Crops Analysis (VIP) -- April 1, 2013

April 1, 2013 09:38 AM
 

Corn

Price action: May and July corn futures took advantage of expanded trading limits today, ending 53 and 49 1/4 cents lower, respectively. September corn futures finished 12 cents lower. New-crop contracts were 2 1/4 to 3 cents lower.

Fundamental analysis: There was more fallout from last Thursday's March 1 corn stocks figure, which came in nearly 400 million bu. above expectations. The rush to get out of long old-crop corn positions is being led by funds, who dumped an estimated 35,000 contracts (175 million bu.) today after selling an estimated 40,000 contracts (200 million bu.) last Thursday.

Pressure spilled over to new-crop contracts, although the selling was much less active and these contracts closed well off session lows. Until old-crop futures find a level of value, new-crop contracts will struggle to find active buying interest.

Technical analysis: Next support for May corn futures is at $6.32 1/4, followed by $6.15 and then the psychological $6.00 mark. To the upside, key resistance stands at the January low of $6.78 1/2 and the top of today's gap at $6.95 1/4.

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: Old-crop soybean futures posted losses of 7 3/4 to 14 cents, while the September finished 1 1/2 cents lower. New-crop futures ended 1 1/4 to 3 3/4 cents higher. Soymeal and soyoil futures settled mixed with nearby contracts favoring the downside and deferred months the upside.

Fundamental analysis: Old-crop futures were pressured by heavy spillover from corn today, as well as USDA's heavier-than-anticipated soybean stocks estimate. The 999-million-bu. tally still represents tight supplies, but export demand for old-crop supplies is expected to fade with South American soybeans moving onto the world market. Already, some slowdown has been seen in weekly export inspections totals

New-crop soybeans, on the other hand, received light support from USDA's forecast for soybean plantings to decline from last year. Recent strong Chinese new-crop soybean buys also helped limit pressure.

Technical analysis: May soybean futures broke through and settled below support at both the March and February lows of $14.03 and $13.93 1/2, respectively, turning these levels into near-term resistance and opening downside risk to the 2013 low of $13.44.

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 were on the defensive throughout the day and extended losses into the close to finish in the teens to 20-plus cents lower in Chicago, and with losses in the teens in Kansas City and Minneapolis.

Fundamental analysis: Much of the pressure in the wheat pit came on spillover from sharp losses in corn futures as old-crop wheat must find a price that spurs demand. Traders continue to digest last week's bearish Grain Stocks Report that showed more old-crop corn, wheat and soybeans stocks than traders expected. The recent sharp pressure on corn has widened the wheat/corn spread, with Chicago May wheat now trading at around a 20-cent premium to May corn.

A more favorable weather outlook added to the weaker tone in the wheat pit, as the latest National Weather Service forecast calls for above-normal precip across the HRW Wheat Belt. After a unfavorably dry March, April showers would be welcome across the region to give the crop a boost.

Technical analysis: May Chicago wheat futures posted a contract low of $6.59 3/4 and a low-range close today. Followthrough pressure tomorrow would confirm the downside breakout and open significant downside risk for the contract. Bears' next target is $6.50, with support layered every 20 cents below that.

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 saw a choppy start but softened as the day progressed to close 38 to 107 points lower.

Fundamental analysis: Early buying gave way to selling and cotton saw spillover from overall weakness in the commodity markets, as reflected by the Continuous Commodity Index. Weakness in the commodity sector came despite sharp softening of the dollar index. This reflects an overall risk-off day in the marketplace.

Traders are still digesting last week's USDA reports, which reflected producers' intentions to plant far fewer acres to cotton than last year. This helped limit pressure on cotton futures, as did recent indications China will continue to stockpile cotton.

Technical analysis: December cotton futures saw two-sided trade but in the end posted a low-range close to give bears the advantage on tomorrow's open. But the contract remains well within the boundaries of the uptrending channel established from the December and February lows. The recent widening of the range suggests the market could be in the process of putting in a near-term high, however.

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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