Crops Analysis (VIP) -- April 9, 2013

April 9, 2013 09:44 AM
 

Corn

Price action: Corn futures settled 7 1/4 to 11 cents higher, which was a high-range close for most contracts.

Fundamental analysis: Corn futures were supported by short-covering today as traders even positions ahead of USDA's Supply & Demand Report tomorrow morning. Funds were also buyers, purchasing an estimated 11,000 contracts (55 million bu.) of corn today. While traders are anticipating a sharp increase in carryover from month-ago, the market was pressured hard after the March 28 reports and therefore, traders have some short positions to cover.

Additional support came from the cash market today, as basis was firmer. That reflects tight supplies, but could also indicate some near-term demand is on the horizon.

Technical analysis: Last Friday's low at $6.26 1/2 is key near-term support for May corn futures. Violation of that level would make $6.15 next daily chart support. To the upside, bulls must fill the April 1 gap from $6.79 to $6.95 1/4 to signal a low is in place.

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 extended gains through the day and posted a high-range close. The May through September contracts ended 10 to 17 1/2 cents higher, with new-crop contracts up 8 3/4 to 9 1/2 cents.

Fundamental analysis: Ideas prices fell too far too fast triggered a round of short-covering as traders turned their focus to evening positions ahead of tomorrow's USDA reports. Traders look for 2012-13 soybean carryover to rise by around 12 million bu. from last month after the March Grain Stocks Report showed greater stocks than anticipated.

Additional support for nearby futures came from improvement in Gulf basis which reflects demand news may be announced soon. Also, Brazil's supply-estimating agency trimmed its soybean crop estimate to 81.9 MMT, though that would still be record production.

Upside potential for new-crop contracts was limited as traders expect rain moving across the Corn Belt this week to delay the start of corn planting, which increases the odds some intended corn acres could eventually get shifted to soybeans, especially in northern locations.

Technical analysis: November soybean futures managed to post an upside day of trade on the daily chart and finished high-range. But the contract has a lot of work ahead to signal a near-term low has been posted. Initial support is at last week's low of $12.20 1/2, with resistance at the March high of $12.81.

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.

 

 

Wheat

Price action: Chicago wheat faced pressure most of the session and ended roughly 3 to 4 cents lower. Kansas City and Minneapolis wheat, on the other hand, favored the upside and ended steady to 3 1/2 cents higher in most contracts.

Fundamental analysis: Traders in the wheat market had a mix of weather and production data to digest today. While USDA's Crop Condition Report yesterday showed an increase in the amount of winter wheat rated "good" to "excellent," the amount of wheat rated in the "very poor" category also increased. And as illustrated by the Pro Farmer weighted Crop Condition Index, the condition of the HRW wheat crop declined last week while the condition of the SRW crop improved.

The forecast also gave the Kansas City and Minneapolis wheat markets a boost as it calls for snow in the northern Plains and sub-freezing temps as far south as Texas. Also limiting traders' willingness to add either long or short positions is the Supply & Demand Report tomorrow.

Technical analysis: May Chicago wheat futures posted an inside day of trade, leaving near-term support at the psychological $7.00 level, followed by the April low of $6.59 3/4. Resistance is at the March high of $7.41 3/4.

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 saw a choppy day of trade and ended 47 to 74 points lower through the October contract, while the rest of the market was narrowly mixed. This was a low-range close for most contracts.

Fundamental analysis: Traders reduced risk ahead of the Supply & Demand Report tomorrow by booking some profits today despite expectations for a friendly report. Pre-report expectations are for USDA to lower its 2012-13 carryover projection by 100,000 bales from March to 4.1 million bales amid an increase in exports. Plus, recent price action raises concerns the rally may have run its course.

Selling interest in deferred contracts was limited by USDA's first planting progress update of the 2013 growing season that showed plantings at 5% complete, which compares to 9% done last year and 7% complete for the 5-year average.

Technical analysis: May cotton futures closed below the psychological 85.000-cent level today to hit their lowest level since March 1. Followthrough selling tomorrow would have bears eying the February low of 81.39 cents. Resistance stands at the March 28 high of 90.27 cents.

Hedgers: 100% sold on old-crop in the cash market. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 85% sold on old-crop. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

 

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