Crops Analysis (VIP) -- December 3, 2012

December 3, 2012 09:03 AM
 

Corn

Price action: Corn futures ended mid-range to finish 1 to 5 cents higher.

Fundamental analysis: Pressure on corn was limited by weakness in the U.S. dollar index, which spurred a more favorable risk-taking atmosphere for traders today. But continued demand destruction limited buying enthusiasm. Weekly corn export inspections of 9.626 million bu. came in well below expectations.

Futures also saw some support from ongoing rain-related planting delays in Argentina, which raise questions about acreage. See "Evening Report" for the latest South American weather outlook.

Technical analysis: March corn futures saw trade above Friday's high and the $7.60 level, but futures ended the day near session lows -- just above the psychological $7.50 level. Key support lies at the November low of $7.14 1/2, with resistance at the October high of $7.75 3/4.

Hedgers: 100% sold on 2012-crop in the cash market -- 10% for March 2013 delivery. No 2013-crop sales recommended yet.

Cash-only marketers: 75% sold on 2012-crop --10% for March 2013 delivery; 15% for May 2013 delivery. No 2013-crop sales recommended yet.

 

Soybeans

Price action: Soybean futures enjoyed gains throughout today's session and settled in the upper half of today's trading range with gains of 14 3/4 to 17 1/4 cents in the January through September contracts.

Fundamental analysis: Soybean futures benefited from improved risk appetite today along with recognition that soybean demand remains strong. Outside markets initially benefited from an easing of concerns in the euro-zone along with strong economic signals from China. But disappointing U.S. manufacturing data dampened risk appetite around mid-morning.

Meanwhile, China is expected to remain a major buyer of U.S. beans, especially as crushers gear up for the Lunar New Year celebration in February that marks their peak production period. A surge in soybean basis this morning sparked optimism more export demand news is on the horizon. And while this morning's export inspections data fell short of expectations, the tally was still impressive.

Technical analysis: January soybean futures traded through last week's high and up to $14.62 3/4, but settled off of it, leaving it as near-term resistance. Support is layered from the psychological $14.00 mark to the November low of $13.72 1/4.

Hedgers: 100% sold on 2012-crop in the cash market. No futures/options positions at this time. No 2013-crop sales advised yet.

Cash-only marketers: 75% sold on 2012-crop production for harvest delivery. No 2013-crop sales advised yet.

 

Wheat

Price action: Wheat futures saw two-sided trade today and ultimately ended low-range with losses of 1 3/4 to 2 3/4 cents in Chicago, 2 1/2 to 7 cents in Kansas City and 2 to 6 cents in Minneapolis. This was a low-range close.

Fundamental analysis: Wheat futures initially benefited from news that Egypt purchased 400,000 MT of wheat over the weekend, including 280,000 MT of U.S. supplies, signaling U.S. wheat is benefiting from tightening Black Sea supplies.

But around mid-morning, profit-taking in the wheat market picked up as there are rain chances for the Great Plains this weekend, weekly wheat export inspections fell short of expectations and outside markets turned less friendly. But considering severe moisture deficits in winter wheat country that today's high winds only worsen, selling interest was limited to profit-taking.

Technical analysis: May soybean futures settled low-range, which will give bears the near-term advantage. The contract is likely headed for a test of downtrending support drawn off the lows since August, which intersects around $8.41 1/4 cents tomorrow.

Hedgers: 75% sold on 2012-crop in the cash market. No 2013-crop sales advised yet.

Cash-only marketers: 75% of 2012-crop is sold. No 2013-crop sales advised yet.

 

Cotton

Price action: Cotton futures favored a firmer tone throughout the day, but without fresh news to digest, buying was limited and futures ended mixed.

Fundamental analysis: Traders looked to outside markets for direction today. Strength in the soybean market helped to limit selling in cotton, and weakness in the U.S. dollar index provided additional support. But without fresh news for the market to digest, upside potential was limited. Cotton has seen a boost in export sales this winter, but the global stocks situation is ample, limiting this as a supportive factor.

Technical analysis: December cotton futures gapped higher on the open, extended gains but then trimmed gains into the close -- although the contract left the gap open. Support begins at the bottom of the gap at 72.65 cents and resistance lies at the mid-November high of 74.63 cents.

Hedgers: 50% priced on expected 2012-crop production via cash forward contract for harvest delivery. A breakout from that range is needed to spark a trending move.

Cash-only marketers: 50% priced on expected 2012-crop production via forward contract for harvest delivery.

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