Crops Analysis (VIP) -- April 11, 2013

April 11, 2013 09:42 AM
 

Corn

Price action: Old-crop corn futures settled mid-range with gains of 1 to 2 1/2 cents, which was low-range. New-crop corn ended mostly fractionally to a penny higher, which was a mid-range close.

Fundamental analysis: Old-crop corn benefited from increasing attention on the tight supply situation signaled by historically high basis levels around the country. Gulf basis has also firmed of late, which could signal export demand is improving along with domestic demand. Weekly export sales also came in near the top of expectations. However, this represents an improvement from a much-damaged demand base; therefore, upside potential will likely be limited to short-covering.

Cold and wet condition with more in the forecast continues to keep a floor under new-crop corn as it points to a late start to planting and a challenge in reaching trendline yields.

Technical analysis: May corn futures settled just above psychological support at $6.50 today, after which support lies at the April low of $6.26 1/2. Former support at $6.80 3/4 is now resistance.

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 closed 9 1/4 and 3/4 cent higher in the May and July contracts, respectively. The September contract ended a nickel lower, while new-crop contacts were mostly 8 to 10 cents lower.

Fundamental analysis: Tight supplies and decent old-crop export sales of 319,200 MT, including 526,000 MT in purchases by China (there were cancellations by unknown destinations), supported nearby soybean futures throughout the day. New-crop contracts struggled to gain traction, however, amid a disappointing 2013-14 export sales figure of just 64,500 MT and talk corn planting delays could lead to more soybean acres.

Interestingly, December corn futures are not being supported by planting delay talk, but new-crop soybean futures are feeling pressure from these thoughts. That's partly because traders generally feel USDA underestimated soybean plantings in the Prospective Plantings Report.

Technical analysis: November soybean futures continue to flirt with support at $12.25 1/4, but have yet to close below that level. A close below it would make the summer 2012 low at $11.40 next strong daily chart support.

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.

 

 

Wheat

Price action: Wheat futures closed narrowly mixed in Chicago, mostly 5 to 8 cents higher in Kansas City and 2 to 5 cents higher in Minneapolis.

Fundamental analysis: Kansas City wheat futures led price gains today amid concerns with the HRW crop, which endured more sub-freezing conditions overnight. While some crop damage was done the past two nights (and on the late-March freeze), it will be a couple weeks before there's a good assessment of damage. And even then, it will be hard to quantify. For now, the freeze damage is doing little more than limiting selling interest.

Weekly wheat export sales were near the lower end of the trade guess range at 263,500 MT for 2012-13 and 76,000 MT for 2013-14. A daily announcement that China bought 360,000 MT of U.S. SRW wheat was confirmation of part of the business that was rumored last week. This news was already "in" the market and, therefore, had little to no price impact today.

Technical analysis: July Kansas City wheat futures remain in the downtrend from the November 2012 high. Bulls need a close above that trendline, which intersects around $7.78 1/2 Friday and the last reaction high at $7.83 1/2 to signal a short-term low is in place.

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.

 

 

Cotton

Price action: Cotton futures saw two-sided trade today, but the market ended low-range with losses of 64 to 107 points.

Fundamental analysis: Export sales were solid at 147,100 bales for 2012-13 and 17,300 bales for 2013-14 with China as the lead buyer. Still, cotton futures faced profit-taking pressure today after posting solid gains yesterday on USDA's friendly Supply & Demand Report. Recent price action signals investor unease as they continue to lighten long positions following the sharp rally from November to March.

News China will continue its stockpiling program of domestic cotton from September through March 2014 at prices steady with last year is mildly friendly for the market longer-term as it points to ongoing cotton import demand among textile mills.

Technical analysis: Near-term support for May cotton futures remains at Monday's low of 85.22 cents, followed by the bottom of the previous consolidation range at 81.39 cents.

Hedgers: 100% sold on old-crop in the cash market. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 85% sold on old-crop. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.
 

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