Price action: Corn futures saw choppy trade at times today, but bulls had the advantage for most of the day and heading into the close. Futures settled at or near session highs with gains of 2 to 3 3/4 cents in most contracts.
Fundamental analysis: Traders in the corn market engaged in some followthrough buys today as they still have USDA's lower-than-expected carryover peg for 2013-14 in mind. Adding support was a 120,000 MT daily sales announcement by USDA this morning as well as gains in Gulf basis this morning and at midday, which could signal more export news is ahead.
But while USDA's carryover peg came in on the friendly side of expectations, ending stocks are still ample, which will limit the market's upside to corrective short-covering.
Technical analysis: March corn futures spent the day trading within the upper half of yesterday's trading range, leaving near-term resistance at yesterday's high of $4.40 3/4, followed by the November high of $4.49 1/2. The contract low of $4.18 1/2 is tough support.
Hedgers: 25% of 2013-crop production is sold via cash forward contract for harvest delivery.
Cash-only marketers: 25% of expected 2013-crop production is sold via forward contract for harvest delivery.
Price action: Soybean futures ended the day 3 1/4 to 6 1/2 cents higher through the September 2014 contract. That was near session highs.
Fundamental analysis: After a sell-the-fact reaction to yesterday's lowering of the carryover projection by USDA, traders refocused on the big picture today, which signals supplies will be tight through the 2013-14 marketing year. The fact corn futures worked higher today also allowed soybeans to finish strong.
While there was no fresh demand news today, export demand remains a supportive factor as China continues to actively buy U.S. soybeans. Traders will get another reminder of strong export demand via weekly export sales tomorrow. Weekly export sales have been consistently running at or above expectations.
Funds were net buyers of 3,000 contracts (15 million bu.) of soybeans today. Despite a large net long position, funds are showing no urgency to trim their long exposure.
Technical analysis: January soybean futures posted an inside day up today. To spark fresh chart-based buying the contract must push above Tuesday's high at $13.53 1/2. If the contract is able to establish the general $13.50 area as support, bulls' target would be the psychological $14.00 mark, the August high of $14.06 and the contract high at $14.09 3/4.
Hedgers: Get to 100% sold in the cash market on 2013-crop production. We'll manage risk on the board the remainder of the marketing year.
Cash-only marketers: Get to 75% sold on 2013-crop production.
Price action: Wheat futures were lower this morning, but the market firmed around midday as funds worked to cover short positions. In the end, SRW wheat ended mostly 2 to 5 cents higher, with HRW up marginally to 3 cents and HRS narrowly mixed.
Fundamental analysis: Following yesterday's losses, wheat futures were due for a corrective bounce. But gains were limited as traders still have yesterday's bearish Supply & Demand Report data from USDA on their minds, in which the agency unexpectedly raised domestic carryover from last month. Buying was also limited by a reminder of the competitiveness of the global market, as Egypt purchased Romanian and French wheat in its latest tender.
Traders aren't overly concerned about the frigid temps that continue to blanket the Plains, as they believe winterkill will be limited due to the insulation of the recent snow event.
Technical analysis: March HRW wheat traded within the lower half of yesterday's trading range and ended above the $6.40 level. Violation of support at yesterday's low of $6.35 would make bears' next target $6.25. A return above the November low of $6.52 is needed to signal the downside has been overdone.
Hedgers: 75% sold on 2013-crop in the cash market. No 2014-crop sales are advised.
Cash-only marketers: 50% sold on 2013-crop. No 2014-crop sales are advised at this time.
Price action: Nearby cotton futures ended 100-plus-point higher, with deferred futures posting lighter gains.
Fundamental analysis: Cotton benefited from followthrough after yesterday's gains as well as spillover from slight dollar weakness and gains in the grain markets. Traders still have yesterday's USDA Crop Production Report on their minds, in which USDA trimmed the size of the crop. USDA left its 2013-14 U.S. carryover peg unchanged from last month at 3.0 million bales, but it raised global cotton stocks slightly from last month. However, traders are encouraged by recent demand improvements, which are helping to strengthen bullish attitudes.
Technical analysis: March cotton futures posted a big upside day of trade on the daily chart to strongly suggest a near-term low has been posted. The close above the September low of 81.76 cents turns that level into support. Resistance is now layered every penny higher starting at 83.00 cents to the October high of 87.62 cents.
Hedgers: 50% of expected 2013-crop is sold in the cash market.
Cash-only marketers: 50% sold on 2013-crop production.