Crops Analysis (VIP) -- December 6, 2012

December 6, 2012 09:02 AM
 

 

Corn

Price action: Corn futures sank with the start of open-outcry trade. Futures ended off session lows, but posted losses of 2 to 5 cents in most contracts.

Fundamental analysis: The combination of strength in the dollar index and a disappointing weekly export sales tally weighed on corn futures today. Net sales of 51,600 MT for 2012-13 and net sales reductions of 4,200 MT for 2013-14 resulted in a combined tally that came in well below traders' expectations. China was noted as a buyer of 109,000 MT of corn, but the overall dismal export pace reminded traders of ongoing demand destruction.

Technical analysis: March corn futures posted a downside day of trade on the daily chart, but respected support at this week's low of $7.46 3/4. Boundaries of the consolidation range are the September low of $7.08 3/4 and 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 favored a firmer tone throughout the day, but buying was somewhat limited by negative outside markets. Late-session buying pushed soybeans to session highs on the close, with 10- to 12-cent gains through the August contract.

Fundamental analysis: Support this morning was tied to stronger-than-expected weekly export sales of 1,142,700 MT for 2012-13 and sales of 1,100 MT for 2013-14. Combined, the tally was well above traders' expectations, with China the lead buyer. Export commitments are running 29% ahead of year-ago and USDA currently projects exports at 1.2% below year-ago.

However, strength in the U.S. dollar index limited buying in the commodity world, which capped gains in the soybean pit.

Technical analysis: January soybean futures still managed to post an upside day of trade on the daily chart to extend the recovery from the November low. After completing a 25% retracement of the decline from the September high to the November low yesterday, today's followthrough buying is encouraging to market bulls. But to confirm a low, the market needs to complete a 38% retracement, which stands at $15.30.

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 were choppy today and enjoyed late short-covering on help from soybean futures. Wheat futures at all three exchanges favored a firmer tone by the close.

Fundamental analysis: Strength in the dollar index and a disappointing weekly export sales tally limited buying to short-covering throughout the day. Weekly export sales of 353,100 MT for 2012-13 came in below expectations, but were up 26% from last week. Export commitments are running 10% behind year-ago and USDA currently projects exports to be 4.8% stronger than year-ago. As a result, traders expect USDA to lower its export projection in next week's Supply & Demand Report.

Pressure on futures was limited by tight supplies in the Black Sea region and concerns about lingering drought in the U.S. Plains.

Technical analysis: March Chicago wheat futures respected support at this week's low of $8.51 1/2 and managed a high-range close. But futures need to move back above last week's high of $8.95 1/2 to build upward momentum.

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 saw a choppy day of trade, but favored a firmer tone on the close. Futures ended 16 to 131 points higher in all but the October contract, which finished 28 points lower.

Fundamental analysis: Strength in the U.S. dollar index limited buying in the commodity world, but pressure on cotton was limited by a strong weekly export sales tally. The report showed sales of 415,700 RB for 2012-13 and 4,300 RB for 2013-14, with China the lead buyer. Traders say the recent strong buying pattern from China is somewhat confusing as the country holds more than 40% of the world's cotton stockpiles.

Technical analysis: March cotton futures posted an upside day of trade on the daily chart, but finished off session highs. Resistance stands at Monday's high of 74.41 cents and support begins at yesterday's low of 72.43 cents and extends to the November low of 69.79 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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