Price action: Corn futures posted gains of 4 3/4 to 8 cents in most contracts today, which was just off session highs.
Fundamental analysis: Buying interest in the corn market was initially tempered by news China has cleared the way for Brazilian corn imports. Adding pressure was an ag attache forecast that lowered its Chinese import forecast due to "biotech-related" trade disruptions. But both of these "news" items were expected, and therefore already factored into prices.
As a result, traders shifted their attention to stepped-up positioning for USDA's Supply & Demand Report tomorrow. The average trade guess shows traders expect USDA to lower its 2013-14 carryover peg by 53 million bu. to 1.403 billion bushels.
The market also benefited from reports of a 24-hour strike at Argentina's Rosario port as well as the forecast for a widespread frost event next week following a warm-up in the Midwest this week. Sharp losses in the U.S. dollar index added to the positive tone.
Technical analysis: May corn futures have notched higher lows five consecutive days, confirming the market's ongoing uptrend. Of note, the contract settled back above $5.00 and former resistance at $5.02 1/2 today, turning these levels into support. Bulls' next target is the April high of $5.12 1/2.
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.
Price action: Soybean futures moved higher throughout today's session after trading lower overnight and briefly opening the day session under pressure. Most contracts finished near their daily highs. The May through September contracts finished 10 to 18 1/4 cents higher, with May leading gains, while new-crop futures closed 9 1/4 to 9 3/4 cents higher.
Fundamental analysis: Futures initially faced some profit-taking pressure, but positioning ahead of tomorrow's USDA Supply & Demand Report trimmed those losses and levered prices higher throughout the day. Trading in the electronic system halted this afternoon, disrupting trading temporarily, but trading continued in the open-outcry trading pits.
The weather forecast tended to support new-crop futures as it calls for portions of the Midwest to undergo frost early next week despite a warm-up in temperatures due this week. That could push back planting for both corn and soybeans. Spread activity favored the front months as traders look for USDA to trim its old-crop carryover projection tomorrow.
Some support also came from news Argentine workers around the main export hub at Rosario are planning a one-day strike Thursday. While this is a temporary strike at this time, it has potential to blow up into something greater.
Technical analysis: May soybean futures found support just above yesterday's low and gained momentum throughout the day to close above yesterday's high. Futures continue to find support at the February-April steep uptrend line. Support also exists under the April 2 low of $14.56. Recent trading action may be forming a bullish pennant in the May contract. It takes a close above the April 4 high of $14.87 to confirm the formation. Support exists under the April 2 low of $14.56.
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.
Price action: Late-session price action was a little wild in the wheat market today after CME Group had to halt electronic trade this afternoon due to technical difficulties. SRW contracts ended mostly 5 to 6 cents higher, HRW contracts closed 2 to 3 cents higher and HRS contracts closed mostly 1 to 4 cents higher. That was a mid- to upper-range close.
Fundamental analysis: Traders used dry weather in the Southern Plains as a reason to cover some short positions in the wheat market today. While conditions are very dry and the HRW crop is struggling, that hasn't been a focal point of late, suggesting traders simply weren't looking to peel off any more long positions or add short positions ahead of USDA's reports tomorrow morning.
Forecasts call for hot and dry conditions in the Southern Plains into Friday. There is a chance for rains in the region by the weekend, but they are again forecast to favor eastern areas.
USDA is expected to increase its 2013-14 wheat ending stocks forecast in the monthly Supply & Demand Report. The average pre-report guess shows wheat carryover up 25 million bu. from last month at 583 million bushels.
Technical analysis: Key near-term support for July SRW wheat futures lies at last week's low of $6.65 1/4, with a 38% retracement of the winter rally just below that around $6.10. A drop below the latter level would signal the pullback from last month's highs is more than a simple correction to the runup from the winter low.
Hedgers: 50% of expected 2014-crop is sold via forward contract for harvest delivery. 100% sold on 2013-crop.
Cash-only marketers: 90% sold on old-crop. 50% of expected 2014-crop is sold via forward contract for harvest delivery.
Price action: Cotton futures finished 117 to 124 cents higher in old-crop contracts, while new-crop contracts closed 13 to 44 points higher.
Fundamental analysis: Expectations USDA will trim its cotton carryover projection in tomorrow's Supply & Demand Report fueled a wave of short-covering today. Based on a Dow Jones survey, traders expect USDA to cut its 2013-14 ending stocks projection to 2.5 million bales. More pre-report positioning will guide price action ahead of 11 a.m. CT, while the report data will influence the last couple hours of trading tomorrow.
Aside from USDA's reports, traders are paying closer attention to weather in the U.S. South. Drought remains a concern in the Southwest, though cotton could pick up some acres that were intended for corn amid the ongoing dryness.
Technical analysis: Technically, May cotton futures are giving off some bearish signals after the failed spike up on March 26. But there won't be strong bearish signals unless the market takes out key near-term support. Those support levels are Monday's low at 90.53 cents, the uptrend from last November's lows that intersects at 90.07 cents Wednesday and the March 24 low at 89.84 cents. If those levels are violated, key support would then be the August 2013 high at 88.32 cents.
Hedgers: 75% of 2013-crop is sold in the cash market. 25% of expected 2014-crop production is sold via cash forward contract for harvest delivery.
Cash-only marketers: 75% of 2013-crop is sold. 25% of expected 2014-crop production is forward sold for harvest delivery.