Crop Analysis (VIP) -- November 1, 2013

November 1, 2013 09:45 AM



Price action: Corn futures slumped in very narrow trading to new three-year lows. Futures finished 1 1/4 to 3 cents lower and lower for the week.

5-day outlook: Corn futures will remain under pressure as harvest heads toward its completion amid reports of better-than-expected yields. Traders will begin to even positions next week in anticipation of the release of the November Crop Production Report on Nov. 8.

30-day outlook: Corn futures will continue to feel pressure through the end of the month as harvest of this year's delayed crop drags on. Basis levels have held relatively steady, suggesting prices have fallen low enough to attract demand. But the rebuilding of supplies from this year's record harvest will serve as a major overhang on the market, limiting any rallies.

90-day outlook: Prices will slowly trend higher after finally notching their harvest low at the completion of this year's harvest. This will put the focus squarely on demand. The key will be how fast the resulting lower prices can rebuild demand. History suggests the demand rebuilding process takes time.

Hedgers: 25% of expected 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.



Price action: Soybean futures softened into the close to post sharp losses for the day and week. January beans ended the week 42 cents below last week's close.

5-day outlook: Key next week is if funds view this week's decline as a buying opportunity or if the downturn in technicals builds upon itself. Position evening should move into the market at midweek as traders turn their attention to the release of USDA's Crop Production Report due Friday Nov. 8.

30-day outlook: Futures should find support from the completion of this year's harvest. And export news should continue to prove supportive, although traders may believe much of the positive export news is already factored into the market. But the key driver will be the release of USDA's November Crop Production Report. This will be the first solid reading on the size of this year's soybean crop following ongoing reports of better-than-expected yields. The eventual completion of corn harvest may be the first step in lifting the oppressive bearishness that has griped grain futures.

90-day outlook: Export demand and prospects of record plantings in Brazil will drive soybean prices through the winter. Strong export demand is expected and likely priced into the market, which means swings in the value of the U.S. dollar could prove pivotal in the direction of prices going forward.

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

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



Price action: SRW wheat ended the day mid-range with fractional- to 1 3/4-cent gains. The HRW market, in contrast, closed low-range with losses of 3 to 7 cents in nearby contracts. HRS wheat also settled low-range with losses of 1 to 4 cents. All three flavors posted moderate losses for the week.

5-day outlook: The wheat market was disappointed this week that unlike buyers of corn and beans, wheat importers did not actively book needs during the government shutdown to take advantage of the reporting blackout and slide in the U.S. dollar index during the three-week reporting period. The surge in the U.S. dollar index this week added pressure. This could weigh on the market again next week unless fresh news pops up or USDA's Nov. 8 reports provide a bullish surprise for either corn or wheat.

30-day outlook: The winter wheat crop is thought to be off to a favorable start and bearish attitudes prevail in the corn market. Both of these factors will likely make it tough for wheat to find active buying interest over the near-term.

90-day outlook: Wheat has tried to lead rallies in recent history, but without the participation of corn, such efforts have eventually peetered out. Therefore, wheat will likely continue to struggle to rally until corn traders shift their attention to rebuilding demand.

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.



Price action: Cotton futures continued their slide today and ended 3 to 60 points lower for the day through the December 2014 contract and sharply lower for the week across the board.

5-day outlook: Cotton futures sustained major technical chart damage this week and in light of this, buying interest outside of tentative short-covering will likely remain limited. The market is not overly concerned about the slow harvest pace, and many, including Informa Economics, expect USDA to raise its production estimate on Friday.

30-day outlook: The cotton market was unable to shake oppressive technical pressure this week, despite impressive weekly export sales date for the Oct. 3-24 period that accounted for the government shutdown and a major slide in the dollar. Barring any surprises with this year's crop, attention will be on how much downside risk remains and whether the slide attracts even stronger export activity.

90-day outlook: Record production in India and expectations U.S. production will be better than initially thought means export demand from China will be highly influential as to price action. If last week's export sales report was any indication, the country will return as a major buyer on any price breaks. Thus far, there have been no updates on talk the country may scrap its stockpiling program.

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.

Cash-only marketers: 50% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

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