Price action: Old-crop corn futures posted a seventh consecutive day of gains and ended high-range. Futures closed 4 to 7 3/4 cents higher for the day.
Fundamental analysis: The corn market enjoyed more short-covering today as well as additional fund buying as USDA's reports Friday showed carryover supplies are even tighter than the market had expected. Funds bought an estimated 11,000 contracts (55 million bu.) of corn today and have now been net buyers of 37,000 contracts (185 million bu.) the past three sessions including today. Corn also benefited from strong gains in the wheat market and some concern about increasing heat and dryness in Argentina.
But the market must see signs export demand is improving to continue to build on gains. An increase in USDA's feed use projection is not enough to keep traders actively adding long positions as prices rise.
Technical analysis: March corn futures came within 1/4 cent of near-term resistance at the Dec. 17 high of $7.34 1/4 today. A move through this level would have bulls targeting the November high of $7.67 1/2. The psychological $7.00 mark is initial support.
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 traded both sides of unchanged today, but settled around 2 to 6 cents lower and near session lows.
Fundamental analysis: Traders cashed in today following strong gains Monday as profit-taking weighed on soybean futures into the close. Fresh news was lacking today, which encouraged the corrective selling action this afternoon.
While talk of drier conditions in areas of Argentina and southern Brazil supported soybeans throughout the morning, this wasn't enough to maintain buying interest. The South American crop is far from "made," but record production this year is virtually a foregone conclusion. As a result, traders are anticipating a letup in demand for U.S. soybeans once South American supplies are in exportable position. That's helping ease concerns about tight carryover projected for the 2012-13 marketing year.
Technical analysis: Key near-term boundaries for March soybean futures are clearly defined, with support at last Friday's spike low at $13.51 1/2 and resistance at the December high of $15.01 1/4. A breakout from this range is likely to trigger the next trending move.
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 finished with gains in the teens in Chicago and Kansas City today, while Minneapolis wheat was roughly 11 to 14 cents higher.
Fundamental analysis: Fundamental support for wheat came from crop concerns as very dry conditions in the Central Plains leave the HRW crop at risk for winterkill issues given sub-freezing temps the past couple of nights. There are also winterkill concerns in Russia following reports Monday that up to one-quarter of the winter wheat crop could have suffered some damage in key growing regions.
Additional support came from corn/wheat spread unwinding. The March Chicago wheat/March corn spread tightened to 43 cents premium wheat on Monday, prompting concerns it had gotten too tight, especially with USDA bumping up its wheat feed/residual use by 35 million bu. in last Friday's Supply & Demand Report. The spread widened to more than 50 cents today, but remains in the downtrend from the November peak of $1.73 1/4.
Technical analysis: March Chicago wheat futures have now completed three days of corrective gains and retraced 25% of the price fall from the November high to the Jan. 11 low. Additional price strength tomorrow would signal an extended correction is underway, while failure to attract followthrough buying would suggest the move off last Friday's low was little more than a correction to the downtrend.
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 bull spreading today and ended 27 to 67 points higher in the March through October contract and 6 points lower in deferred months.
Fundamental analysis: The March through October cotton contracts benefited from reports that China's auction of state cotton reserves to domestic mills have come up against resistance. Chinese mills are said to be unimpressed with the low-quality cotton up for auction at relatively high prices. This has sparked speculation these end-users may be willing to pay duties to import higher-quality cotton from other countries, including the United States.
Light support also comes from concerns about heat in Australia that could trim cotton production in the country.
Technical analysis: March cotton futures settled high-range but within the market's recent consolidated trading range, the boundaries of which are the December high of 77.10 cents and the January low of 73.72 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.