Price action: Corn futures favored a firmer tone in choppy trade today and ended 3 1/2 to 5 1/4 cents higher, which was near session highs.
Fundamental analysis: Weakness in the U.S. dollar index was supportive for much of the commodity world today. This spilled over into corn futures, which were also supported by strength in wheat futures. But spread unwinding between wheat and corn limited the advance in nearby corn futures.
Traders are keeping a close watch on basis and say recent softening is the result of a pickup in farmer sales. But this was largely ignored by the market as traders recognize old-crop supplies are very tight. Also supportive today was news that weekly ethanol production rose slightly last week (see "Evening Report" for more). Traders will digest tomorrow morning's weekly export sales data to see if export demand remained steady given recent price strength.
Technical analysis: May corn futures posted an upside day of trade on the daily chart and finished above the $7.30 level to make bulls' next target the February high of $7.47 1/2. Initial support lies at the early March high of $7.12 3/4.
Hedgers: 100% sold on 2012-crop in the cash market. No 2013-crop sales advised yet.
Cash-only marketers: 75% sold on 2012-crop, including 15% for May 2013 delivery. No 2013-crop sales recommended yet.
Price action: Soybean futures closed 7 to 13 higher through the September contract and 5 to 6 higher in new-crop contracts. Futures finished near session highs.
Fundamental analysis: Bull spreading was seen throughout today's session as tight old-crop supplies and news of recent cancellations of Brazilian soybeans by China gave the market a boost. Traders also covered short positions amid ideas the downside was overdone.
While soybean futures rallied today, the upside is likely limited unless some of the canceled Brazilian purchases lead to fresh demand for U.S. soybeans. Brazilian soybeans will eventually displace demand for U.S. supplies. Weekly export sales tomorrow morning need to be strong to trigger active followthrough buying.
Technical analysis: November soybean futures must respect key support at the February low at $12.47 1/4. Violation of this level would open downside risk to $12.25 1/4 and potentially to the $12.00 area. To the upside, the March 7 high at $12.82 1/4 must be cleared to trigger a strong rally.
Hedgers: 100% sold on 2012-crop in the cash market. No futures/options positions at this time. No 2013-crop sales advised yet.
Cash-only marketers: 75% sold on 2012-crop production for harvest delivery. No 2013-crop sales advised yet.
Price action: Wheat futures ended mostly 10 to 14 cents higher in Chicago, mostly 9 to 13 cents higher in Kansas City and mostly 10 to 12 cents higher in Minneapolis. Futures at all three exchanges finished close to session highs.
Fundamental analysis: Much of the strength in wheat futures today was tied to pressure on the U.S. dollar, which encourage short-covering in wheat. Hopes for improved demand for U.S. wheat were also supportive, however, as U.S. wheat is competitively priced and there has been a recent pickup in export demand. Because demand is a greater focus for traders, tomorrow morning's weekly export sales figures must at least match lofty expectations or the market is at risk of fresh selling.
Wheat/corn spread unwinding was also supportive for wheat futures today. Traders have moved May wheat futures back to a slight premium to May corn. But the price still favors feed wheat over corn, especially when basis is taken into account.
Technical analysis: May Chicago wheat futures got a boost on the push through the March 14 high at $7.25 1/2 and the push above the downtrend from the November and January highs. The next level of key resistance is old support at the January low of $7.45 1/4. A close above that level would signal an extended corrective recovery is underway.
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.
Advice: Hedgers are advised to make a 50% 2012-crop cash sale to get to 100% sold on old-crop in the cash market. Cash-only marketers should make a 35% old-crop sale to get to 85% sold. Hedgers and cash-only marketers should also make an initial 25% 2013-crop cash forward contract sale.
Price action: Old-crop cotton futures were pressured sharply today to end 100- to 200-plus points lower while new-crop futures saw milder pressure to end 5 to 41 points lower.
Fundamental analysis: News that India will follow China's lead in selling cotton from government stockpiles to protect domestic end-users against soaring prices triggered a wave of selling in cotton futures today (see "Evening Report" for more). As a result, traders expect upcoming weekly export sales data to reflect a slowdown in demand, which has been the hallmark behind the strong price recovery from the harvest lows.
Cotton futures have also interestingly been following direction of the dollar index. Today's sharp pressure on the dollar index was supportive for much of the commodity world today, but cotton failed to take advantage of the dollar weakness.
Technical analysis: May cotton futures posted a big downside day of trade on the daily chart. The contract finished off the daily low, but still posted a low-range close. Followhrough pressure tomorrow would violate uptrending support drawn off February and March lows. The contract bounced off the 25% retracement level of the rally from the November low to last week's high. This important support lies at 88.20 cents while last week's high of 93.93 cents is resistance.
Hedgers: NEW ADVICE: Make a 50% 2012-crop cash sale to get to 100% sold on old-crop in the cash market. Also, make an initial 25% 2013-crop cash forward contract sale.
Cash-only marketers: NEW ADVICE: Make a 35% 2012-crop cash sale to get to 85% sold on old-crop. Also, make an initial 25% 2013-crop cash forward contract sale.