Crops Analysis (VIP) -- December 18, 2013

December 18, 2013 09:11 AM


Price action:
Corn futures traded in another 4-cent range today, finishing 1/4 to 1 3/4 cents lower through the July 2015 contract. Futures closed midrange. Funds were even on the today.

Fundamental outlook: Corn futures enjoyed light short-covering at the start of pit trading today, but prices turned down on reminders of building supplies. Futures were also pressured by news China had canceled more cargoes of U.S. due to the presence of an unapproved GMO material than previously thought. China has reportedly rejected 500,000 MT to 600,000 MT (nine to ten cargoes) of U.S. corn since mid-November.

News mid-morning that a private firm expected 2014 corn plantings to be higher than previously thought combined with a slight build in ethanol stocks sent futures lower. But some short-covering again surfaced to trim losses near the close for a midrange finish.

Technical outlook: March corn futures attempted to find buy stops just above Tuesday's highs and slumped when they failed to appear. This makes $4.30 a potential resistance area. Futures did uncover support at Tuesday's low. Futures need closes above the December high of $4.40 3/4 to signal a near-term low is in the works. Contract-low support lies at the December low of $4.18 1/2.

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 sharply extended losses into the close to finish 12 1/4 to 22 1/2 cents lower through the August contract. Remaining contracts ended 4 3/4 to 9 cents lower. Funds sold an estimated 8,000 contracts of soybeans today (40 million bu.).

Fundamental outlook: Futures favored a weaker tone today amid profit-taking. Funds lightened their long exposure to the market and losses were extended into the close as the U.S. dollar index rose sharply. While the dollar backed away from initial strength on news the Fed will begin scaling back its asset purchases in January, bean futures remained under sharp pressure.

Traders are more aggressively evening positions ahead of the holidays, but will have fresh news to digest tomorrow morning as USDA is set to release its weekly export sales report.

Technical outlook: January beans posted a bearish reversal and a low-range close. Followthrough pressure tomorrow could have bears' targeting last week's low of $13.12 1/4. Resistance on a price recovery lies at the December high of $13.53 1/2.

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 extended losses into the close, with SRW and HRW futures ending mostly 5 to 6 cents lower and SRW ended mostly around 3 cents lower.

Fundamental outlook: Early pressure was tied to plentiful global supplies and the lack of fresh export developments for U.S. wheat. USDA will issue its weekly sales report tomorrow morning, and given the usual slowdown in sales that comes around the holidays, this report won't likely be a positive for the market.

Adding to pressure into the close was sharp strength in the U.S. dollar index due to the Fed's announcement it will begin scaling back its asset purchases next month. See "Evening Report" for more.

Technical outlook: Wheat futures posted another round of contract lows today. March SRW wheat is closing in on critical support from the weekly continuation chart of $6.07 1/2. Below that, support begins at the psychological $6.00 level.

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: Cotton futures traded on either side of unchanged today but the market edged out slight gains of 5 to 39 points on the day. This was generally a high-range close.

Fundamental outlook: Fresh news for the cotton market was lacking today, leaving traders to engage in some light positioning ahead of USDA's Weekly Export Sales Report tomorrow. Last week's cotton export sales were generally lackluster and a marked slowdown from recent strong weeks. Strength in the U.S. dollar index kept buying interest in check. The market has settled into a consolidated trading range after a strong runup to start the month.

Technical outlook: March cotton futures spent the day chopping within yesterday's trading range and the contract settled near yesterday's close and today's open. The contract must move above yesterday's high of 83.72 cents to start the next leg higher. Support is in the 82.50-cent area, which was also today's low.

Hedgers: 50% of expected 2013-crop is sold in the cash market.

Cash-only marketers: 50% sold on 2013-crop production.

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