Price action: Corn futures were under pressure throughout the day due to spillover from soybeans and followthrough from last week's losses. Corn closed mostly 4 to 7 cents lower, with was mid- to low-range for the day.
Fundamental analysis: Much of today's pressure in corn futures came on spillover from soybeans, but USDA's baseline projections added to the negative tone (see "Evening Report" for more). Additional pressure came from lackluster demand, although slow cash grain movement was noted as helping to limit pressure on futures.
Traders are also keeping a close eye on the South American weather situation. Recent rains across southern Brazil are aiding in the development of corn, but dry conditions are expected to linger across Argentina this week, which is a threat to the pollinating and filling crop.
Technical analysis: March corn futures posted a downside day of trade on the daily chart and violated support at the September low of $7.08 3/4, making bears' next target the January low of $6.78. Futures need to return above the February high of $7.46 1/4 to signal a near-term low has been posted.
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.
Price action: Soybean futures were under heavy pressure throughout the day and finished 18 1/2 to 21 cents lower through the September contract. New-crop futures closed mostly around 13 cents lower.
Fundamental analysis: Soybean futures faced heavy followthrough selling after sharp losses last Friday. Funds sold an estimated 7,000 contracts (35 million bu.) of soybeans today.
Fundamental pressure came from expectations for record South American crop production and expectations demand for U.S. soybeans will dramatically slow once South American supplies hit the world market. Southern Brazil received beneficial rains over the weekend and more are in the forecast throughout this week. That countered another generally disappointing rain event for Argentina. While some areas of Argentina got scattered rains over the weekend, more is needed and the forecast is mostly dry through Friday. Another rain event is forecast for the weekend and early next week.
With limited demand news expected this week since China is celebrating its Lunar New Year, it will be hard for bulls to gain traction unless the fund selling eases.
Technical analysis: March soybean futures have now retraced nearly 50% of the rally from the January low to the Feb. 4 high. That level at $14.24 3/4 is initial support.
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.
Price action: Wheat futures briefly poked into positive territory this morning, but this quickly gave way to profit-taking. Futures ended 12 to 14 3/4 cents lower in Chicago, while Kansas City and Minneapolis wheat ended roughly 8 to 10 cents lower for the day.
Fundamental analysis: Spillover pressure from corn and especially soybeans made it tough for wheat to find buyers today, as did rain chances for the Southern Plains this week. And while this morning's weekly export inspections tally was an improvement over recent weeks and matched expectations, the tally did not signal U.S. wheat prices are competitive globally.
Also, USDA's baseline projections for wheat did not call for any major changes. Production is expected to decline slightly due to a decline in average yields in 2013-14. (See "Evening Report" for more details.)
Technical analysis: March Chicago wheat futures settled near session lows and below support at the May high. The contract appears headed for a test of the January low of $7.36 1/4, after which support stands at the psychological $7.00 level. A corrective bounce would have bulls eyeing the January high of $7.99 3/4.
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.
Price action: Cotton futures enjoyed followthrough buying today and ended 25 to 127 points higher for the day, with deferred months leading gains.
Fundamental analysis: Cotton futures received a boost from news the National Cotton Council's (NCC) annual survey signals U.S. producers plan to seed just 9.01 million acres to cotton this year, which, if realized, would be nearly a 27% decline from last year. The NCC notes that assuming harvest of 7.65 million of these acres and state-level yield assumptions would result in a 2013 crop of 12.86 million bales, down 4.15 million bales from 2012.
Adding to ideas cotton will likely lose acres to corn and beans in 2013-14, USDA in its long-term ag projections today projected cotton plantings of 9.3 million acres in 2013. And in Friday's Supply & Demand Report, USDA raised its export projection and lowered its carryover estimates. This means selling interest in cotton will likely remain limited over the near-term.
Technical analysis: March cotton futures enjoyed followthrough buying today and appear headed for a test of the February high of 83.45 cents, followed by the January high of 84.00 cents. Near-term support remains at last week's low of 80.60 cents.
Hedgers: 50% priced on expected 2012-crop production in the cash market.
Cash-only marketers: 50% priced on expected 2012-crop production in the cash market.