Price action: September through May 2013 corn futures traded their 40-cent limit lower today, but this sparked a wave of late value buying, helping futures to settle well off their daily lows. September futures closed 24 cents lower, while deferred months pared losses to the single-digits on the close.
Fundamental analysis: Corn futures faced followthrough profit-taking pressure today as rains crossed the northern and eastern Corn Belt and the forecast calls for additional rain chances. However, recognition that the crop is in really tough shape (USDA rates it 45% "poor" to "very poor") and that at best rains would stabilize the crop encouraged some late value-buying.
Outside markets were price-negative today thanks to heightened euro-zone concerns and disappointing U.S. manufacturing data. That added to pressure on corn.
Technical analysis: December corn futures traded down to $7.45 1/2 today, which is new support, but the contract rebounded around midday and settled high-range and within yesterday's trading range. This means bulls' will again target yesterday's contract high of $8.00.
Hedgers: 40% of expected 2012-crop production is covered in Dec. $6.50 put options for 31 1/2 cents. 35% cash forward sold on expected 2012-crop production -- 25% for harvest delivery; 10% for March 2013 delivery. 90% sold on old-crop in the cash market.
Cash-only marketers: 90% sold on old-crop. 35% forward priced on expected 2012-crop production -- 10% for harvest delivery; 10% for March 2013 delivery; and 15% for May 2013 delivery.
Price action: Soybean futures posted sharp losses again today, with the August through January contracts around 50 cents lower while farther deferred futures ended 20 to 40-plus cents lower. Despite the sharp losses, futures closed well off their session lows as the first five contract months traded down the 70-cent daily limit intra-day.
Fundamental analysis: Parts of the northern and eastern Corn Belt got precip overnight and throughout the morning as rains slid over the top of the high pressure ridge centered over the central Corn Belt. That gave traders a "reason" to actively take profits as the rains are timely with beans flowering, setting pods and filling pods. Additional precip chances are expected through Thursday. But futures were able to come well off session lows into the close as some private forecasters reduced rain chances in the five-day outlook.
Aside from weather, outside markets weighed on soybeans today. The fact traders are again paying attention to anything besides weather and crop losses is a warning sign that "the" top could already be in the market even though additional yield declines are possible.
Technical analysis: November soybean futures completed a 25% retracement of the rally from the June low. The contract could retrace 38% of the rally and it would be considered a correction in a bull market. That makes the 38% retracement at $15.20 key, near-term support.
Hedgers: 25% of expected 2012-crop production is covered in Nov. $14.00 put options for 42 3/8 cents. 50% of expected 2012-crop production is sold via cash forward contract for harvest delivery. 90% sold on old-crop in the cash market.
Cash-only marketers: 85% sold on old-crop. 50% sold on expected 2012- crop production via forward contract for harvest delivery.
Price action: Wheat futures finished 20- to 30-plus cents lower in most contracts at all three exchanges today, although far-deferred months posted losses in the teens. Wheat futures finished well off session lows, ending mid-range in most contracts.
Fundamental analysis: Wheat futures followed the lead of corn and soybean lower today. With spillover support that wheat had been riding to the upside gone, the market is without solid support, leaving futures vulnerable to selling pressure.
Fundamentally, crop concerns in the Former Soviet Union have been pushed to the back burner this week. But if the corn and soybean markets can rebuild upside momentum, wheat traders will again be looking for fundamental reasons to buy futures.
Technical analysis: September Chicago wheat futures completed a 25% retracement of the rally from the June low today, but closed above that level at $8.66 1/2. A close below that level would make a 38% retracement at $8.23 3/4 bears' next target.
Hedgers: 75% cash sold on 2012-crop for harvest delivery. 100% sold on 2011-crop in the cash market.
Cash-only marketers: 75% of 2012-crop production is sold for harvest delivery. 100% sold on 2011-crop.
Price action: Cotton futures saw two-sided trade today, but futures settled low-range with losses of 79 to 130 points.
Fundamental analysis: The cotton market received a dose of supportive news today as China National Cotton Reserves Corp. forecast Chinese cotton production to decline by 9.1% to 6.86 million metric tons. The agency also says China's government will start stockpiling cotton when new-crop supplies come available.
But heavy spillover pressure from sharp losses in corn and beans along with strong gains in the U.S. dollar index prevented cotton from rallying. Also, USDA raised its cotton crop condition rating yesterday by two percentage points to 47% "good" to "excellent."
Technical analysis: December cotton futures remain range-bound. Resistance stands at the June high of 74.80 cents, while support lies at the late-June low of 67.16 cents.
Hedgers: 100% sold on old-crop in the cash market. 50% priced on expected new-crop production via cash forward contract for harvest delivery.
Cash-only marketers:100% sold on old-crop. 50% priced on expected new-crop production via forward contract for harvest delivery.