Crops Analysis (VIP) -- April 19, 2013

April 19, 2013 09:46 AM
 

Corn

Price action: Corn futures ended the day 3 1/4 to 7 1/2 cents higher. For the week, futures posted slight losses but held within the recent consolidation range.

5-day outlook: Upside potential for corn futures was limited this week by heavy, widespread rains across the Corn Belt that is shrinking the crop, but selling was limited as wet and cool conditions have delayed the start of planting season. This battle is likely to continue into next week, but if we enter May and farmers are still not actively planting, traders will begin to convert lost acres into bushels, which will be supportive for new-crop futures.

30-day outlook: The focus is moving away from demand and to the new-crop supply situation. Current prices have sparked slight improvement in demand. As a result, USDA could add some bushels to usage in next month's Supply & Demand Report to slightly tighten 2012-13 carryover.

90-day outlook: Once more is known about acreage -- how much has shifted from corn to other crops, especially in the northwest region of the Belt -- focus will shift to weather. We also look for old-crop basis to remain strong until new-crop supplies become available; the cash market could heat up as supplies tighten this summer.

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 2 1/4 and 7 1/2 cents lower in the May and July contracts, respectively. Other contracts ended 9 1/4 to 10 1/2 cents lower. For the week, old-crop futures continued to work off the early April low, while new-crop futures extended their price decline.

5-day outlook: Cold, wet weather will keep producers out of fields across the Corn Belt again next week. As a result, there's likely to be more talk of some intended corn acres switching to soybeans. That's likely to keep new-crop futures under pressure, especially since some traders felt soybean planting intentions were understated.

30-day outlook: Export demand for U.S. soybeans has slowed some, but China and other global end-users continue to buy U.S. supplies. As long as there's solid demand for U.S. soybeans, old-crop futures will be well supported given tight supplies.

90-day outlook: The deeper into May corn planting delays extend, the greater the odds soybeans will pick up acres from March intentions. USDA won't revisit soybean acreage until the end of June, so any acreage shifts will be speculative until that point.

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: 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 were under pressure this morning, but the market firmed as the day progressed and ended high-range with gains mostly around 4 to 7 cents in Chicago and Minneapolis while Kansas City finished with slight gains in most contracts. Nevertheless, Chicago wheat futures posted slight losses for the week.

5-day outlook: Traders will continue to digest recent freeze events as far south as northern Texas and the impact on a winter wheat crop already off to a poor start. Meanwhile, snow and cold weather continues to delay spring wheat planting. Thus, next Monday's Crop Condition Report will be in focus and should limit selling interest.

30-day outlook: Export demand for U.S. wheat has also picked up of late -- especially among Asian nations. If this trend continues, wheat futures should work higher, especially if the recent freeze event proves to have caused significant damage to the crop.

90-day outlook: Cool, wet weather will be needed for a battered HRW wheat crop to rebound from a poor start to the year. The Climate Prediction Center's Outlook is not favorable for this; it calls for above-normal temps for most of the U.S., while western areas of the Plains are expected to see below-normal precip. The rest of the HRW Belt has equal chances for above-normal, normal and below-normal precip.

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 a choppy day of trade and ended 12 points lower to 32 points higher. The market posted moderate losses for the week.

5-day outlook: Recent steady to lower action in cotton has signaled the market feels a downside correction is needed. This trend will likely continue for the week ahead as fundamental support is declining and funds are looking to lighten their long exposure.

30-day outlook: Cotton acres are expected to be down sharply from year-ago, but expectations are building that slowed corn planting in southern regions could shift some acres back to cotton. As a result, some of that support has eased.

90-day outlook: Chinese demand is a key factor for the cotton market. China has announced it will release higher quality cotton reserves for feed mills and that it will ease its purchase cap restrictions from two months of needs to eight months of needs. This could ease near-term Chinese demand. Plus, the bird flu situation is seen as being a drag on the country's economic growth for the year, which could also slow Chinese cotton demand.

Hedgers: 100% sold on old-crop in the cash market. 50% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

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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