Price action: Corn futures extended gains as the day progressed to close high range with double-digit gains in the September through July contract. Deferred months saw lighter gains.
Fundamental analysis: The Pro Farmer Midwest Crop Tour released final yield estimates for Ohio and South Dakota last night and they were far from pretty. As a result, traders focused on building more premium into prices today. See "Evening Report" for a midday update from Tour leaders on their travels through Indiana, Illinois and Nebraska today.
The market ignored USDA's unchanged crop condition rating yesterday as they recognize that the bigger picture is that the corn crop is in tough shape.
Technical analysis: December corn futures continued their march toward contract-high resistance at $8.49 today, after which resistance is layered every quarter higher beginning at $8.50. Support stands at $7.86, which stemmed declines three times in August.
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.
Price action: Soybean futures rallied into the close to finish 40-plus cents higher in most contracts to post new contract highs. Far-deferred months ended in the 20s to 30s. Meal and soyoil saw strong spillover support.
Fundamental analysis: Concerns the soybean crop could be even lower than USDA's first survey-based projection earlier this month lifted soybean futures to contract highs today, as traders work to find a price that will slow demand to ration use. Traders continue to focus on the variable results from the Pro Farmer Midwest Crop Tour, as early indications from routes today signal the pod-making factory is lower than many had hoped.
Technical analysis: November soybean futures posted a contract high of $17.34, which is initial resistance. The contract has moved into overbought territory according to the 9-day Relative Strength Index, but has seen much higher levels before setting back in the past. The next psychological level of resistance is $17.50.
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.
Price action: Wheat futures were mixed in early trade, but firmed as corn and soybean futures extended gains to sharply higher levels. Futures ended with gains in the teens to 20s. Additional support came from sharp weakness in the U.S. dollar index, which improved traders' risk-taking appetite for the day.
Fundamental analysis: Early gains in the wheat pit were limited by news Iran's state grain agency has reportedly purchased around 400,000 metric tons (MT) of milling wheat from the European Union, Baltic Sea and Black Sea regions -- signaling U.S. prices are not as competitive on the global market. See "Evening Report" for more details.
But as the dollar index weakened amid hopes central banks will soon enact stimulus measures as an additional source of support, wheat futures began to follow corn and soybeans higher.
Technical analysis: September Chicago wheat ended just above the psychological $9.00 level to post a strong upside day of trade on the daily chart. Bulls' next upside objective is the August high of $9.31 3/4.
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. .
Price action: Cotton futures ended at or near their daily highs with gains of 221 to 239 points.
Fundamental analysis: Cotton futures benefited from spillover from strong rallies in the corn and soybean market, a sharply lower U.S. dollar index, a decline in U.S. cotton condition ratings and fresh demand news. Yesterday, USDA lowered the amount of cotton rated "good" to "excellent" by 1 percentage point to 41% and raised its "poor" to "very poor" rating by 2 percentage points to 30%.
On the demand front, Chinese customs data shows the country's imports for July totaled 405,830 metric tons (MT), which compares to 157,066 MT a year ago. Imports of 3.46 million MT for the first seven months of the year are up 57.2% over last year at this time.
Technical analysis: December cotton futures broke through resistance at the August high of 77.07 cents, making it new support. This opens upside potential to the top of the May 11 downside gap at 79.37 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.