Crops Analysis (VIP) -- April 15, 2013

April 15, 2013 09:19 AM
 

Corn

Price action: Corn futures finished 11 3/4 and 13 1/4 cents lower in the May and July contracts, respectively. The September through July 2014 contracts were 17 1/2 to 20 1/4 cents lower today.

Fundamental analysis: Corn futures were pressured by heavy liquidation that stemmed from broad risk aversion after disappointing Chinese economic data overnight. Funds sold an estimated 10,000 contracts (50 million bu.) of corn for the day, breaking a string of five days in which they were buyers.

Fundamentally, new-crop futures were also pressured by an improved weather outlook. While conditions are expected to be cool and wet across the Midwest this week, the outlook for next week isn't as wet. Still, active fieldwork isn't likely until late this month at the earliest and corn planting progress will remain delayed.

Technical analysis: Despite today's heavy pressure, December corn futures did no major chart damage. Bulls must defend support at the April 1 low of $5.25 1/2. Violation of that level would open downside risk to the June 2012 low at $5.11.

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 sank into the close to finish 18 cents lower in the front-month (May) contract and 23 to 25 cents lower in other contracts.

Fundamental analysis: Futures were pressured by disappointing Chinese GDP growth of 7.7% in the last quarter, which didn't live up to expectations. This, combined with more bird flu cases being reported in China, raised concern about Chinese feed demand.

Additional weakness came from sharply negative outside markets, as gold futures moved to their lowest level in more than two years today in reaction to concerns about the global economy. Crude oil futures also posted sharp losses, but the market came off its lows as soybeans were closing.

Meanwhile, traders believe the soybean acreage figure projected in March by USDA will be the low-watermark of the year given possible planting delays across the Corn Belt.

Technical analysis: November soybean futures posted a downside day of trade on the daily chart and moved to the lowest level since mid-June. Followthrough pressure tomorrow would make bears' next target the June low of $11.40.

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 faced pressure throughout the day and ended mostly 17 to 21 cents lower in Chicago and Kansas City and 8 3/4 to 10 3/4 cents lower in Minneapolis.

Fundamental analysis: The grain markets as a whole pushed fundamentals to the side today and exited long positions after weaker-than-expected economic growth figures from China encouraged a broad commodity selloff. A weekly export inspections tally that fell just short of expectations added light pressure.

As a result, traders blew off readying for USDA's weekly crop condition report that will likely reflect some of the damage of the freeze event in the heart of HRW country last week and the possibility of more freeze damage this week to a crop that is already in tough shape.

Technical analysis: May Chicago wheat futures turned the psychological $7.00 mark back into resistance after briefly moving above it Friday. The next level of resistance is the $7.16 level that has stopped rallies three times this month. The contract tested but respected support at last week's low of $6.88 today, which is the last layer of support until the contract low of $6.59 3/4.

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 faced pressure most of the day and ended at or near session lows with losses of 101 to 162 points for the day.

Fundamental analysis: News of slower-than-expected economic growth in China weighed heavily on the cotton market today as the country is a major importer of U.S. cotton. The Chinese economic data spurred heavy dumping of risky assets -- especially commodities -- today. This added spillover pressure to the cotton market.

Somewhat offsetting this, however, is news that the the country's statistics bureau expects Chinese cotton plantings for 2013 to fall 6.2% from last year.

Technical analysis: May cotton futures have thus far respected near-term support at Friday's dip to 83.46 cents. The next level of support would be the bottom of the February consolidation range at 81.35 cents. A bounce to the upside would have bulls eyeing the March 28 high of 90.27 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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