

Price action: Corn futures saw choppy trade today and bulls held the upper hand into the close. Futures settled steady to 3 1/4 cents higher for the day.

Fundamental analysis: Corn futures enjoyed spillover support from soybeans as well as technical selling as May futures respected the 200-day moving average and the December contract respected former resistance at the 40-day moving average today.

But short-covering was the extent of buying interest as this morning's disappointing export sales report reminded of slow export demand and easing basis levels at Gulf and interior locations signal the recent rally has spurred some producer selling. Weekly sales of 92,200 MT for 2012-13 and 183,300 MT for 2013-14 fell short of expectations.

Technical analysis: May corn futures continued on their uptrend since the start of the month today, with the next level of resistance standing at the 2013 high of $7.47 1/2. Support lies at the $7.00 level, followed by the February low of $6.80 3/4.

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: Buying in soybean futures picked up with the start of open-outcry trade and futures posted a high-range close to finish 20-plus cents higher in May through August contracts. The rest of the market posted double-digit gains, mostly in the teens.

Fundamental analysis: Bull spreading was the dominant force in the bean pit today as traders recognize old-crop supplies are tight and shipping delays in South American continue to hang over the market. While the U.S. export window for beans has remained open longer than usual, it will be closing soon. However, weekly export sales of 107,800 MT for 2012-13 and 234,000 MT for 2013-14 were highly disappointing.

Traders are also digesting news that China plans to sell between 1 MMT and 1.5 MMT of state soybean reserves to crushers due to shipping delays in Brazil. While this could eventually translate to additional Chinese bean buys from the U.S. or South America to replenish stocks, it will limit near-term import demand for the country.

Technical analysis: May soybean futures posted a big upside day of trade on the daily chart, trading through but settling a penny below the psychological $14.50 level. Followthrough buying tomorrow would make bulls' target the March high of $14.84 3/4. Support lies at this week's low of $14.03.

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 spent much of the day under pressure and ended roughly 4 to 7 cents lower at all three exchanges.

Fundamental analysis: Concerns the recent uptick in prices combined with strength in the U.S. dollar index has eased demand for U.S. wheat was confirmed by this morning's disappointing weekly export sales report. The report showed sales of 484,500 MT for 2012-13 and 88,800 MT for 2013-14. Wheat needs a constant dose of demand news to keep bulls interested given plentiful global supplies.

Traders still have the HRW wheat crop on their minds, as the crop's moisture needs have risen as warmer temps have caused the crop to green up. This morning's drought outlook called for drought conditions to remain in place across the Central and Southern Plains through the spring.

Technical analysis: May Chicago wheat futures tested resistance at yesterday's high of $7.36 3/4 but were unable to move above this level. The contract posted a mid-range close and needs to complete a 25% retracement (at $7.45) of the decline from the November high to signal a near-term low is in the works. Support lies at the March low of $6.81.

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 settled low-range with losses of 82 and 74 points in May and July futures, respectively, while other contracts ended high-range with losses of 13 to 42 points.

Fundamental analysis: Cotton futures faced followthrough selling today as the market continues to digest news that India will join China in releasing government stockpiles onto the market. Adding to ideas demand for U.S. cotton may decline, old-crop cotton export sales for the week ended March 14 of 114,100 RB were down 39% from the week prior and 31% from the four-week average. In addition, exports for that week also declined 21% from the week prior to 278,400 RB.

This, along with recent strength in the U.S. dollar index, supports ideas the cotton market may have put in a near-term top.

Technical analysis: May cotton futures tested but settled above near-term support at the psychological 88.00-cent level, leaving it as near-term support. The next area of key chart support is the 38% retracement of the November to March rally at 85.20 cents. Major resistance stands at the March high of 93.93 cents.

Hedgers: 100% sold on old-crop in the cash market. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 85% sold on old-crop. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

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