Crops Analysis (VIP) -- April 26, 2013

April 26, 2013 09:13 AM
 

Corn

Price action: Corn futures ended 1 1/4 cents lower in the May contract and 4 3/4 cents lower in the July contract, while new-crop months closed around 7 cents lower today to lock in losses for the week.

5-day outlook: Monday's crop progress data will again show corn plantings well below year-ago and the five-year average. But traders have so far not shown concern. In fact, most feel the long-term benefits of recent, heavy precip outweigh any negative associated with planting delays. Rains are again forecast for areas of the Corn Belt next week, meaning the window of opportunity for fieldwork is likely to be small this weekend.

30-day outlook: If severe corn planting delays extend past mid-May, traders' level of concern is likely to rise. That's generally considered the timeframe for when yield potential starts to decline if seed isn't in the ground.

90-day outlook: Funds continue to liquidate their once record-large long position. Until the fund selling ceases, it will be hard for corn to find sustained buying interest. It may take a fundamental catalyst and an easing of macro-economic concerns to spark active fund buying.

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 overnight and in early trade, but the market reversed course around mid-morning and settled 3 to 9 3/4 cents higher for the day with old-crop contracts leading gains. Old-crop futures ended near steady with last week, while new-crop futures posted moderate weekly losses.

5-day outlook: Soybean futures will likely continue to be a tale of two crops, with selling interest in old-crop futures being limited by tight supplies and ongoing logistics issues in South America and new-crop being pressured by expectations for a rebound in production in 2013.

30-day outlook: New-crop futures traders will focus on weekly planting progress updates and determining just how many acres will be planted to beans. USDA's March estimate for near- steady plantings compared with year-ago is viewed as the low-water mark, especially if corn planting delays extend well into May, which is certainly a possibility.

90-day outlook: The further futures slide, the greater the odds for weather scare at some point during the growing season. While soil moisture has been recharged across much of the Corn Belt, some forecasters signal summer conditions may be hotter and drier again this year.

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 gave back much of yesterday's gains today, finishing 9 to 12 cents lower in Chicago, 7 to 14 cents lower in Kansas City and mostly 3 to 6 cents lower in Minneapolis today. Wheat ended slightly lower for the week.

5-day outlook: Traders have thus far shown little concern with deteriorating crop conditions in the Plains. The Wheat Quality Council will tour Kansas and far southern Nebraska, while concurrent tours will move through Oklahoma and Colorado next week. If tour scouts reveal severe crop problems, attitudes could change.

30-day outlook: It may take until combines start to roll before the market realizes the extent of crop damage in the Plains. We feel there will be a crop-scare rally at some point, but this may turn into a long waiting game for the rally to get going.

90-day outlook: An expected rise in global wheat supplies in 2013-14 is part of the reason traders haven't responded to HRW crop concerns. Plus, the SRW crop is in very good shape. With that in mind, it's going to take a strong increase in demand to fuel sustained price strength.

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 enjoyed short-covering today, but for the week posted sharp losses and did technical chart damage.

5-day outlook: Violation of important support levels this week signals an attitude change in the cotton market. News that India will join China by selling state-owned cotton reserves onto the domestic market -- beginning today -- weighed heavily on cotton futures this week. Followthrough pressure is likely next week as attitudes have turned bearish toward global demand.

30-day outlook: Focus in new-crop futures is turning to acreage and prospects for cotton to pick up some acres in Texas due to freeze and drought damage to the winter wheat crop. As of April 21, USDA reported 10% of the nation's cotton crop was planted, which compares to 14% on average. Planting will move into full swing in the weeks ahead.

90-day outlook: Traders will be watching global demand closely as any pickup in purchases would signal supplies are tighter than expected in China and India. But for now, traders expect U.S. export sales to slow.

Hedgers: 50% of expected 2013-crop production is hedged in December cotton futures at 83.87 cents. 50% of expected 2013-crop production is also sold via cash forward contract for harvest delivery. 100% sold on old-crop in the cash market.

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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