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Crops Analysis (VIP) -- April 16, 2014

14:46PM Apr 16, 2014

Corn

Price action:
Corn futures favored a weaker tone throughout the day and ended near session lows with losses of 2 1/2 to 6 1/4 cents. Nearby futures lead losses amid spread evening.

Fundamental analysis: Spreading with soybeans weighed on corn futures today, as did news that Ukraine's exports are running smoothly despite political turmoil in the region. Traders are also worried that a decline in Gulf basis (down 2 cents) signals export demand has softened. As a result, all eyes will be on the weekly export data tomorrow for indications of demand.

Traders ignored news that ethanol production was strong the week ended April 11 and there is currently little concern about the slow start to the planting season, as traders realize there is still plenty of time to get this year's crop seeded.

Technical analysis: December corn futures posted a downside day of trade. The low-range close gives bears the upper hand heading into overnight trade. Key tomorrow will be how comfortable traders are with positions heading into the extended Easter weekend, as the markets are closed on Friday. The contract closed just below the key $5.00 level.

Hedgers: 70% sold on old-crop. 30% of expected 2014-crop is sold via forward contract for harvest delivery.

Cash-only marketers: 60% sold on old-crop. 30% of expected 2014-crop is sold via forward contract for harvest delivery.

 

Soybeans

Price action: Soybean futures enjoyed another day of impressive gains, finishing 14 1/2 to 21 1/4 cents higher in old-crop contracts, while September and later contracts finished 7 1/2 to 9 1/4 cents higher. This was a high-range close. Soymeal and soyoil also enjoyed gains.

Fundamental analysis: Traders were encouraged by the front-month's ability to find and sustain buying above the $15.00 level. Previous surges above this level were short-lived and yesterday marked the first time the contract had closed above that level.

New-crop contracts benefited from efforts to prevent the old-crop/new-crop price spread from widening too far. At the close, the spread had widened to within 1/2 cent of its high of $2.82.

Fundamentally speaking, traders still have yesterday's stronger-than-expected crush data in mind, which some say could signal more reductions to USDA's already tight 2013-14 carryover peg are ahead.

Technical analysis: May soybean futures have turned $15.00 into support. After that, bulls' next target is the $14.60 area that has acted as both support and resistance since February. Today's high of $15.22 3/4 is resistance.

Hedgers: 25% of expected 2014-crop is sold via forward contract for harvest delivery. 100% sold in the cash market on 2013-crop production.

Cash-only marketers: 25% of expected 2014-crop is sold via forward contract for harvest delivery. 90% priced on old-crop.

 

Wheat

Price action: Wheat futures saw two-sided trade today, but bears had full control of the market at the close. SRW wheat ended near session lows with losses of 13 3/4 to 15 1/2 cents. HRW wheat ended 9 to 11 cents lower, while HRS wheat ended mostly 11 to 12 cents lower.

Fundamental analysis: Wheat futures saw some light followthrough buying this morning, but this eventually gave way to profit taking. And selling interest accelerated on news out of the Black Sea region that grain shipments and early spring grain sowings are continuing uninterrupted despite mounting tension in the region.

While recent frost events in the SRW and HRW Wheat Belts remain on traders' minds, the true damage of the event will not be obvious for some time. Cold temps in spring wheat country are not a major concern at this time.

Technical analysis: July SRW wheat futures hit a new monthly high of $7.18 1/4 today, but this triggered profit-taking and futures ended below $7.00, turning it back into resistance. Last week's double-bottom of $6.63 3/4 is tough support.

Hedgers: 75% of expected 2014-crop production is sold via cash forward contract sale for harvest delivery. 100% sold on 2013-crop.

Cash-only marketers: 60% of expected 2014-crop production is sold via forward contract sale for harvest delivery. 90% sold on old-crop.

 

Cotton

Price action: Cotton futures were stronger throughout the day and settled mid-range with gains of 37 to 128 points. Nearby futures led gains amid bull spreading.

Fundamental analysis: Cotton futures were bolstered by technical buying today, as there's little fresh news for the market to digest. Futures will get some guidance tomorrow as USDA will release its weekly export sales data. A slowdown in the sales pace could dampen bulls' enthusiasm.

Technical analysis: December cotton futures posted a new-for-the-move high of 81.73 cents today and then set back to post a mid-range close. The contract ended just below previous resistance at the Oct. 4 high of 81.44 cents. Futures have spent much of this week pivoting around that level.

Hedgers: 100% sold on old-crop. 25% of expected 2014-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 90% sold on old-crop. 25% of expected 2014-crop production is forward sold for harvest delivery.

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