Crops Analysis (VIP) -- April 22, 2013

April 22, 2013 09:29 AM
 

Corn

Price action: Corn futures closed 6 1/4 and 9 1/2 cents lower in the May and July contracts, respectively. The September through July 2014 contracts were 13 to 16 cents lower, while far-deferred contracts were around a dime lower.

Fundamental analysis: Traders chose to focus on forecasts calling for slightly improved weather in the mid-range outlook instead of ongoing planting delays and more wet weather this week. That's an indication attitudes are bearish and signal traders feel the bulk of intended corn acres will eventually get seeded. With that in mind, it will be interesting to see if this afternoon's progress data that shows corn planting well behind the average pace will spark short-covering overnight and in tomorrow session. But with a more favorable weather outlook for next week, any price recovery will be corrective in nature.

As has been the case recently, fund money flow dictated price movement for futures. Funds sold 7,000 contracts (35 million bu.) of corn today.

Technical analysis: December corn futures have staked out a short-term consolidation range from $5.25 1/2 to $5.51. A downside breakout would open the door to the next leg down on the daily chart. An upside breakout would clear the way for a price recovery to the March high at $5.73 3/4.

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: Soybean futures faced pressure throughout the day and ended 11 to 19 cents lower in old-crop contracts while new-crop posted losses around 9 to 10 cents.

Fundamental analysis: Old-crop soybeans led losses in the grain and soy markets today due to concerns about slowed Chinese demand for soy products as a result of the ongoing bird flu situation. Adding to the negative tone was today's weekly export inspections of 4.97 million bu. that fell short of expectations and came in at a fraction of amounts reported earlier this year, also pointing to slower export demand.

Meanwhile, the market expects beans to pick up acres from corn as cold, wet conditions have led to a slow start to planting. Plus, extended outlooks point to more favorable planting conditions for beans into much-improved soils.

Technical analysis: November soybean futures traded through the psychological support level at $12.00 down to $11.94 1/2 before rebounding to a mid-range finish. These levels are near-term support. The April 10 high of $12.48 is near-term resistance.

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 throughout the day but closed mid-range with losses of 5 to 9 cents in Chicago, losses of 4 1/2 to 8 cents in Kansas City and losses of 3 1/4 to 6 3/4 cents in Minneapolis.

Fundamental analysis: Much of today's pressure came on spillover from neighboring corn and soybean markets, as traders responded to what they perceive as improved conditions for planting in the Midwest. But Minneapolis futures were the first to move off lows as the spring wheat region braces for what is expected to be another major snowfall tonight -- further delaying planting.

Tomorrow's price action in large part will be directed by traders' reaction to this afternoon's crop progress and condition data. Traders will monitor the condition data to get an idea of the quality of the crop after recent freeze events.

Traders ignored this morning's stronger-than-expected weekly export inspections figure for wheat. However, further confirmation of stepped up demand should help the market secure a near-term low.

Technical analysis: September Chicago wheat futures penetrated support at last week's low of $7.01 but managed to finish in the upper third of today's trading range. Futures need to climb above the April high of $7.27 1/4 to signal a near-term low is in the works.

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 rallied into the close to finish 75 to 113 points higher, with deferreds leading gains.

Fundamental analysis: Buying in the cotton pit picked up through the day, but price action was limited by a lack of fresh news. About the only fresh news for the day was confirmation of an earlier release that China's cotton imports in March reached 528,808 MT, which was down 15% from last year. Year-to-date imports of 1.37 MMT are down 13% from year-ago.

Meanwhile, outside markets provided mixed direction for cotton today, as the dollar was choppy while crude oil and gold were firmer.

Technical analysis: December cotton futures finished just off the session high and came just shy of posting an upside day of trade on the daily chart. Futures continue within the boundaries of the gradual downtrend from the March high but have yet to post a close below uptrending support drawn off November and January lows, which currently intersects near 84.00 cents.

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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