Advice: We recommend hedgers and cash-only marketers sell 10% of 2013-crop and 10% of expected 2014-crop production.
Price action: Corn futures saw daily losses of 2 to 4 3/4 cents today amid profit-taking. Futures still posted solid weekly gains. May corn ended the week with a weekly gain of more than 25 cents, while December corn was up 13 1/4 cents for the week.
5-day outlook: Confirmation the recent price rise is not slowing demand gave bulls more confidence in buying this week. USDA's Supply & Demand Report on Monday is only expected to reflect a minor revision in carryover from last month. But if USDA provides another surprise for the market, it could be a market-mover for the week. Next week's technical price action will be telling of near-term price direction as this week brought an acceleration of the uptrend.
30-day outlook: Traders' focus right now is on better-than-expected old-crop corn demand, but more attention will turn to the 2014 acreage mix as we near the March 31 Prospective Plantings Report. General expectations are for corn to lose some acres to soybeans this year due to rotations, but weather and price action this spring will ultimately be telling of this year's acreage.
90-day outlook: Weather will be directing new-crop futures during this period. A late start to planting could be a hard sell to market bulls this year after yields turned out better than expected despite a very late start last year.
Hedgers: NEW ADVICE: Sell 10% of 2013-crop to get to 70% sold on old-crop. Sell 10% of expected 2014-crop production to get to 30% forward priced on new-crop.
Cash-only marketers: NEW ADVICE: Sell 10% of 2013-crop to get to 60% sold on old-crop. Sell 10% of expected 2014-crop production to get to 30% forward priced on new-crop.
Advice: We recommend hedgers and cash-only marketers sell 15% of expected 2014-crop production to get to 25% forward priced on new-crop.
Price action: Soybean futures extended strong weekly gains heading into the close. Old-crop futures posted gains of 14 3/4 to 20 cents on the day, September settled 4 1/4 cents higher on the day and new-crop posted gains around a penny.
5-day outlook: The focus to start next week will be on USDA's Supply & Demand Report. The trade is expecting USDA to raise its export forecast and tighten projected carryover. But it's possible USDA could increase exports and offset that with a reduction to residual use and leave carryover unchanged. If that happens, it would be temporarily price-negative. Once the report data is factored in, the focal point will return to late-season conditions in Brazil and Chinese demand.
30-day outlook: USDA is surveying for its March 31 Prospective Plantings Report. But with heavy snowfall across portions of the Corn Belt, planting intentions as of March 1 may not be exactly what gets seeded. If there are spring planting delays, it could push more acres to soybeans than intended. But soybean acres will be up even if that doesn't happen.
90-day outlook: If there are any major shipping disruptions in Brazil, it would keep the window for U.S. soybean exports open even longer. It's highly possible Brazil will still be shipping its record crop as the U.S. is harvesting this year's crop.
Hedgers: NEW ADVICE: Sell 15% of expected 2014-crop production to get to 25% forward priced on new-crop. 100% sold in the cash market on 2013-crop production.
Cash-only marketers: NEW ADVICE: Sell 15% of expected 2014-crop production to get to 25% forward priced on new-crop. 90% priced on old-crop.
Advice: We recommend cash-only marketers sell 15% of 2013-crop and 15% of expected 2014-crop production. Hedgers should sell 15% of expected 2014-crop production.
Price action: All three flavors of wheat posted strong gains today with HRS wheat leading gains with increases of 9 3/4 to 12 3/4 cents higher. All three flavors finished sharply higher for the week with May SRW futures posting their highest weekly close since Dec. 9. Funds bought 3,000 contracts (15 million bu.) today.
5-day outlook: The crisis in Ukraine is the dominant bullish wild card. As long as tensions remain high, traders will favor U.S. wheat futures as global buyers back away from buying wheat out of the Black Sea region. Since prospects of a quick settlement appear slim, wheat will likely favor the upside next week.
30-day outlook: There is plenty of wheat available in the world, which means prices will likely retreat once the tensions in Ukraine are resolved. But that situation does not appear to be near a quick conclusion, which will support wheat prices going forward.
90-day outlook: Seasonal trends and the arrival of early harvest in Texas and Oklahoma will eventually put pressure on wheat prices. But the tensions in Ukraine will offset those seasonal trends for now. But eventually those tensions will likely be reduced and the abundant supply of wheat on the global market will pressure prices.
Hedgers: NEW ADVICE: Sell 15% of expected 2014-crop production to get to 50% forward priced on new-crop. 100% sold on 2013-crop.
Cash-only marketers: NEW ADVICE: Sell 15% of 2013-crop to get to 90% sold on old-crop. Sell 15% of expected 2014-crop production to get to 50% forward priced on new-crop.
Price action: Cotton futures closed 21 to 34 points lower with the exception of the lead March contract, which finished 1.02 points higher. The lower close came after the May contract surged well above 93 cents, which attracted profit-taking. Futures finished sharply higher for the week and at their highest close since early 2012 for nearby contracts.
5-day outlook: Cotton futures benefited from the unrest in Ukraine and the general move of funds into commodities in the face of that uncertainty. Prices punched through levels that previously halted rallies. The key now is whether those levels turn into support on a setback. If not, be prepared to make some sales. In addition, traders will be looking for a tightening in old-crop carryover in Monday's Supply & Demand Report. Be prepared to act if traders reacts negatively to that report.
30-day outlook: Traders will continue to look for signs of funds flowing into commodities in general and cotton in particular as volatility in markets heat up. If so, prices could move somewhat higher. But overall fundamentals suggest prices will eventually move lower once market direction becomes more clear.
90-day outlook: The market is currently bidding for a rise in cotton acres. And the market does expect a boost in plantings to around 11 million acres. USDA's Prospective Plantings Report March 31 will be the first reading on intentions. Traders will take their cue from that report.
Hedgers: 75% of 2013-crop is sold in the cash market. 25% of expected 2014-crop production is sold via cash forward contract for harvest delivery.
Cash-only marketers: 75% of 2013-crop is sold. 25% of expected 2014-crop production is forward sold for harvest delivery.