Crops Analysis (VIP) -- April 12, 2013

April 12, 2013 09:39 AM
 

Corn

Price action: Corn futures ended 6 1/4 to 10 cents higher through the July 2014 contract today. That locked in solid gains for the week, with old-crop contracts as the upside leader.

5-day outlook: USDA will release its first corn planting figures on Monday. That should shift more focus to delayed plantings across the Corn Belt, which could be supportive for new-crop futures. Based on forecasts, another week (or two) of cold, wet conditions are in store for the country's midsection, meaning virtually no planting progress will be made.

30-day outlook: While corn plantings are delayed, it's still very early and producers can plant a lot of corn very quickly if conditions turn favorable. For the corn planting delays to turn into more than a short-term market factor, they would have to extend past mid-May, when yield declines are generally around 1 bu. per day for each day of delay.

90-day outlook: Tight old-crop corn supplies and the need for a big crop mean traders will need to respond if there are any serious weather threats during the growing season. But if the growing season unfolds without any major hitches once the crop is in the ground, the upside will be limited for new-crop futures.

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 ended 8 to 11 cents higher in old-crop contracts, while new-crop contracts were 4 to 6 cents higher today. Old-crop futures posted solid corrective gains for the week, while new-crop futures struggled to find buying interest.

5-day outlook: A continuation of this week's bull spreading is likely again next week. While export demand for U.S. soybeans is slowing seasonally, China has remained a buyer of U.S. old-crop supplies, keeping the market supported. Meanwhile, new-crop futures are struggling to find buying interest amid talk soybean acres will rise from March intentions.

30-day outlook: Talk of acres switching from corn to beans due to corn planting delays is premature at this point. But if corn planting delays stretch into mid-May, that talk would build. Even if there isn't much acreage switched, traders feel USDA understated soybean acres in the Prospective Plantings Report.

90-day outlook: Recent heavy precip across the Midwest is recharging soil moisture following last year's severe drought. That has traders looking for a rebound in soybean yields. But the key to how the crop performs will be weather from mid-July forward.

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 mostly 13 to 17 cents higher in Chicago, mostly 10 to 14 cents higher in Kansas City and mostly 8 to 18 cents higher in Minneapolis. Wheat futures posted corrective gains for the week and ended near weekly highs.

5-day outlook: After a couple days of freezing conditions in the Plains this week, attention on weather and crop conditions is heightened. Monday's crop condition figures should reflect some of the damage to the HRW crop, but it will take a couple weeks for a full damage assessment. Unfortunately, another freeze event is in the forecast for next week.

30-day outlook: The HRW crop has bounced back strong from spring freezes in the past. The level of recovery will depend on post-freeze conditions. Cool and wet weather is ideal as that would promote new tiller growth. Hot and dry would be a worst-case scenario. The mid-range forecast favors a cool and mostly dry forecast.

90-day outlook: China has recently booked around 1 MMT of U.S. SRW wheat and more purchases are likely as the country looks to rebuild tightening state-owned reserves. Chinese purchases of U.S. spring wheat are also possible as China has recently complained about the quality (gluten content) of Canadian spring wheat. Chinese purchases could give the wheat market a needed demand boost.

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: After being under pressure much of the day, cotton futures staged a strong late price recovery to end 44 to 135 points higher. Still, cotton futures ended lower for the week.

5-day outlook: Technically, cotton futures look heavy, especially old-crop contracts. Therefore, bulls must step up and defend today's lows next week or there's risk of additional selling pressure. Fundamentally, the question is whether there's enough positive demand news to keep futures from sliding further.

30-day outlook: Traders will continue to watch Chinese demand very closely. While China is trying to sell state-owned reserves to domestic mills, demand thus far has been limited. Instead, they continue to buy better-quality U.S. cotton. If Chinese demand falters, cotton futures will face fundamental pressure.

90-day outlook: Cotton plantings are running ahead of the five-year avearge at this early stage. If December cotton futures are able to avoid a sharp price drop this spring, cotton may not give up as many acres as producers indicated in the Prospective Plantings Report.

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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