Crops Analysis (VIP) -- April 23, 2013

April 23, 2013 09:52 AM
 

Corn

Price action: Corn futures finished 7 1/4 and 9 1/2 cents lower in the May and July contracts, respectively. September corn closed 13 1/2 cents lower, while new-crop contracts were 9 1/2 to 10 1/4 cents lower. Old-crop futures ended near session lows, while new-crop contracts worked well off session lows into the close.

Fundamental analysis: Corn traders completely ignored planting delays despite only 4% of the U.S. corn crop being seeded as of Sunday. Instead, focus was on forecasts calling for warmer, drier conditions this weekend and early next week. That has traders hoping for a big jump in plantings. But in the meantime, weather remains cold and wet across the Corn Belt.

Funds were sellers of 8,000 contracts (40 million bu.) of corn today, further trimming their net long position. Unless funds start actively flowing money into the long side of the market again, it will be hard to generate much buying interest.

Technical analysis: December corn futures closed below support at the April 1 low of $5.25 1/2, signaling a potential next leg lower on the daily chart. Today's low at $5.18 is now initial support, with stronger support at the June 2012 low at $5.11, followed by the psychological $5.00 area. To the upside, $5.25 1/4 is initial resistance. A quick close above that level would signal today's downside breakout was a bear trap. Stronger resistance is at the April high at $5.51.

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: May soybean futures softened into the close to finish 2 1/2 cents higher, with most other contracts closing 5 to 6 cents lower. The exception was August beans that closed 10 3/4 cents lower.

Fundamental analysis: Front-month soybean futures benefited from concerns about tight supplies and a surge in Gulf basis this morning. Gulf basis for April improved another five cents at midday to stand $1 above May futures, but basis for shipment in early May slipped by 15 cents to stand 70 cents over May futures.

Traders ignored news that China purchased another 392,000 MT of new-crop soybeans, as focus remains on the weather and expectations that warmer and drier conditions next week could benefit planting. Additional pressure came from further signals China's economy is slowing, as the HSBC flash purchasing managers' index declined in April. Traders remain concerned about the impacts the bird flu outbreak is having on the country's economic growth, as well as feed demand.

Technical analysis: November soybean futures penetrated support at yesterday's low but closed back above it. Today's low of $11.90 1/2 is initial support, followed by the June low of $11.40.

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: Bears had the upper hand in the wheat market for most of the session and ended around mid-range in most contracts. Chicago wheat posted losses of 4 3/4 to 8 1/4 cents for the day while Kansas City and Minneapolis wheat futures ended mostly 2 to 6 cents lower.

Fundamental analysis: Spillover from corn and strength in the U.S. dollar index encouraged selling in the wheat market today. This overshadowed yesterday's confirmation of deterioration in the condition of the HRW wheat crop with more likely in the weeks ahead due to recent freeze events.

Minneapolis wheat did see gains at times today thanks to USDA's confirmation of very slow spring wheat planting in northern locations. Areas of the Northern Plains still have significant snowcover on the ground which will keep farmers out of the fields for some time.

Light pressure also stemmed from news Ukraine may lift its wheat export ban for the remainder of the 2012-13 marketing year, though the country is not expected to be a major wheat exporter even if the ban is lifted.

Technical analysis: May Chicago wheat futures remain within the consolidation range that has bound action since early April. The parameters of this range -- $6.88 and $7.16 -- mark near-term support and resistance, respectively.

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 settled at or near session lows with losses of 46 to 163 points, with nearbys leading to the downside on light trade.

Fundamental analysis: Strength in the U.S. dollar index and ideas the upside has been exhausted for the cotton market encouraged profit-taking today. Early pressure pushed some contracts through near-term levels of support, triggering some technical selling.

The market is not yet overly concerned about a slow start to planting for a crop that is expected to see sharply lower plantings this year. As of April 21, 10% of the crop had been seeded compared to 17% last year and 14% on average for this time of the year.

Technical analysis: May cotton futures hit a new monthly low today and stopped just short of key support at the 50% retracement of the November to February rally at 82.51 cents. A move through this levels would set the contract up for a test of the bottom of the old consolidated trading range at 81.35 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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