Crops Analysis (VIP) -- Advice -- May 29, 2013

May 29, 2013 09:52 AM
 

Corn

Price action: All but the front-month corn contract extended gains in late trade to finish 10 to 14 3/4 cents higher. July corn ended 1 1/2 cents lower amid bull spread unwinding. Funds bought 5,000 contracts (25,000 bushels) today.

Fundamental analysis: New-crop futures gained momentum today on concerns continuing rain in the western and northwestern Corn Belt will trim total planted acreage and yield prospects. The gains in new-crop futures rose as storms in southwest Iowa moved north and eastward. Key will be if futures build on these gains in overnight trade as there are additional rains in the forecast tomorrow and Friday.

Technical analysis: December corn futures closed near the day's high and at their highest level since March 27. Today's close is just shy of resistance at the April high of $5.70. If cleared, the next upside resistance area is the February high of $5.96 1/2. The $5.50 area provided psychological support today.

Hedgers: 100% sold on 2012-crop in the cash market. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery

Cash-only marketers: 75% sold on 2012-crop production. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

 

Soybeans

Price action: Soybean futures saw a choppy day of trade amid active bull spread unwinding. July through September futures ended 2 3/4 to 7 1/2 cents lower for the day, while new-crop beans were steady to 1 1/4 cents higher. This was a mid-range close for most contracts.

Fundamental analysis: Pressure on old-crop futures stemmed from USDA's announcement that China had canceled a purchase of 147,000 MT of old-crop soybeans and softer basis levels both at the Gulf and interior locations. This signals the recent rally in bean prices encouraged enough farmer selling for end-users to cover their near-term needs.

New-crop futures, meanwhile, enjoyed spillover support from the corn market and concerns about the slow planting and emergence pace for the bean crop relative to the five-year average. But bullish enthusiasm was kept in check by recognition that the delayed planting of the remainder of the corn crop means some of these acres will likely be shifted to soybeans.

Technical analysis: November soybean futures continue to inch their way toward psychological resistance at $13.00, coming within a nickel of that price today. The $12.50 area that has acted as both support and resistance since February is again support.

Hedgers: 100% sold on 2012-crop in the cash market. 50% of expected 2013-crop production is hedged in November soybean futures at $12.19. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 90% sold on 2012-crop. 10% of expected 2013-crop production is sold via forward contract for harvest delivery.

 

 

Wheat

Advice: Hedgers and cash-only marketers should make a 25% 2012-crop cash sale to get to 100% sold in the cash market on old-crop.

Price action: Wheat futures benefited from spillover from the corn pit and finished near daily highs. Chicago wheat ended 9 to 12 3/4 cents higher, Kansas City closed up 4 1/4 to 6 1/2 cents and Minneapolis ended 3 3/4 to 9 1/4 cents higher.

Fundamental analysis: Wheat was in a follower's role to the corn market today, with additional support coming from sharp weakness in the U.S. dollar index. Traders used both of these as reasons to cover short positions, though the dollar index is still up strong for the year.

Minneapolis futures also found support from another storm moving into the region to once again delay planting, while further deterioration in the HRW wheat crop helped to support Kansas City futures.

Technical analysis: July Chicago wheat futures posted an inside day up on the daily chart. The high-range close gives bulls more momentum heading into the overnight session, but they have a lot of work ahead of them to signal a near-term low has been posted. Near-term boundaries are support at the April low of $6.64 3/4 and resistance at the April high of $7.36 3/4.

Hedgers: NEW ADVICE: Make a 25% 2012-crop cash sale to get to 100% sold on old-crop in the cash market. No 2013-crop sales advised yet.

Cash-only marketers: NEW ADVICE: Make a 25% 2012-crop sale to get to 100% sold on old-crop. No 2013-crop sales advised yet.

 

Cotton

Price action: Cotton futures softened into the close to finish 47 to 69 points lower in 2013 contracts and 2014 futures closed 26 to 37 points lower in all but the October contract, which ended 10 points higher.

Fundamental analysis: Cotton futures were pressured by indications planting is picking up. USDA reports 59% of the nation's crop was planted as of Sunday, which is a twenty-percentage-point improvement from last week (though the pace still lags the average). Cooler- and wetter-than-usual conditions in the Mississippi Delta have resulted in planting delays, but traders are now hopeful producers are catching up.

Cotton futures showed a large disconnect with the dollar index today, which was sharply lower today. Outside markets provided mixed signals today, as crude oil was sharply lower and gold was sharply higher.

Technical analysis: December cotton futures posted a low-range close but respected support at the May low of 82.92 cents. Closes below that level would make bears' next target the September high of 81.30 cents. On the flip side, to signal a near-term low has been posted the contract needs to return above the May high of 87.25 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. 100% sold on old-crop in the cash market.

Cash-only marketers: 85% sold on old-crop. 50% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

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