Crop Analysis (VIP) -- October 22, 2013

October 22, 2013 09:40 AM



Price action: Corn futures slipped lower today finishing 4 1/2 to 5 3/4 cents lower for 2013-crop contracts. December futures closed down 5 3/4 cents. .

Fundamental outlook: Corn futures came under pressure today as harvest-related hedge pressure increased amid continuing reports that yields are proving to be better than expected. Traders note the pace of corn harvest continues to lag behind average with USDA saying only 39% of the crop was harvested as of Sunday. That compares to the average of 53%. Traders do not expect harvest-related hedge pressure to ease until harvest surpasses the halfway mark. Pressure was limited by sharp losses in the U.S. dollar index.

Technical outlook: December corn futures closed near their lows of the day finishing right at Monday's low. Futures remain confined in a 20-cent wide trading range with support at the October low of $4.32 and resistance at the October high of $4.49 3/4. Futures found resistance at the fall downtrend line at $4.44. It takes a close above the late September high of $4.62 to signal the market is working on a low.

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 faced pressure throughout the day, but the market did pare losses to 1 to 4 cents for a high-range close.

Fundamental outlook: Soybean futures faced profit-taking today after the market posted decent gains to start the week. Soybeans need fresh demand news to rally, and that was lacking today. However, gains in Gulf basis this morning and around midday signals some export buys may be occurring. In addition, the market does not yet know (and will not find out until month's end) to what extent exporters took advantage of the reporting blackout during the government shutdown. This helped the market move well off its lows.

Traders are not overly concerned about a slower-than-average pace of harvest as the five-day outlook is generally favorable for harvest activity.

Technical outlook: November soybean futures saw trade below the psychological $13.00 mark overnight and early this morning, but the market pared those losses to finish back above $13.00. The late-September double-top high around $13.28 marks resistance, closely followed by the June high of $13.33.

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: Wheat futures moved higher after trending lower in the overnight session with HRW and HRS leading SRW higher. Futures posted a midrange close. SRW finished 1 to 3 1/4 cents higher in bear spreading. HRW closed 2 to 4 1/2 cents higher. HRS ended 1/2 cents lower to 4 3/4 cents higher.

Fundamental outlook: Wheat futures moved higher on bargain-buying following Monday's selloff. Signs of surging world demand for high-protein wheat coupled with the sharp selloff in the U.S. dollar index combined to lift futures higher. Rising demand for high-protein wheat saw HRS and HRW contracts leading SRW contracts higher. Gulf SRW basis bids firmed this morning, which fueled speculation of pending export business news.

Limiting gains was confirmation of positive growing conditions for the HRW crop from USDA, which listed 65% of the crop as "good" or "excellent."

Technical outlook: December SRW wheat futures posted an inside day of trade on the daily chart and closed just above the psychological $7.00 level. Back-to-back closes above this level would keep the trend clearly pointed higher. Bulls' next objective is the June high of $7.38 1/4.

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 softened through the day and ended 44 to 58 points lower. The low-range close gives bears the upper hand heading into the next trading session.

Fundamental outlook: Pressure on cotton was limited by weakness in the U.S. dollar index, but around midday, cotton futures faltered. The cotton market clearly needs fresh export news to find a floor of support.

Yesterday's progress data from USDA didn't raise any concerns about the crop that weren't already factored into prices. The report showed just 21% of the crop had been harvested as of Sunday, which compares to 36% a year ago and 34% on average.

Technical outlook: December cotton futures posted a downside day of trade on the daily chart and closed below last week's low of of 82.57 cents. Bears' next objective is the September low of 82.11 cents, followed by the June low of 81.72.

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. The Oct. 8 high of 84.75 cents marks resistance.

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

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