Price action: Corn futures traded mixed amid bull spreading through the overnight session and then gained upward momentum in morning trade ahead of the release of USDA's reports. After an initial upturn, futures lost ground, closing 4 3/4 to 5 cents lower in old-crop months and roughly 6 to 7 cents lower in new-crop months.
Fundamental analysis: USDA dropped projected 2013-14 carryover more than expected to 1.331 billion bu. in the Supply & Demand Report. That was a decline of 125 million bu. from last month. Traders moved to the sell side after the initial surge failed to attract followthrough buying and they took advantage of the runup into the report by booking profits. Also, while carryover came in lower than anticipated, old-crop ending stocks still aren't tight.
Traders took a negative view toward news ethanol production declined 26,000 barrels per day (bpd) to 896,000 bpd the week ended April 4. In addition, imports more than tripled to 38,000 bpd. As a result, ethanol stocks rose 532,000 barrels to 16.41 million barrels.
Funds were net sellers of 10,000 contracts (50 million bu.) today, wiping out what they bought Tuesday. If the flow of fund money into the long side of the market subsides, it will be difficult for the corn market to build near-term upside momentum.
Technical analysis: May futures tested resistance at the $5.20 level, the August highs, and fell back. The 10-day Moving Average continues to provide support as does the winter uptrend line. The April uptrend line offers support at about $5.00 tomorrow while the winter uptrend line pegs support at about $4.85 tomorrow.
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 ended 11 1/2 to 16 1/2 cents higher through the August contract. New-crop futures closed roughly 9 to 10 cents higher. That was near the middle of today's wide trading range. Funds bought 5,000 contracts (25 million bu.) today.
Fundamental analysis: USDA delivered a slightly bigger-than-expected cut to its old-crop carryover projection in this morning's Supply & Demand Report. But a negative price response in the corn and wheat markets pulled soybeans from their daily highs. Still, bulls have solid control of the market as old-crop stocks are tight.
USDA lowered its global soybean carryover projection from last month amid a 1-MMT decline in the Brazilian crop. But that was expected. Traders will be more closely monitoring the situation in Argentina where heavy rains are causing crop concerns. Reports out of Argentina say 1 MMT to 3 MMT of this year's crop could be lost due to flooding and poor quality from the heavy, late-season rains. Plus, traders will closely monitor the labor situation with truckers and dockworkers. There's a one-day strike planned for Thursday.
Technical analysis: May soybean futures poked above $15.00 intra-day, but failed to close above that level. A close above that mark would make the June 2013 high at $15.58 3/4 bulls' next target. To the downside, near-term support lies at $14.60 and then the $14.10 area, with the latter representing a 38% retracement of the rally from winter low.
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: Wheat futures faced pressure for much of the day and ended low-range. SRW wheat was the downside leader with losses of 10 3/4 to 12 cents. HRW and HRS wheat ended roughly 6 to 10 cents lower.
Fundamental analysis: Traders in the wheat market took advantage of gains the first two days of the week by booking some profits today. And an as-expected wheat carryover peg of 583 million bu., a 25-million bu. increase from last month, gave traders little incentive to shift gears. Adding pressure, USDA raised its global wheat carryover peg by 2.87 MMT since March to 186.68 MMT.
A bearish reaction to generally positive U.S. corn carryover data added pressure to the wheat market. Traders also brushed off confirmation of winter wheat crop condition declines in the first official condition update of the spring, as such deterioration has been monitored via state updates.
Technical analysis: May SRW wheat futures posted a bearish reversal today, but despite this bearish technical signal, the market avoided doing any major chart damage. Bears will have the advantage heading into the overnight session, however, with their initial target at Friday's low of $6.58 3/4, closely followed by the rough September double-bottom around $6.54.
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 ended mixed for the day, with the May through October contracts 37 to 135 points lower and the front-month leading to the downside. December and later contracts posted slight gains.
Fundamental analysis: Cotton futures had a sell-the-fact reaction to USDA's as-expected cut to 2013-14 U.S. cotton carryover today. USDA cut old-crop cotton carryover by 300,000 bales to 2.5 million bales, largely due to a reduction in USDA's 2013 crop estimate in its final Cotton Ginnings Report. Also of note, the world cotton data also included a 1-million bale increase in expected imports by China, which USDA said was based on "stronger-than-expected imports to date and the likely release of new import quotas."
Traders paid more attention to the fact USDA raised its global cotton carryover peg slightly from last month to 96.92 MMT, reminding of plentiful world supplies.
Technical analysis: May cotton futures remain well within the market's recent consolidated trading range that stretches from the March 24 low of 89.84 cents to the March 31 high of 94.80 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.