Price action: September corn futures closed 11 3/4 cents lower today, while new-crop contracts were around 3 cents lower. Corn futures ended near weekly lows and sharply extended the price drop this week. Funds sold 7,000 contracts (35 million bu.) of corn today and were net sellers of 20,000 contracts (100 million bu.) of corn for the week to add to their record net short position.
5-day outlook: Bears have clear control of the market and forecasts call for more non-threatening weather next week. As a result, corn futures are at risk of additional price pressure. While futures are oversold, the upside is limited to modest corrective buying, though traders may want to cover short positions ahead of USDA's Aug. 12 Crop Production Report.
30-day outlook: USDA's first survey-based crop estimate could very well show a yield above the current 156.5-bu. projection. But that could also very well be the high-water mark for the year. While weather has been non-stressful, there are a lot of holes in the western Corn Belt. But it may take until after combines start rolling before the market realizes there are problems in the western Belt.
90-day outlook: The sharp drop in prices will help rebuild the demand base for corn, especially export demand. That's needed for an eventual price recovery. But it will take a period of lower prices to broadly bring back export demand that was greatly reduced by last summer's run to all-time high prices.
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: Soybean futures traded firmer through mid-morning as short-covering was the initial theme of the day. But prices slumped to new lows later in the session, closing low-range and down 21 1/2 cents in the September contract and 10 to 11 cents lower in new-crop contracts. Funds sold 6,000 contracts (30 million bu.) of soybeans today and were net sellers of 26,000 contracts (130 million bu.) for the week.
5-day outlook: Traders will likely maintain their negative view toward new-crop prices if precipitation forecasts for this weekend pan out. In addition, extended forecasts call for below-normal temperatures and normal to above-normal precip, which will also keep traders looking to the short side of the market.
30-day outlook: Weather will be the key factor into September this year. Given the late development of the crop, soybeans need an extended summer. Traders will use long-range forecasts for the last half of the monthly to guide their outlook. If weather forecasts remain benign, traders will maintain their negative attitudes and prices will slump even further.
90-day outlook: Prices normally slide lower during the fall and work on marking a harvest low once harvest moves past the 50% completion mark. That mark will be a long time coming this year due to its late planting date and delayed crop development. It will take an early end to the growing season to turn trader attention to the "holes" in the western Corn Belt and late development of the crop.
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 closed narrowly mixed today, but managed light corrective gains for the week.
5-day outlook: Wheat futures are trying to put in a seasonal low. While export demand has improved, corn and soybeans are making it hard for wheat to find active buying interest. Until selling pressure eases in corn and beans, wheat will struggle to gain traction.
30-day outlook: After a rough start, especially in North Dakota, the spring wheat crop has rebounded and has good yield potential. As combines start to roll through the Northern Plains, the wheat market may get a second, although lighter, wave of seasonal pressure.
90-day outlook: Export demand for U.S. wheat is improving thanks largely to big purchases from Brazil and China. The U.S. is being undercut on prices by Black Sea origin wheat for much of the business from other countries. Increased exports from the Black Sea region will make it hard for wheat futures to find sustained buying interest.
Hedgers: 50% of 2013-crop is sold in the cash market. 100% sold on of 2012-crop.
Cash-only marketers: 25% of 2013-crop sale is sold. 100% sold on 2012-crop.
Price action: Cotton futures closed 15 to 56 points lower today and had very little net price movement for the week.
5-day outlook: Recent price action signals traders are not willing to move the market too far in either direction as they wait on the next batch of market-moving news. With USDA's first survey-based estimate of the cotton crop out on Aug. 12, more light and choppy price action is likely next week.
30-day outlook: If there aren't any major surprises in the August Crop Production Report, the choppy price action could continue into harvest as traders seem comfortable with prices at current levels. It's likely going to take some kind of a fundamental shift to encourage traders to actively pump money into one side of the market.
90-day outlook: The longer-term fundamental focus for traders will be demand, specifically from China. With China sitting on huge cotton reserves, their buying could slow if their economy slows and/or demand for Chinese-produced textiles eases.
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.