Crop Analysis (VIP) -- September 19, 2013

September 19, 2013 09:59 AM
 

 

Corn

Price action: Corn futures enjoyed light buying interest throughout the day and futures ended 2 1/2 to 3 1/4 cents higher, which was near the midpoint of today's narrow range.

Fundamental outlook: Light corrective short-covering lifted the corn market today. The market got a lift yesterday from surprising news the Fed will not begin winding down its bond buying program this month. This lifted the commodity markets late yesterday and the corn market saw limited followthrough buying interest today. Funds bought 5,000 corn contracts (25 million bu.) today. Signs that tepid corn demand is slowly improving added some support.

But with harvest getting started and rains moving across the Midwest this week, buying interest is limited.

Technical outlook: December corn futures continue to chop within the narrow range between this month's low and high of $4.52 and $4.93 3/4, respectively. Tough support is at the 2013 low of $4.46 1/2.

Hedgers: 100% sold on 2012-crop in the cash market. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 100% sold on old-crop. 25% of expected 2013-crop production is sold via forward contract for harvest delivery.

 

Soybeans

Price action: Soybean futures posted another highly choppy day of price action and ended 8 1/4 to 9 1/4 cents lower through the March contract. The rest of the market ended up 1/2 cent to 6 cents lower. Meal ended weaker amid spreading with soyoil, which ended higher.

Fundamental outlook: Soybean futures built on yesterday's gains in overnight trade but buying interest dried up at the start of daytime trade and futures softened. As the dollar index firmed, buying interest based on positive outside markets faded. Futures were pressured by rains moving across the Corn Belt to help with pod fill.

Traders also discounted this morning's weekly export sales data that showed sales of 923,300 MT, which came in above expectations. In addition, USDA announced a daily sale of 120,000-MT of beans to an unknown destination for 2013-14.

Technical outlook: November soybean futures briefly slipped 1/4 cent below the Aug. 23 high to fill that important gap area, but the contract closed back above it. How the contract ends the week could be very telling as to near-term price direction.

Hedgers: 50% of expected 2013-crop production is sold via a forward-price cash contract for harvest delivery. 100% sold on 2012-crop in the cash market.

Cash-only marketers: 50% of expected 2013-crop production is sold via a forward-price cash contract for harvest delivery. 100% sold on 2012-crop in the cash market.

 

Wheat

Price action: Wheat futures were supported by short-covering throughout the day and finished in the upper quarter of today's price range in most contracts. SRW wheat ended 10 1/4 to 11 cents higher, with HRW up 7 to 9 1/2 cents. HRS closed 5 1/2 to 8 1/4 cents higher.

Fundamental outlook: Ideas the downside has been overdone and weakness in the U.S. dollar index provided early support. But even as the dollar firmed, wheat futures continued to rise due to a stronger-than-expected showing from the weekly sales report.

Weekly wheat sales of 704,400 MT for 2013-14 came in above traders' expectations, even though cancellations of 2,500 MT were reported for 2014-15. Exports of more than 1.2 MMT were a new marketing year high.

Traders are also keeping close tabs on the weather across the Central and Southern Plains, as recent rains have encouraged producers to begin seeding. But the extended weather outlooks call for drought to persist across the region through year's end (see "Evening Report" for more).

Technical outlook: December SRW wheat futures posted an upside day of trade on the daily chart and finished above last week's high of $6.55. The contract needs closes above the late-August high of $6.76 1/2 to signal a near-term low is in the works.

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

Cash-only marketers: 25% of 2013-crop is sold.

 

Cotton

Price action: December cotton futures settled mid- to low-range with losses of 39 to 93 points for the day.

Fundamental outlook: Cotton futures rallied yesterday amid news the Federal Reserve will not yet begin to taper its massive bond buying program. Traders took advantage of those gains and strength in the U.S. dollar index today by booking some profits. This morning's Weekly Export Sales Report provided little reason for traders to expand their long exposure to the market. Sales of 103,100 RB failed to impress and China was not a strong buyer for the week ended Sept. 12.

But selling interest continues to be kept in check by the forecast for heavy rains in the South, which could lead to quality deterioration on what is already expected to be a small crop since. As of Sunday, 36% of the crop was opening bolls.

Technical outlook: December cotton futures continued their gradual climb from the early September low. Uptrending support drawn off this month's lows intersects just below 84.00 cents tomorrow. Near-term resistance stands at the July high of 87.11 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.

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

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