Price action: September corn futures settled 20 1/4 cents higher, while new-crop contracts were 29 to 30 cents higher.
Fundamental outlook: Traders reacted strongly to forecasts calling for oppressive heat and dryness across the Corn Belt this week. They fear this will take a bite out of the filling corn crop that's already tipping back. While weather is supportive and forecasts continue to call for more heat and dryness, weather rallies can be fickle and are historically short-lived.
A key to how long the corrective price recovery unfolds lies with fund buying. Funds bought an estimated 30,000 contracts (150 million bu.) of corn today. But funds are still short corn, suggesting they could continue to cover short positions near-term.
Technical outlook: December corn futures pushed through last week's high of $4.86 3/4 and old support at $4.90, which triggered buy stops. By closing above the psychological $5.00 mark, bulls' next upside objective is July correction high at $5.28 1/4. Above that, bulls would have to clear tough resistance from $5.70 to $5.73 3/4.
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: September through January soybeans ended 58 1/2 to 62 1/4 cents higher for the day, after some contracts traded their daily 70-cent limit higher at times today. Deferred months posted gains in the 30- or 40-cent range. Funds bought an estimated 23,000 contracts (115 million bu.) of soybeans today. Soyoil and soymeal also posted strong gains.
Fundamental analysis: Soybean futures surged to start the week on a forecast for heat to stress the bean crop with the heat dome expected to keep precip out of the Corn Belt. In addition, high temps are expected to persist over the 6- to 10-day outlook. Many areas of the Corn Belt are already too dry. And because of the late spring, much of the crop is still setting or filling pods. Hot, dry weather also increases the risk of pod abortion.
USDA will provide an update on the bean crop's condition and development this afternoon. Pre-report expectations are for USDA to rate 59% of the crop in "good" to "excellent" condition, which would be down 3 percentage points from the week prior.
Technical analysis: November soybean futures gapped sharply higher on the open and came within 2 cents of psychological resistance at $14.00, which will be bulls' initial target tomorrow. A move through that level would have them eying the contract high of $14.09 3/4. Support stands at today's gap from $13.48 to $13.31 1/2.
Hedgers: 50% of expected 2013-crop production is sold via a forward-price cash 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 a forward-price cash contract for harvest delivery. 100% sold on 2012-crop in the cash market.
Price action: Wheat futures saw strong spillover from sharp gains in neighboring corn and soybean markets. HRW wheat ended 17 1/2 to 20 3/4 cents higher, with HRW up 12 3/4 to 17 1/2 cents. HRS ended 10 to 13 cents higher.
Fundamental analysis: Wheat futures extended early gains on indication of stronger-than-expected demand. This morning's weekly export inspections report showed 31.192 million bu. of wheat left ports in the weekly reporting period. Cumulative inspections data shows wheat inspections up 30.6% ahead of year-ago, well above what's needed to reach USDA's export forecast.
As corn and soybean futures extended gains, wheat continued to rally. Traders are also concerned above the potential for frost in Argentina's wheat belt, although ongoing harvest activity limited buying in HRS futures.
Technical analysis: December SRW wheat futures gapped higher on the open and extended gains as the contract moved above last week's high of $6.58 3/4, which is now initial support. The contract needs closes above the August high of $6.79 3/4 to signal a near-term low is in the works.
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: Nearby cotton futures ended 82 to 101 points higher, with deferred contracts up 31 to 57 points. Most contracts posted a mid-range close.
Fundamental analysis: Cotton benefited from spillover from sharp gains in the grain markets, which triggered some value buying. Ideas last week's losses were overdone allowed traders to come in and cover short positions. But concerns about a slowdown in demand for U.S. cotton was a limiting factor today. Therefore, key will be if futures can follow today's gains with more price strength tomorrow.
Futures will also be influenced by this afternoon's USDA crop condition ratings. Futures were pressured sharply last week after USDA surprisingly increased the percent of the crop rated "good" to "excellent." See "Evening Report" for highlights of today's report.
Technical analysis: December cotton futures saw trade above Friday's high, but ended mid-range and below the psychological 85.00-cent level. The contract has a lot of work ahead in order to signal a near-term low has been posted. Key support is at the June low of 81.72 cents, with resistance at the July high of 87.11 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.