Crops Analysis (VIP) -- April 24, 2014

April 24, 2014 09:59 AM
 

Corn

Price action:
Corn futures closed around 1 to 3 cents weaker, which was low-range for the day. Funds sold 4,000 contracts (20,000 bu.) today.

Fundamental analysis: Corn futures were on the defensive today due to profit-taking after prices moved to a two-week high in early trading. Futures also saw some position evening ahead of the expiration of May corn options tomorrow. This morning's weekly Export Sales Report supported corn futures as it signaled continued strong export demand. Sales of 618,900 MT for 2013-14 and 382,900 MT for 2014-15 came in at the upper end of pre-report expectations.

Recent weather patterns are not friendly for getting the 2014-crop planted quickly and forecasts call for a continuation of the wet and cool pattern well into next week. That supported prices on setbacks.

Technical analysis: July corn futures firmed and trended higher until meeting resistance at the $5.13 1/2 area, the April 8 high. That prompted profit-taking, which resulted in a test and small bounce off of support at the 14-day moving average at $5.05 3/4. That is the support zone with $5.13 1/2 as resistance.

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 saw two-sided trade today and ended with bulls in control of the market. Old-crop ended 3 1/2 to 9 cents higher, while new-crop finished 1 3/4 to 3 3/4 cents higher. September ended 4 3/4 cents higher.

Fundamental analysis: Soybeans faced pressure at times today on confirmation of slowed export demand. Weekly export sales of 800 MT for 2013-14 and 118,200 MT for 2014-15 fell short of expectations and old-crop sales notched a marketing-year low. Also today, Gulf basis slipped 5 to 10 cents for near-term delivery. But the slowdown in demand implied by these figures has long been anticipated.

Buying in new-crop was limited by current and expected weather that is unfavorable for corn planting. This ups the odds record-high soybean planting intentions will be realized.

But losses ultimately gave way to bargain buying. Traders are hesitant to push futures sharply lower considering tight ending stocks and the fact the 2014 crop is not yet seeded.

Technical analysis: May soybeans again found support in the $14.60 to $14.65 area. A move through this level would open downside risk to the late February high of $14.45 1/2. Tough resistance stands at $15.00.

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 enjoyed strong gains today and ended roughly 12 to 15 cents higher across all three flavors. Most contracts ended high-range.

Fundamental analysis: Wheat futures enjoyed renewed buying interest today as traders extended the market's recent uptrend. SRW wheat contracts for 2014 again found support at the 40-day moving average.

Besides technical support, the wheat market also benefited from the expansion of drought in HRW wheat country over the past week, according to the National Drought Monitor. While there is rain in the forecast, there are also chances for severe weather conditions. Meanwhile, the HRS wheat market was lifted by concerns that cold, wet weather on the Northern Plains will keep planting progress well behind the average pace.

Solid demand signaled by today's weekly export sales data also kept bulls in control of the market.

Technical analysis: May SRW wheat futures bounced off support at the 40-day moving average around $6.74 today. This will remain a key support level in days to come. Below that, the April double-bottom of $6.56 1/4 is support. The contract appears headed for a test of the $7.00 resistance mark, followed by the April high of $7.11.

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 again ended split, but this time the front-month finished down 24 points, while deferred months posted gains of 35 to 67 points. Most contracts ended high-range.

Fundamental analysis: Cotton futures saw some mild bull spread unwinding today of spread positions put on yesterday. While the chart pattern of the market continues to favor market bulls, traders are hesitant to push prices much higher for fear of slowing export demand.

The week ended April 17, cotton export sales of 124,100 RB for 2013-14 were up notably from the prior four-week average and 46% above last week's total. USDA also noted sales of 16,400 RB for 2014-15. Exports of 218,900 RB were down around 20% from week-ago and the four-week average. Export commitments remain well ahead of the pace needed to meet USDA's export projection for 2013-14.

Technical analysis: May cotton futures spent the day within the upper half of Wednesday's trading range. But the high-range close gives bulls the advantage. Initial resistance is the 93.23 cents area that stymied buying yesterday and on April 4. The 90.00-cent level marks support.

Hedgers: 50% of expected 2014-crop production is sold via forward contract for harvest delivery. 100% sold on old-crop.

Cash-only marketers: 50% of expected 2014-crop production is sold via forward contract for harvest delivery. 90% sold on old-crop.

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