Price action: Corn futures saw firmer trade overnight but a failed test of Monday's high resulted in a disappointing finish. Futures ended around 16 cents lower through the July 2014 contract. Funds sold 12,000 corn contracts (60 million bu.) today.
Fundamental analysis: Price action today signals traders view yesterday's rally as purely corrective in nature and that funds are content to hold onto their record net short position for the time being as USDA's lower-than-expected corn production estimate, if realized would still be the largest crop on record. In addition, USDA' crop condition rating held steady at 64% "good" to "excellent" yesterday and mild temps this week for the Corn Belt are seen as non-threatening.
However, the 6- to 10-day outlook is less favorable as it calls for above-normal temps and below-normal precip for dry areas of the western Belt. This, along with the slow development of the crop could heighten crop concerns down the road.
Technical analysis: December corn futures followed up yesterday's bullish reversal with a dip below yesterday's low to its lowest level since September 2010. The next level of support is the $4.40 to $4.35 area that capped rallies the spring and summer of 2010. The contract needs to move back above $4.90 to signal a low is in the works.
Hedgers: 100% sold on 2012-crop in the cash market. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.
Cash-only marketers: 100% sold on old-crop. 25% of expected 2013-crop production is sold via forward contract for harvest delivery.
Price action: August soybeans settled 14 cents lower, while the September through March contracts finished 1/4 cent to 2 1/2 cents higher. Far-deferred contracts ended slightly lower. Funds, who were active buyers of soybeans yesterday, were even today -- neither net buyers or net sellers.
Fundamental analysis: Soybean futures were higher through overnight trade and virtually all of the day session, but a late, sharp selloff in corn led to the mixed close. While traders' attitudes toward soybeans have improved and price action signals a short-term low is in place, the corn market remains an anchor. Therefore, unless the corn market can find a bottom, soybeans may struggle to attract sustained buying interest.
While temps thus far in August have been mild, traders are showing a little concern with dryness in areas of the western Corn Belt. Forecasts are also starting to suggest warmer, drier conditions are ahead for the end of the month. The combination of heat and dryness would hurt soybean yield potential.
Technical analysis: November soybean futures extended their price recovery from last week's 14-month low, but the inability to close above yesterday's high is a potential warning sign the recovery may be running out of steam. A drop below today's low at $12.21 1/2 could trigger a fresh wave of technical-based selling.
Hedgers: 100% sold on 2012-crop in the cash market. 20% forward priced on expected 2013-crop production for harvest delivery.
Cash-only marketers: 100% sold on old-crop. 20% of expected 2013-crop production is sold via forward contract for harvest delivery.
Price action: Wheat futures favored a firmer tone in early trade, but softened as corn futures turned sharply lower. SRW wheat ended 7 1/2 to 8 1/2 cents lower, with HRW down 4 to 5 1/4 cents and HRS down 3 1/4 to 4 3/4 cents.
Fundamental analysis: Early gains were tied to short-covering and followthrough from yesterday's gains as well as yesterday's neutral to friendly USDA data. But as corn futures began to soften, wheat followed suit. Losses in wheat were extended by sharp strength in the U.S. dollar index, as it raises concerns about the competitiveness of U.S. wheat on the global market.
Traders also expect harvest-related hedge pressure to begin building soon as spring wheat harvest is in its early stages. Adding to the negative tone was a reminder of a crop recovery in Europe, as FranceAgriMer and UkrAgroConsult raised their crop estimates slightly.
Technical analysis: SRW December wheat futures posted a contract low of $6.39 1/2 and finished just off the daily low. The contract is oversold according to the 9-day Relative Strength Index, signaling a time or price correction is due. Support is now layered every 10- to 15-cents lower, with resistance at the August high of $6.79 3/4.
Hedgers: 50% of 2013-crop is sold in the cash market. 100% sold on of 2012-crop.
Cash-only marketers: 25% of 2013-crop is sold. 100% sold on 2012-crop.
Price action: Cotton futures saw strong followthrough from yesterday's gains and closed 144 to 175 points higher through the July contract, with far deferreds up mostly 41 points.
Fundamental analysis: Cotton futures benefited from followthrough on yesterday's gains as traders continue to react to USDA's smaller-than-expected crop estimate of 13.05 million bales. Hot and dry conditions across key southern growing regions has traders concerned about yield prospects, especially after crop condition ratings slipped again this week.
But given recent strong gains, traders will be keeping a close eye on demand, especially since recent weekly export sales reports have shown reduced sales tallies.
Technical analysis: December cotton futures rallied to their highest level since February 2012. The confirmed breakout above the June high of 89.56 cents turns that level into support and makes bulls' next target the February 2012 high of 96.00 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 2012-crop in the cash market.
Cash-only marketers: 50% of expected 2013-crop production is sold via cash forward contract for harvest delivery. 100% sold on 2012-crop.