Crop Analysis (VIP) -- November 13, 2013

November 13, 2013 08:57 AM
 

Corn

Price action:
Corn futures saw two-sided trade but faded into the close to finish 2 1/2 to 4 1/4 cents lower.

Fundamental analysis: Given a lack of fresh news, corn futures were vulnerable to selling today. Funds sold an estimated 5,000 contracts (25 million bu.) of corn today. Some pressure came as traders are hearing more talk the EPA will release 2014 Renewable Fuels Standards in the very near future. Traders expect EPA to propose lower ethanol mandates.

Meanwhile, ethanol production has been ramping up and export demand remains strong. Gulf corn basis firmed again this morning and at midday to reflect the rebuilding of demand. Traders will have to wait until Friday for the weekly export sales data due to Monday's government holiday.

Technical analysis: December corn futures posted a downside day of trade on the daily chart but didn't do any technical chart damage. But the contract needs to return above this week's high of $4.38 to build upward momentum and provide more clues of a low being posted. Last week's low of $4.15 1/2 is support.

Hedgers: 25% of 2013-crop production is sold via cash forward contract for harvest delivery.

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

 

Soybeans

Price action: Soybean futures traded mixed to lower for most of the session, but the market firmed into the close to end fractionally to 4 3/4 cents higher. Funds bought 2,000 bean contracts (10 million bu.) today.

Fundamental analysis: Traders took advantage of recent gains by booking some profits today. And while USDA announced yet another daily sale to China this morning, strong soy demand is known. Gulf basis was steady to to 2 cents higher for immediate delivery at midday after softening 4 to 5 cents this morning. This eased concerns the market was getting flooded with supplies.

Light pressure also stemmed from news Lanworth trimmed its 2013-14 U.S. soybean production forecast to 3.287 billion bu. today.

Technical analysis: January soybeans spent the day trading within the upper half of yesterday's trading range and the contract closed just above support at the October high of $13.12 3/4. Yesterday's high of $13.19 3/4 marks initial resistance, followed by the June high of $13.37.

Hedgers: Get to 100% sold in the cash market on 2013-crop production. We'll manage risk on the board the remainder of the marketing year.

Cash-only marketers: Get to 75% sold on 2013-crop production.

 

Wheat

Price action: Wheat futures saw two-sided trade overnight, but the market faced pressure for most of the day session and ended fractionally to 2 cents lower across all three flavors.

Fundamental analysis: Bulls have largely exited the wheat market as demand for U.S. wheat has faded and the U.S. winter wheat crop is off to a favorable start. Adding pressure today was spillover from corn and a flurry of global production estimates that generally pointed to a larger global crop.

Helping to limit selling, however, was news China may need to import 8 MMT of wheat for 2013-14, which would be its highest level in nearly two decades.

Technical analysis: December SRW wheat futures extended the markets' downtrend and most expect the contract to continue to slide toward an eventual test of the August contract low of $6.35 1/2. The July double-bottom of $6.66 1/4 is resistance.

Hedgers: 75% sold on 2013-crop in the cash market. No 2014-crop sales are advised.

Cash-only marketers: 50% sold on 2013-crop. No 2014-crop sales are advised at this time.

 

Cotton

Price action: Cotton futures ended 7 to 126 points higher in all but the front-month contract, which ended 2 points lower. Deferred futures led gains amid bull spread unwinding.

Fundamental analysis: Without fresh news for the market to digest, buying in the cotton pit was limited to funds covering short positions. Talk that China will soon begin selling domestic supplies onto the market have limited buying this week. As a result, traders suspect Chinese buying of U.S. cotton has waned after strong buys in October. Traders have to wait until Friday for the weekly export sales data due to Monday's federal holiday.

Technical analysis: March cotton futures posted an inside day of trade on the daily chart and closed mid-range. Near-term boundaries are support at the November low of 77.64 cents and resistance at the November high of 80.52 cents.

Hedgers: 50% of expected 2013-crop is sold in the cash market.

Cash-only marketers: 50% sold on 2013-crop production.

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