Price action: September corn futures closed 4 cents lower while new-crop contracts closed low-range with losses of 1/4 to 1 1/2 cents.
Fundamental analysis: Futures moved higher in early trading on corrective buying but the pervasive bearishness prompted by continuing cool temperatures and forecasts for precipitation capped the correction. Traders are turning their attention to USDA's first survey-based crop estimates due next Monday. Traders expect an average yield of 157.7 bu. per acre compared to 156.5 bu. projected by USDA in July. The average pre-report guess calls for total corn production of 14.005 billion bu., up from USDA's 13.950 billion bu. figure projection in July.
Technical analysis: Futures attempted a corrective rally as momentum indicators suggest the market is heavily oversold. However, the December contract saw the correction immediately run into resistance at Monday's high of $4.65. December futures need to climb above $4.80 to hint a low has been posted. Such a move would be only a 25% retracement of the summer price collapse. December corn has support at Tuesday's low of $4.55 with additional support at the psychological $4.50 area.
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 were unable to hold overnight price gains once daytime trade began, with new-crop contracts ending 1 1/2 to 2 3/4 cents lower. Old-crop futures ended 3 1/2 to 5 1/2 cents higher amid bull spreading.
Fundamental analysis: Soybean futures were stronger in overnight trade amid short-covering, but followthrough buying was lacking at the start of daytime trade. Traders' focus remains on what they view as favorable weather, although near-term forecasts are drier for the Corn Belt (see "Evening Report" for more). Still, traders view below-normal temps as non-threatening for the critical pod-setting and pod-filling period.
Meanwhile, traders ignored news that China purchased another 220,000 MT of U.S. soybeans, which follows yesterday's announcement from USDA of a 110,000-MT sale to China. The pickup in Chinese demand signals prices have dropped to a "value" level.
Technical analysis: November soybean futures moved deeper into oversold territory according to the 9-day Relative Strength Index, as the contract now posts a reading of 22%. A reading of 30% or lower signals a time or price correction is due. Bears' next target is the June low of $11.40. Futures need to return above the psychological $12.00 level to suggest a near-term low is in the works.
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: SRW wheat futures closed roughly 5 to 7 cents lower, while HRW and HRS futures settled 3 to 4 cents lower. Most contracts ended in the middle portion of today's range.
Fundamental analysis: While the corn and soybean markets were supported by short-covering at points today, wheat futures were under pressure the entire day session. Concerns with export demand were the primary source of pressure. While export demand for U.S. wheat has improved, the U.S. is still being undercut on price on many of the tenders. As a result, traders are fearful export demand won't be consistent.
Traders ignored pressure on the U.S. dollar today, which would make U.S. wheat more competitive on the global market. But with wheat from other origins, especially the Black Sea region, priced well under U.S. wheat, it would take sustained pressure on the dollar to be solidly price-supportive for wheat futures.
Technical analysis: September Chicago wheat futures narrowly missed posting a bearish reversal today coming off yesterday's modest corrective gains and mild followthrough buying early in the overnight session. Until there are strong signs of a low, traders will view even modest price strength as a selling opportunity.
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 built gains through the day, ending 116 to 271 points higher through the July 2014 contract and finished high-range.
Fundamental analysis: Weather/crop concerns fueled strong gains in the cotton market today. On the domestic front, traders are concerned with hot, dry conditions in Texas and the potential negative impact that could have on this year's crop. Overseas, traders expect recent record temps in China to curb production there, which could lead to more export demand. Those concerns are overshadowing expectations for record Indian cotton production.
Sharp pressure on the U.S. dollar index also supported buying in cotton futures today. A weaker dollar makes U.S. goods, including cotton, more competitive on the global market. The dollar now appears headed for a test of the June low.
Technical analysis: December cotton futures pushed above resistance at the July high, which triggered buy stops. Tough resistance stands at the June high of 89.56 cents. A close above that level would signal a potential upside breakout from the long-standing choppy range. A quick close back below the July high at 87.11 cents would point the contract toward the bottom end of the choppy range.
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.