Crop Analysis (VIP) -- May 24, 2013

May 24, 2013 09:47 AM


Price action: July corn futures finished 4 3/4 cents lower, while most other contracts were fractionally to 3 1/4 cents higher. For the week, new-crop contracts led corrective gains.

5-day outlook: Traders are anticipating planting progress to be around 90% complete as of Sunday. While that would still leave 10% to be planted very late, traders' concerns with planting delays or yield losses due to late plantings remain limited for now.

30-day outlook: If planting delays extend into June, which is likely in northern areas, corn is likely to lose some acres to soybeans and some to prevent-plant insurance claims. Because some acres will be in "limbo" as USDA surveys for its June 28 Acreage Report, that estimate may give us only a partial read on actual acreage.

90-day outlook: Given the late start to the growing season, the majority of Corn Belt corn acres will pollinate as temps are typically at their hottest near the end of July. Also, waters along the equatorial Pacific are starting to cool, which suggests La Nina may be rebuilding. Just a reminder, La Nina conditions are typically associated with warmer, drier summers for the Corn Belt.

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.



Price action: Bull spread unwinding dominated action today. Old-crop futures ended 12 to 23 1/4 cents lower for the day, while new-crop posted gains of roughly 4 to 5 cents. For the week, old-crop futures posted strong gains while new-crop ended with more moderate gains.

5-day outlook: On Tuesday the market will receive another update on soybean planting. Wet weather in the Corn Belt this week and a focus on getting the remainder of the corn crop seeded means planting will likely continue to lag the average pace by a substantial amount, though the market will likely not get too excited about delays until June.

30-day outlook: Old-crop futures this week benefited from concerns about tight supplies, which were heightened by a South American port strike. More strikes in the region are certainly possible, plus any new-crop supply scares -- also likely considering the late start to planting -- could lead to more explosive action in old-crop contracts. Action in new-crop will be tied to growing season prospects. The market expects soybeans to pick up some intended corn acres.

90-day outlook: A late start to soybean planting means new-crop supplies will not come available until later in the year, though South American supplies should help to limit some supply tightness. This puts added attention on the 2013 growing season and timely rains in August.

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: 90% sold on 2012-crop. 10% of expected 2013-crop production is sold via forward contract for harvest delivery.



Price action: Wheat futures opened weaker, stayed on the defensive throughout the day and slumped to the day's lows on the close. Chicago was down 4 to 7 cents, Kansas City down 8 to 10 cents and Minneapolis down 3 to 8 cents.

5-day outlook: Prospects of wheat harvest just around the corner and ample soil moisture for the spring wheat crops will make it difficult to spark supply worries and lift prices higher. But if the Upper Midwest continues to receive rain through the week, stalling wheat seeding, delayed planting could become an issue at week's end.

30-day outlook: As the HRW wheat harvest begins, the markets' attention toward the dismal crop could return support to futures. But the onset of harvest-related pressure also looms. Traders will watch for any stumbles in export demand due to the recent run up in the U.S. dollar.

90-day outlook: Prospects of large global wheat stocks and a rise in both U.S. and global coarse grain supplies will prove a damper on prices. Any surprises that suggest global wheat supplies or coarse grains will not be as large as expected could bring short upswings in U.S. prices until the scope of those production worries become known.

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 settled slightly higher in all but the July contract, which finished slightly lower. For the week, cotton futures posted sharp losses.

5-day outlook: Bears will have momentum on their side coming out of the extended, holiday weekend. If active followthrough selling isn't seen, however, the market could be set up for a short-covering bounce, especially the December contract which respected support at the May 1 low on this week's price slide.

30-day outlook: If not for planting delays and concerns with lingering drought in Texas, new-crop cotton futures would likely be lower -- potentially much lower. As the crop gets planted, those concerns will ease, though drought concerns could linger if rains remain sporadic.

90-day outlook: NOAA is calling for an active hurricane season, which means plenty of moisture should move out of Gulf and into key cotton areas. Key will be the timing and location of the hurricanes. Texas will need some hurricane rains to get relief from the ongoing drought.

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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