Crops Analysis (VIP) -- August 15, 2012

August 16, 2012 10:23 AM
 

Corn

Price action: Corn futures saw choppy trade today and ended high-range with September through July futures 1 1/2 to 3 3/4 cents higher and far-deferred contracts slightly lower.

Fundamental analysis: Corn futures traded in a very narrow trading range today as the market exhibited uncertainty as to whether to place more emphasis on demand or supply fundamentals. The U.S. crop is small, heightening concerns about supplies being sufficient -- both domestically and globally.

But usage is also slowing amid high prices. Today's weekly export sales tally of a combined 253,400 MT for 2011-12 and 2012-13 fell short of expectations and represents a marked slowdown in sales relative to tallies earlier this year.

Technical analysis: December corn futures tested the psychological $8.00 level but left it intact as near-term support. Strong resistance stands at last Friday's contract high of $8.49.

Hedgers: 100% sold on 2011-crop in the cash market. 40% of expected 2012-crop production is covered in Dec. $6.50 put options for 31 1/2 cents. 35% cash forward sold on expected 2012-crop production -- 25% for harvest delivery; 10% for March 2013 delivery.

Cash-only marketers: 100% sold on 2011-crop. 35% forward priced on expected 2012-crop production -- 10% for harvest delivery; 10% for March 2013 delivery; and 15% for May 2013 delivery.

 

 

 

Soybeans

Price action: Soybean futures ended low-range with losses of 3 1/2 to 10 3/4 cents. Soymeal and soyoil futures settled with slight losses due to disappointing weekly export sales tallies.

Fundamental analysis: Soybean futures were unable to find buyers today despite bullish demand news. Rather, traders focused on removing some weather premium as recent rains could improve yield prospects for those lucky enough to receive them. Also, FSA certified acreage data for 2012 showed planted soybean acreage is likely 1.8 million higher than NASS's most recent estimate. This added light pressure though it doesn't ease supply worries.

Pressure was limited by strong weekly export soybean sales totaling 1.022 million metric tons (MT) for mostly 2012-13. China was the major purchaser for the week. Also, the Philippines purchased 123,900 MT of U.S. soymeal in a daily sale.

Technical analysis: November soybean futures remain within a consolidation trading range that is bound by the July 25 low of $15.36 and the contract high of $16.91 1/2.

Hedgers: 100% sold on old-crop in the cash market. 25% of expected 2012-crop production is covered in Nov. $14.00 put options for 42 3/8 cents. 50% of expected 2012-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 100% sold on old-crop. 50% sold on expected 2012-crop production for harvest delivery.

 

 

Wheat

Price action: Chicago wheat closed 11 to 15 1/2 cents higher; Kansas City ended with gains of mostly 12 to 14 cents; Minneapolis wheat settled 6 3/4 to 10 3/4 cents higher. This was mid-range for Minneapolis wheat and high-range for the other two locations.

Fundamental analysis: Wheat futures were the atypical leader in the grain market today thanks to heightened global wheat supply concerns. First came news Russia's on-farm stocks as of Aug. 1 are the lowest since 2003, encouraging ideas the country's export sales may be limited. Meanwhile, the developing El Nino weather pattern is adding to dryness concerns in western Australia.

This outweighed a disappointing weekly export sales tally of 396,700 metric tons.

Technical analysis: December wheat futures remain within the bottom half of the contract's recent trading range, the parameters of which are the August low of $8.57 1/4 and the July high of $9.53 1/4.

Hedgers: 75% cash sold on 2012-crop for harvest delivery. 100% sold on 2011-crop in the cash market.

Cash-only marketers: 75% of 2012-crop production is sold for harvest delivery. 100% sold on 2011-crop.

 

 

Cotton

Price action: Cotton futures traded in a very narrow range today and most contracts settled mid-range with losses of 23 to 54 points.

Fundamental analysis: This morning's weekly export sales of cotton failed to impress at just 77,800 running bales (RB) for 2012-13, but neither were they especially disappointing as the market has grown used to tallies around the level.

Limiting pressure on cotton futures was a softer dollar and improved investor risk appetite, as reflected by strong gains in the Dow Jones Industrial Average and crude oil futures.

Technical analysis: December cotton futures remain within an increasingly narrow trading range. Uptrending support drawn off the June to August lows intersects at roughly 71.65 cents tomorrow. Initial resistance is the June high of 74.80 cents.

Hedgers: 100% sold on old-crop in the cash market. 50% priced on expected new-crop production via cash forward contract for harvest delivery.

Cash-only marketers:s100% sold on old-crop. 50% priced on expected new-crop production via forward contract for harvest delivery.

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