Crops Analysis (VIP) -- April 30, 2013

April 30, 2013 09:27 AM
 

 

Corn

Price action: Corn futures settled 3/4 cent lower in the May contract, 9 3/4 cents lower in the July contract and 4 1/2 cents lower in the September contract, while new-crop futures were around 1 to 2 cents lower today.

Fundamental analysis: The corn market caught its breath today following yesterday's sharply higher to limit-up performance. Mild profit-taking was seen throughout the session. But the biggest difference was fund activity. After aggressively buying yesterday, funds were the net sellers of 13,000 contracts (65 million bu.) of corn today.

As the calendar flips to May tomorrow, the focus will be on two fronts -- fund money flow to start the new month and weather/planting progress. With a return of colder air and a daily chance for rains across the Corn Belt the remainder of the week, a planting-delay rally is very possible, especially given the very slow start to the planting season. But as was proven the past two days, fund buying is likely needed to fuel a price rally. Without that, corn struggles to find sustained buying interest despite planting delays.

Technical analysis: Today's high of $6.69 is initial resistance for July corn futures, but bulls must fill the April 1 gap at $6.76 to spark active chart-based buying. If that gap remains open, a drop to test solid support at the April low of $6.10 remains a possibility.

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 saw a volatile day of trade, with bears having the advantage heading into the close. Futures ended 4 to 9 3/4 cents lower for the day, which was low-range.

Fundamental analysis: Month-end positioning in the soybean market along with some spread activity with corn led to a very choppy day of trade in the soybean market. In the end, profit-taking and expectations for an increase in soybean acreage relative to USDA's March 28 Prospective Plantings Report gave bears the advantage. Corn planting is off to the slowest start in nearly 30 years and the forecast is not favorable for producers getting in the fields the remainder of this week. As a result, traders expect some corn acres to be switched to soybeans.

Traders of old-crop futures continue to weigh tight old-crop supplies against expectations the Chinese bird flu situation will reduce the country's feed needs, as well as South American supplies being available.

Technical analysis: November soybean futures traded up to a new monthly high of $12.40 1/4 today, but the contract was unable to sustain buying interest at that level and eventually settled low-range with a loss for the day. Today's high is new resistance. Strong support stands at last week's low of $11.86 1/2, which is the 2013 low.

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 sharply extended gains in mid-morning trade and finished with double-digit gains in Chicago and Kansas City. Minneapolis closed 3 to 9 1/4 cents higher.

Fundamental analysis: While corn and soybean futures softened in morning trade, wheat futures turned higher amid crop concerns. Our weighted Crop Condition Index showed the HRW wheat crop continues to slip, while SRW wheat is holding steady. Given forecast for freezing temps as far south as northern Texas later this week, traders opted to build more weather premium into the market as they expect more wheat to be abandoned in the Plains.

Minneapolis wheat futures saw a muted reaction in comparison to Chicago and Kansas City futures despite ongoing planting delays in the Northern Plains. Flooding in the Red River Valley points to the likelihood that producers will switch intended spring wheat acres to other crops.

Technical analysis: September Chicago wheat futures followed yesterday's strong upside day of price action with strong gains to challenge resistance at the late-March high of $7.46 3/4. Closes above this resistance would suggest a near-term low has been posted and make bulls' next target the halfway point of the decline from the November high to the April low, which stands at $7.89 3/4. Failure to clear $7.46 3/4, however, would signal the upside correction has run its course.

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 98 to 193 points higher, with nearbys leading gains.

Fundamental analysis: Futures were supported by concerns about planting delays, as USDA reports just 14% of the nation's intended cotton acres had been planted as of Sunday. This compares to 25% last year at this time and the five-year average of 20%. Of most concern is that just 14% of the intended acres in Texas are planted (20% on average), 6% of the Louisiana crop is planted (compared to 46% on average) and planting has not yet begun in Mississippi (21% on average).

Given today's strong upside day of trade on the daily charts, tomorrow's price action will be telling of the near-term strength of the market. Cotton futures had recently been pressured by worries global cotton demand would slow.

Technical analysis: December cotton futures posted a 38% retracement of the rally from the November low to the March high last week and have since rebounded to return back above the 25% retracement level. Followthrough buying tomorrow would suggest the correction has run its course and reopen upside potential to the March high of 89.20 cents.

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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