Crops Analysis (VIP) -- December 5, 2012

December 5, 2012 08:30 AM
 


 

Corn

Price action: After trading mixed in the early going, corn futures were lifted by spillover from soybeans to end slightly higher. The high-range close gives bulls more momentum heading into the next session.

Fundamental analysis: Without fresh news to digest, upside potential in the corn pit was limited, with buying also limited by strength in the dollar index. But as soybeans extended gains, corn was lifted by spillover support. Additional support also came from improvement in Gulf corn basis for immediate shipment to reflect the tight supply situation.

Wet weather in Argentina is also supportive for corn futures, as planting delays due to heavy rains put acreage and yield prospects in question.

Technical analysis: March corn futures inched above resistance at yesterday's high but need to move above the November high of $7.67 1/2 to signal a near-term low has been posted. This resistance also lines up closely with the 100-day moving average to signal it as important near-term resistance.

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 extended gains into the close to finish 20-plus cents higher in the nearby contracts. Meal and soyoil enjoyed spillover support.

Fundamental analysis: The combination of weather concerns in South America and talk that China is back buying beans triggered a strong round of fund buying today. While some areas of northern and central Brazil have benefited from recent showers, the lack of much-needed moisture in southern growing areas is raising concern about reduced yield potential.

Look for early price action tomorrow to be guided by the weekly export sales report. Rumors that China had purchased more cargoes of soybeans recently was supportive for futures this morning.

Technical analysis: January soybean futures posted an upside day of trade on the daily chart, but still need closes above $15.00 to signal a near-term low has been posted. Today, the contract completed a 25% retracement of the decline from the September high, but a 38% retracement ($15.30) is needed to confirm a low has been posted.

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 a choppy start, but firmed as corn and soybean futures extended gains. Chicago and Kansas City wheat ended mostly 3 to 4 cents higher, with Minneapolis up 2 to 8 cents.

Fundamental analysis: Strength in the U.S. dollar index and news of a slightly higher-than-expected all-wheat crop estimate from Statistics Canada weighed on wheat futures in the early going. But as strength in the soybean market lifted corn futures, wheat saw spillover support.

On days of price strength, traders also note ongoing concerns in the U.S. HRW wheat belt as a reason for higher prices. There are chances of rain in the forecast for the region this weekend, but forecasters say rains won't be drought-busters.

Technical analysis: March Chicago wheat futures remained within the boundaries of yesterday's trading range, but posted a high-range close. Futures need to return above last week's high of $8.95 1/2 to generate fresh chart-based buying, while support lies at the November low of $8.45.

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 firmed into the close to finish slightly higher. The high-range close bodes well for market bulls heading into tomorrow's session.

Fundamental analysis: With little fresh news for the market to digest, cotton futures looked to outside markets for direction. Strength in the U.S. dollar index initially weighed on cotton, but futures eventually were pulled higher on spillover from sharp gains in soybean futures. Traders will look to tomorrow morning's weekly export sales report to gauge foreign demand, which has recently been solid.

Technical analysis: March cotton futures briefly penetrated support at yesterday's low of 72.52 cents but recovered to above the 73.00-cent level. Resistance stands at Monday's high of 74.41 cents and extends to the October high of 76.39 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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