Crops Analysis (VIP) -- December 23, 2013

December 23, 2013 08:37 AM


Price action:
Corn futures closed narrowly mixed, with March through December futures finishing 1/4 to 1 cent higher and far deferred contracts closing unchanged to 4 cents lower. Funds were net buyers of 2,000 contracts (10 million bu.) today.

Fundamental analysis: Corn futures closed marginally higher, largely due to short-covering amid limited support from a mixed weather forecast for Argentina and supportive corn exports. Futures edged higher initially on worries about the outlook for ongoing hot, dry conditions over the corn-growing region of Argentina. But support softened as private forecasters began putting increased chances of rain into their forecasts for next week.

Futures found support from this week's grain inspections report, which showed 35.888 million bu. being inspected for the week ending Dec. 19. That figure represented a 10.75-million-bu. increase versus the previous week and was higher than expectations. The weaker U.S. dollar index provided light support as well.

Technical analysis: March corn futures crept higher again today, posting a higher high and higher low for the fourth consecutive day. Futures are back knocking on the door of resistance at $4.35 to $4.40. Futures need a close above $4.50 to turn traders' heads and confirm the harvest low. The $4.20 area is 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 posted gains overnight, but as has been the trend, the market reversed course with the start of the daytime session. Futures ended near session lows with losses 10 1/2 to 11 1/4 cents through the July contract, with farther deferred months mostly 4 to 8 cents lower.

Fundamental analysis: The market initially benefited from the forecast for hot, dry conditions in Argentina over the next 10 days, though Wednesday could see some rain. This possibility limited concerns about increasing dryness in the country and encouraged profit-taking. Traders showed little response to a daily export sales announcement this morning or decent weekly export inspections that advanced the pace of exports relative to year-ago, signaling strong demand is considered factored into prices.

Talk soybeans will pick up more acres in 2014 also received some attention today as traders look ahead to 2014.

Technical analysis: January soybeans finished low-range but well within the market's recent consolidation range between the December high of $13.53 1/2 and the December low of $13.12 1/4. These levels mark resistance and support.

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 choppy overnight, but favored a weaker tone through the daytime hours and finished low-range. SRW wheat futures finished around 4 cents lower, HRW futures were 4 to 8 cents lower and HRS futures closed 4 to 6 cents lower.

Fundamental analysis: The wheat market continues to struggle to gain traction amid plentiful global supplies and less-than-inspiring demand for U.S. wheat. Traders were reminded of big global supplies and the challenges U.S. wheat faces by news from Russia that the country's bulk wheat crop totaled 54.4 MMT.

Weekly export inspections were also disappointing at 19.464 million bu., which came in just below the bottom end of the guess range. While export wheat demand is up sharply from year-ago, it isn't strong enough to entice buying in futures.

Traders are not concerned with bitterly cold temps through U.S. winter wheat areas. Much of the country's midsection is blanketed by snow or ice, which will protect the crop.

Technical analysis: March SRW wheat futures held above last Friday's fresh contract low. That mark at $6.07 1/4 is support, followed by $5.92 1/4 on the weekly continuation chart. To the upside, bulls need closes above the downtrend from the October and early December highs and flat resistance at the September low of $6.47 3/4 to signal potential trend change. Those two trendlines currently intersect at the same 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 settled 23 to 73 points lower, which was in the middle to upper end of today's trading range.

Fundamental analysis: Cotton futures faced profit-taking throughout today's session, though selling pressure was most pronounced through the overnight hours. Given thin holiday trade, it didn't take a lot to weigh on the market.

Weakness in the U.S. dollar index helped limit selling pressure today, though traders are somewhat concerned the modest rise in the dollar over the past 10 days in combination with the rebound in futures will curb export demand.

Technical analysis: March cotton futures spiked support at 81.64 cents today, but closed well above that level. Today's low at 81.42 cents is key near-term support. A drop through that level would signal a short-term top is in place. Last Friday's high at 83.85 cents is resistance.

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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