Price action: Corn futures saw some profit-taking today, but still posted gains for the week. March corn ended the week 7 3/4 cents higher than last week's close, with new-crop contracts seeing similar weekly gains.
5-day outlook: March corn spent more time above the $4.50 level then below it this week and posted a weekly close above it. Technicals signal there is more near-term upside potential, but this market needs a dose of fresh demand news to keep bulls interested. After three straight weeks of corn sales above 1 MMT, today's report showed demand has slowed. Fresh demand news early next week would be beneficial in supporting prices.
30-day outlook: As the calendar flips to March, more focus will turn to new-crop acreage prospects. USDA's projections released this week peg planted corn acreage at 92 million, down 3.4 million from 2013. USDA's current peg of carryover in excess of 2 billion bu. for 2014-15 signals supplies will be more than plentiful in the year ahead. This will limit upside potential for new-crop futures, which is why we are closely watching the market for signs the rally is stalling that would trigger advice to advance marketings.
90-day outlook: The government's long-lead weather forecasts released yesterday signal planting delays will be seen this spring. Shorter-range forecasts call for cooler-than-normal temps to linger into March. A slower-than-usual start to corn planting could result in some acres switching to soybeans.
Hedgers: 60% sold in the cash market on 2013-crop. 20% of expected 2014-crop production is sold via cash forward contract sale for harvest delivery.
Cash-only marketers: 50% sold in the cash market on 2013-crop. 20% of expected 2014-crop production is sold via cash forward contract sale for harvest delivery.
Price action: Soybean futures posted strong gains to finish the week with the March contract closing at price levels not seen since last September. Contracts closed 8 to 18 cents higher with most contracts closing either at or near their daily highs. Funds bought 9,000 contracts (45 million bu.) of soybeans today.
5-day outlook: Traders will watch Brazilian exports very closely in the upcoming week. The trade continues to wait on export cancellations from China, but reports of rising logistics problems at Brazilian ports may postpone those expected cancellations. That is keeping old-crop soybean futures pointed higher for now.
30-day outlook: USDA has Chinese export cancellations built into its Supply & Demand table as bookings are running above the current forecast. As Brazil moves more new-crop supplies onto the global market, Chinese cancellations will become a greater risk. But the longer it takes for those supplies to move into trade channel, the longer old-crop prices will be supported, and the more likely it becomes USDA will have to raise its export forecast and lower projected 2013-14 carryover.
90-day outlook: The market will eventually shift its focus to new-crop soybeans but that switch may not occur until spring. When the shift comes, traders will focus on the likelihood of higher soybean plantings, a boost in carryover stocks and lower prices. That's why new-crop futures are priced well below old-crop contracts.
Hedgers: 100% sold in the cash market on 2013-crop production. 10% of expected 2014-crop production is sold via cash forward contract sale for harvest delivery.
Cash-only marketers: 90% priced on old-crop. 10% of expected 2014-crop production is sold via cash forward contract sale for harvest delivery.
Price action: SRW wheat futures finished mostly 7 to 10 cents lower today, but still managed gains for the week as the price recovery from the winter lows continues.
5-day outlook: Today's losses can be chalked up to profit-taking following recent gains. But given our stance that the upside is limited and price strength must be used to advance sales, we'll be watching for topping signals next week. If uptrending support from the winter low is violated, that will be our signal to increase sales.
30-day outlook: Another polar vortex is expected to push down from the north in early March. If those bitterly cold temps extend into areas that are not protected by snowcover, it could take another nip out of the winter wheat crop. As spring approaches, traders will pay closer attention to individual state crop reports.
90-day outlook: The extended weather outlook is not positive for the HRW wheat crop in the Southern Plains, as it calls for above-normal temps in Texas for the coming three months. That would increase moisture needs for a crop that has done nothing but go backward this winter. The situation isn't dire for the crop as a whole, but timely spring rains will be needed.
Hedgers: 100% sold on 2013-crop in the cash market. 35% of expected 2014-crop production is sold via cash forward contract for harvest delivery.
Cash-only marketers: 75% sold on old-crop. 35% of expected 2014-crop production is sold via cash forward contract for harvest delivery.
Price action: Cotton futures finished 70 to 80 points higher in old-crop contracts, while new-crop futures posted lesser gains. For the week, old-crop futures posted slight losses, while new-crop futures finished with slight gains.
5-day outlook: Cotton futures are technically strong and showing no warning signs of a top. With that said, March cotton futures are at a price level that's stalled multiple rallies in the past. As a result, we're watching for potential topping action. Be prepared to finish old-crop sales when there are signs of a top.
30-day outlook: Traders continue to watch export demand closely for indications the price rise has slowed global end-user demand. So far, that hasn't been the case. China is the key market for U.S. cotton, but there have been a wide range of buyers recently. The export demand strength has traders anticipating a cut to projected old-crop ending stocks.
90-day outlook: USDA's initial projections for 2014-15 point to cotton carryover expanding to 4.6 million bales. A less friendly outlook is why new-crop futures are trading well below old-crop futures and why we're looking to advance new-crop sales on price strength.
Hedgers: 75% of 2013-crop is sold in the cash market. 25% of expected 2014-crop production is sold via cash forward contract for harvest delivery.
Cash-only marketers: 75% of 2013-crop is sold. 25% of expected 2014-crop production is forward sold for harvest delivery.