Advice: Hedgers are advised to make a 40% cash sale for harvest delivery to get to 100% sold in the cash market for 2012-crop. Cash-only marketers are advised to make a 15% sale for harvest delivery to get to 75% sold for 2012-crop.
Price action: Early selling pressure on corn escalated as the market moved through key levels of support, triggering sell stops. The market ended low-range with losses of 17 3/4 to 19 3/4 cents in most contracts.
Fundamental analysis: Initial pressure stemmed from strength in the U.S. dollar index and broad risk aversion as euro-zone debt troubles are again grabbing headlines. And with harvest underway, the market is also dealing with increased hedge pressure.
Traders are also reducing risk ahead of USDA's Quarterly Grain Stocks Report on Friday. This report has delivered surprises in the past and we expect that if this is again the case (likely), a surprise would be on the bearish side, because the advanced state of the crop means more new-crop corn will be counted as old-crop supplies as of Sept. 1. See "Evening Report" for pre-report expectations.
Technical analysis: The December corn contract ended just above the 38% retracement level of the June to August rally at $7.18. The next strong level of support is the 50% retracement level at $6.77 1/2, which nearly coincides with the bottom of the July 5 upside gap.
Hedgers: * NEW ADVICE * Make a 40% cash sale for harvest delivery to get to 100% sold on 2012-crop in the cash market -- 90% for harvest delivery; 10% for March 2013 delivery. Also, Dec. $6.50 put options, which were purchased on 40% of 2012-crop for 31 1/2 cents, should be held as a crop insurance hedge.
Cash-only marketers: * NEW ADVICE * Make a 15% sale for harvest delivery to get to 75% sold on 2012-crop -- 50% for harvest delivery; 10% for March 2013 delivery; and 15% for May 2013 delivery.
Price action: Soybean futures closed sharply lower, ending 30 1/2 to 44 3/4 cents lower. Meal and soyoil futures also finished with heavy losses on the day.
Fundamental analysis: Soybean futures faced price pressure from a multitude of sources today. As has been the case recently, harvest pressure weighed on prices as combines are actively rolling and some yield reports are better than expected. Plus, rains are falling on some of the key growing regions in Brazil, prompting talk of a favorable start to the planting and the growing season.
On top of those fundamental factors, soybeans also faced pressure from outside markets today as euro-zone concerns moved back into focus. If investors continue to broadly shed risk, it will be hard for soybeans to stop the price slide given the seasonal pressure.
Technical analysis: November soybean futures hit sell stops as the contract violated support at Monday's low of $15.90 1/4. The contract has now completed more than a 38% retracement of the sharp rally from the June low to the all-time high. Followthrough pressure would suggests an even deeper pullback is likely. Next support lies at the August low of $15.55 1/4, followed by the July 25 low at $15.36.
Hedgers: 100% sold on 2012-crop in the cash market for harvest delivery. The Nov. $14.00 put options purchased for 42 3/8 cents on 25% of 2012-crop should be held as a crop insurance hedge.
Cash-only marketers: 75% sold on 2012-crop production for harvest delivery.
Price action: Wheat futures posted double-digit losses most of the day and settled likewise. Wheat at all three exchanges ended near session lows.
Fundamental analysis: Strength in the U.S. dollar index resulted in widespread selling in the commodity markets, as investors' concerns about the euro-zone debt crisis have returned to the front burner. Unrest in Greece and Spain over austerity measures weighed on the U.S. stock market today.
Additional pressure came from forecasts for rains in the Central and Southern Plains, as well as recent rains in Australia. Also today, Egypt purchased a total of 300,000 metric tons of milling wheat from France and Romania, providing a reminder that U.S. wheat is not competitively priced. However, supplies in the Black Sea region are quickly being depleted.
Technical analysis: December Chicago wheat posted a downside day of trade on the daily chart but didn't do any technical chart damage as support at last week's low of $8.60 3/4 remains intact. Key support lies at the August low of $8.57 1/4, which marks the bottom of the long-lasting consolidation range. Resistance stands at this week's high of $9.07 1/4.
Hedgers: 75% cash sold on 2012-crop in the cash market.
Cash-only marketers: 75% of 2012-crop production is sold.
Price action: Adequate global supplies and negative outside markets pressured cotton futures and caused the market to finish 103 to 129 points lower, which was a low-range close.
Fundamental analysis: Strength in the U.S. dollar index amid renewed euro-zone sovereign debt concerns provided widespread pressure to the commodity sector today. The Continuous Commodity Index moved to its lowest level since Aug. 29, making the Aug. 9 high of 566.57 next support.
Additional pressure came from expectations global cotton stocks will climb, as there's a growing consensus global consumption has been overestimated and the U.S. crop will be larger than originally expected.
Technical analysis: December cotton futures posted a downside day of trade on the daily chart and closed below the Aug. 13 low of 71.59 cents. Next support is at the July low of 69.40 cents, followed by the contract low of 64.61 cents.
Hedgers: 50% priced on expected 2012-crop production via cash forward contract for harvest delivery.
Cash-only marketers: 50% priced on expected 2012-crop production via forward contract for harvest delivery.