Crop Analysis (VIP) -- May 16, 2013

May 16, 2013 09:37 AM
 

Corn

Price action: Corn futures were on the defensive throughout daytime trade and closed 7 to 9 cents lower in the July 2013 through July 2014 contracts, which was session lows.

Fundamental analysis: Favorable corn planting weather decreased traders worries about planting delays. Expectations are farmers will make strong strides toward getting this year's crop planted by next Sunday. Traders are shrugging off forecasts for precipitation to move into the Corn Belt later tonight with more chances for precipitation Friday through Monday as the longer-range forecasts call for favorable planting weather to return next week. The unimpressive weekly export sales report today reminded traders of the depressing impact the strong U.S. dollar is having on export demand.

Technical analysis: December corn futures posted a disappointing performance for bulls as futures spent most of today trading below yesterday's low. The contract posted its lowest close since April 26, closing just above the May low of $5.22 3/4. Support extends to the April low of $5.17 and psychological resistance is at $5.50.

Hedgers: 100% sold on 2012-crop in the cash market. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 75% sold on 2012-crop production. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

 

Soybeans

Price action: July and August soybean futures closed 14 3/4 and 12 cents higher, respectively, with September up 9 cents. The rest of the 2013 contracts ended 7 3/4 to 9 cents higher, with 2014 contracts up 3 3/4 to 7 1/2 cents.

Fundamental analysis: Tight old-crop supplies controlled the action today. The positive corn planting weather cooled trader concerns of a shift of corn acres to soybean acres and, without that shift, it places a greater premium on old-crop supplies. Gulf basis only mildly reflected the concerns. Basis for July delivery firmed 3 cents, with basis for immediate delivery steady with yesterday. The market received no direction from the weekly export sales data, which came in about as expected.

Technical analysis: The modest uptrend in July soybean futures was extended today. The 200-day moving average, currently at $14.31 3/4, stopped today's rally. Moving above that level could trigger buy stops. The November contract continued to trend sideways, bracketed by the April low of under $11.86 1/2 and the last reaction high at $12.40.1/4. However, the winter downtrend still remains in place.

Hedgers: 100% sold on 2012-crop in the cash market. 50% of expected 2013-crop production is hedged in November soybean futures at $12.19. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 75% sold on 2012-crop production. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

 

Wheat

Price action: Wheat favored a firmer tone in overnight trade but weakened with the start of daytime trade on spillover from corn. Chicago wheat ended 3 1/4 to 6 1/4 cents lower, with Kansas City down 3 1/2 to 8 1/4 cents. Minneapolis wheat closed 2 to 7 cents lower in all but the front-month contract, which ended 1/4 cent firmer.

Fundamental analysis: Early support was tied to short-covering following yesterday's losses, but stepped up selling in the corn market spilled over to the wheat pit this morning. Traders ignored this morning's better-than-expected weekly export sales data, as total commitments for the soon-to-end marketing year are running behind the pace needed to reach USDA's export projection. As a result, traders look for 2012-13 carryover to rise slightly in the next balance sheet update from USDA.

Traders are also putting crop concerns on the backburner despite the fact this week's rains in the Southern Plains have been outside of the wheat-intensive areas. This morning's drought monitor showed very little change in drought calcifications from last week.

Technical analysis: July Chicago wheat futures posted a downside day of trade on the daily chart but posted a mid-range close. The contract closed just beneath support at the April 24 low of $6.87 3/4. Key support is at the April low of $6.64 3/4.

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: Cotton futures were choppy today but didn't stray too far from unchanged and closed 10 to 30 points lower to finish mid-range.

Fundamental analysis: Weakness in the dollar index limited pressure on cotton futures, with selling limited by concerns about the slower-than-usual planting progress. Otherwise, little fresh news kept futures in their recent consolidation range.

This morning's weekly export sales data showed sales of 74,000 running bales for 2012-13, which was down 37% from last week. Sales of 68,800 running bales for 2013-14 were also reported. China was the lead destination for exports.

Technical analysis: December cotton futures remained within this week's choppy consolidation range and finished mid-range. Initial resistance is at last week's high of 87.25 cents, with support at the May low of 82.92 cents.

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.

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