Price action: Corn futures posted an upside day of trade and closed mid-to high-range with gains of 5 to 10 cents in the September through July 2013 contracts. Far-deferred contracts finished with lighter gains.
Fundamental analysis: Traders displayed greater risk appetite as they readied for USDA reports tomorrow. Pre-report expectations are for USDA to slash its 2012 corn production estimate by nearly 2 billion bu. from July to 10.971 billion bu. with a national average yield of 126.2 bu. per acre. USDA is also expected to raise its 2011-12 carryover estimate by 42 million bu. to 945 million bu. due to demand destruction.
Adding to bullish enthusiasm was a weekly export sales tally of more than 1.1 million metric tons, which raised questions as to whether high prices have trimmed demand enough to ensure an adequate supply cushion.
Technical analysis: December corn futures surpassed their contract high on their way up to $8.29 3/4 today. Resistance past this level is layered every dime higher beginning at $8.30.
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 extended gains as the day progressed and ended 42 3/4 to 64 1/2 cents higher in the August through January contracts. Farther deferred contracts saw gains mostly in the teens to 20s. Soymeal and soyoil closed with strong gains.
Fundamental analysis: As traders readied for USDA reports that are expected to confirm tight old- and new-crop supplies, they reevaluated if prices have achieved sufficient supply rationing. USDA's announcement of the third daily bean sale this week encouraged this. And while weekly export sales of 105,200 MT for 2011-12 and 195,200 MT for 2012-13 fell short of expectations, they were an improvement over last week.
Pre-report expectations are for USDA to estimate soybean production at 2.786 billion bushels. Old-crop stocks are expected to be pegged at 157 million bu., while 2012-13 carryover is expected to be projected at an even smaller 115 million bushels.
Technical analysis: November soybean futures today retraced all of this week's losses and then some. Resistance is layered from last week's high of $16.63 1/4 to the contract high of $16.91 1/2. The July 25 low of $15.36 is initial support.
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 posted double-digit gains in Chicago and Minneapolis, while Kansas City wheat finished with slightly lesser gains.
Fundamental analysis: Wheat futures were supported by spillover from the corn market and a stronger-than-anticipated weekly export sales figure. That was enough to offset strength in the U.S. dollar index. While traders aren't looking for highly supportive data in Friday morning's Crop Production and Supply & Demand Report, they didn't want to go into the report short given the likelihood the corn data will be bullish.
Technical analysis: September Chicago wheat futures remain well within the established, short-term trading boundaries from $8.52 3/4 to $9.47 1/4. The contract must break out of this range to trigger the next trending move.
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 settled narrowly mixed following a day of light and choppy trade.
Fundamental analysis: Cotton traders have recently covered short positions and weren't interested in adding new positions today ahead of USDA's first survey-based crop estimate tomorrow morning. Based on the pre-report guesses, traders expect the cotton crop to come in at 16.8 million bales. Traders are also looking for USDA to slightly reduce its new-crop carryover projection to 4.7 million bales in the Supply & Demand Report.
Technical analysis: December cotton futures continue to consolidate on top of old resistance at 74.80 cents. A drop below that level would signal the breakout attempt was a bull trap. But if bulls are able to turn 74.80 cents into solid support, it would make bulls' next target the May 11 gap from 79.17 cents to 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.