Price action: Corn futures were firmer throughout the day and ended 1 3/4 to 2 3/4 cents higher. Futures closed off session highs, but still posted a high-range close.
Fundamental analysis: Futures were supported by followthrough from yesterday's gains and traders view recent price losses as overdone. Sharp weakness in the U.S. dollar index was also supportive for the market, as a weaker dollar helps to make U.S. corn more competitive on the global market. Otherwise, there was little fresh news for the corn market to digest today, as the weekly export sales data has been delayed until tomorrow due to Monday's federal holiday.
Also supportive today was news that ethanol production (see "Evening Report" for more details) the week ending Jan. 17 was up sharply from the previous week.
Technical analysis: March corn futures saw trade above yesterday's high of $4.29 and closed at that level. The contract is working on weekly gains. A high-range close for the week would hint the market is working on a near-term low, although closes above the December high of $4.40 3/4 are needed to confirm a low is in place. Tuesday's low of $4.21 is initial support, with key support at the contract low of $4.06 1/4.
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 were unable to hang onto opening strength and finished around 2 cents lower in the nearby contracts, with deferred contracts around 4 cents lower.
Fundamental analysis: Soybean futures opened higher and posted double-digit gains on short-covering prompted by a sharp decline in the U.S. dollar index. However, concerns China may eventually cancel purchases of U.S. soybeans as supplies become available from Brazil resurfaced and were amplified by data that reflected a slowing in China's manufacturing sector. A 10-cent decline in Gulf basis for February delivery added to those worries.
Technical analysis: March soybean futures failed to hold sharp gains and slipped into the close. The bottom of the trading range is the January low at $12.62 1/2 and the top of the range is resistance at the Jan. 10 and 13 highs at $12.97.
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: 75% sold on 2013-crop production. 20% of expected 2014-crop production is sold via cash forward contract sale for harvest delivery.
Price action: Wheat futures enjoyed double-digit gains this morning, but the winter wheat markets were only able to finish roughly 6 to 8 cents higher for a midrange close. HRS wheat closed low-range with gains around 2 cents in most contracts.
Fundamental analysis: Sharp weakness in the U.S. dollar index set the stage for corrective short-covering in the wheat market today as the Relative Strength Index reflected an oversold market. Today's gains pulled most contracts out of oversold territory.
Weakness in the U.S. dollar index was also supportive from the standpoint that it increases the competitiveness of U.S. wheat prices. Recent sales activity also kept this in focus as both Japan and Taiwan purchased U.S. wheat overnight. Traders reduced risk into the close, however, as there is uncertainty as to whether tomorrow's Weekly Export Sales Report for the week ended Jan. 16 will reflect an uptick in demand.
Technical analysis: March SRW wheat futures neared but settled well off near-term resistance at last week's high of $5.80. A move through that level would have bulls' eyeing the psychologically significant $6.00 level. The market continues to respect tough support at the contract low of $5.60 1/2.
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 saw an inside day of trade and a low-range close. The market settled 25 to 74 points lower on the day with nearbys leading to the downside.
Fundamental analysis: Disappointing economic data for China weighed on the cotton market today as traders fear contraction in the country's manufacturing sector could equate to lower demand for U.S. cotton imports. Tomorrow's weekly export sales report will provide an update on this front. Recent reports have signaled still-strong demand.
Sharp weakness in the U.S. dollar index along with gains in the grain and soybean markets for much of the day helped limit selling interest.
The market paid little attention to the possibility that China's plans to scrap its cotton stockpiling program in favor of direct subsidies could further reduce planting intentions; the Chinese cotton crop is already expected to decline by more than 9% this year.
Technical analysis: March cotton futures did not venture outside of Wednesday's trading range, but the low-range close gives bears the near-term advantage. Support is layered from 86.00 cents to the July high of 85.75 cents. The 2014 high of 87.14 cents is tough resistance.
Hedgers: 50% of 2013-crop is sold in the cash market.
Cash-only marketers: 50% sold on 2013-crop production.