Crops Analysis (VIP) -- December 30, 2013

December 30, 2013 08:46 AM
 

Corn

Price action:
Corn closed near the lows for the day posting losses of about 4 cents. Funds sold 3,000 contacts (15 million bu.) today.

Fundamental outlook: Futures opened under pressure on reports of widespread precipitation across key growing regions of Argentina. Forecasts suggest continuing chances for rain is coming in the days ahead. Forecasts call for high temperatures, as well, but not crop-threatening intense heat that has stressed the crop recently.

Further weakness moved into the market on today's disappointing weekly export inspections data. That report showed at total of 24.9 million bu. passing inspections which was down 12.35 million bu. from the previous week and below trade expectations.

Technical outlook: March futures slumped back to test support at the $4.20 to $4.18 area. Resistance starts at the recent highs of $4.36 with layers every dime higher starting at $4.40.

Hedgers: 25% of 2013-crop production is sold in the cash market. Be prepared to advance sales on an overdue bounce.

Cash-only marketers: 25% sold on 2013-crop. Be prepared to advance sales on a bounce.

 

Soybeans

Price action: Soybean futures were under pressure throughout the day but ended the day mid-range with losses of 3 1/4 to 8 1/4 cents. Funds sold an estimated 2,000 contracts (10 million bu.) of soybeans today.

Fundamental outlook: Pressure was tied to weekend rains across key growing areas of Argentina. Rains have provided much-needed drought relief after an extended hot and dry period across the grain belt. More scattered rain is in the forecast this week, although some areas have missed out on the precip event. Overall, traders view South American weather as favorable enough to produce a record crop.

Traders were also disappointed by the weekly export inspections report that showed soybean inspections below expectations. But overall, inspections are above the pace needed to reach USDA's export forecast.

Technical outlook: January soybean futures briefly moved above Friday's high, but largely remained confined within the boundaries of Friday's trading range. Traders' focus tomorrow will be on end-of-the-year position squaring. Near-term boundaries are support at last week's low of $13.16 3/4 and resistance at last week's high of $13.47.

Hedgers: 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: 75% sold on 2013-crop production.

 

Wheat

Price action: Wheat futures faced light pressure overnight and this morning, but selling picked up late in the session and futures ended mostly around 8 cents lower in the winter wheat markets, while HRS closed around 4 cents lower. This was at or near session lows.

Fundamental outlook: Wheat futures dipped to yet another contract low today after weekly export inspections reflected shipments was even lighter than expected the week ended Dec. 26. Inspections of 13.396 million bu. were down more than 6 million bu. from the week prior. However, the tally was well above year-ago levels and such slowdowns are normal during the holidays.

Spillover from the corn and soybean markets added to the negative tone, as did news the Rosario Grain Exchange raised its 2013-14 wheat production estimate (see "Evening Report" for more).

Technical outlook: The March SRW wheat contract matched but failed to break through tough support at $6.00 today. A move through that level would likely trigger a round of sell stops. On the weekly continuation chart, tough support is in the $5.90 area, followed by the December 2011 low of $5.77 1/4.

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.

 

Cotton

Price action: Cotton futures saw two-sided trade today, but the market settled high-range for the day with gains of 30 to 63 points through the October contract. Deferred months were 4 to 11 points higher.

Fundamental outlook: Cotton futures benefited from year-end positioning as the market has staged a year-end rally that is setting the stage for the market's first year-over-year gains since 2010. The U.S. cotton crop is the smallest in four years and demand has remained solid despite the recent price run-up.

While China has slowed its purchases of raw cotton in favor of lower-duty yarn, Turkey has stepped up its buys to make up for a domestic shortfall. In fact, the country surpassed China as the No. 1 buyer of U.S. cotton according to the most recent Weekly Export Sales Report.

A weaker U.S. dollar index added to the positive tone today.

Technical outlook: March cotton futures tested but were unable to close above near-term resistance that is layered from 85.00 cents to the Oct. 18 high of 85.47 cents. Former resistance at the Dec. 20 high of 83.85 cents is now support.

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

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

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