Price action: Corn futures saw pressure for most of today's session and softened into the close to end with double-digit losses in most contracts. Futures ended slightly lower for the week and within their well-defined downtrend.
5-day outlook: Chart damage and risk aversion amid dollar strength this week encouraged funds to continue to actively liquidate long corn positions to start the new year after taking similar action in December. Expectations are for USDA to raise both its production and carryover estimates next Friday, so more of the same will likely be seen next week unless traders view losses as overdone.
30-day outlook: Sluggish exports will likely continue to plague the corn market over the near-term. U.S. prices are simply not competitive with those of South America. Plus, the Mississippi River closure will make it difficult and costly to get supplies to port. Tight supplies will continue to be reflected in basis levels around the country rather than in futures prices.
90-day outlook: Corn should receive a boost from the battle for acres. This year's small crop means the market needs to gain acres. Corn futures should also receive a boost from increased concerns about dry subsoil levels this year. At present, it looks like a large portion of the Midwest will start the 2013 growing season amid drought conditions.
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 trimmed daily declines, but still posted sharp losses for the week. March soybean futures matched support at the November low of $13.56 today, but closed above it.
5-day outlook: Bears clearly hold the near-term advantage on a technical basis. Slipping below the November lows early next week would open additional near-term downside risk. Traders, however, could cover short positions as they prepare for USDA's January reports on Friday. The reports will set the price tone for at least the rest of winter.
30-day outlook: Early harvest has begun in Mato Grosso, Brazil, but Brazilian beans won't be readily available for export until at least late January. China announced more cancellations of U.S. soybeans this week, signaling they anticipate a large South American crop. While China is likely to continue showing up as a weekly buyer of U.S. beans, big purchases are needed to signal U.S. prices have fallen far enough.
90-day outlook: Soil moisture improvement is needed across the western Corn Belt and portions of the eastern Belt this winter. A large portion of the Midwest is at risk of entering the 2013-cropping season under a drought watch. The acreage battle will also heat up soon.
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 ended roughly 8 to 10 cents lower in Chicago, with slightly lesser losses in Kansas City and Minneapolis. Most contracts at all three exchanges ended mid-range. Wheat futures sharply extended the recent price slide this week.
5-day outlook: With the trend strongly in bears' favor, there's risk of fresh selling pressure next week. But after recent, sharp price pressure, traders may want to cover short positions ahead of USDA's barrage of reports next Friday -- just in case there's a bullish surprise.
30-day outlook: Drought relief in the Plains is expected to be limited this winter. Even though the HRW crop is in rough shape, it will be hard to get traders too concerned until spring when USDA restarts its weekly crop assessments. Any spark this winter would likely have to come from the demand side of the market.
90-day outlook: Export demand for U.S. wheat should improve some as Black Sea origin supplies are tight and other key global exporters are experiencing crop problems. But a major increase in export demand for U.S. wheat is not expected as others are likely to be the primary beneficiaries before the United States.
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 settled 33 to 54 points lower, which was mid-range. For the week, cotton futures posted modest gains, with new-crop contracts leading the way.
5-day outlook: Much of traders' focus next week will be on preparations for the Annual Crop Production Summary on Friday. While only minor adjustments to the cotton crop are anticipated, it's unlikely traders will want to actively add new positions ahead of the data.
30-day outlook: Cotton futures have rallied to the top of the extended, sideways range on support from improved export demand and expectations cotton plantings will decline sharply. Fresh bullish news is needed to push futures above the top of the range. Otherwise, the long-standing technical pattern is likely to hold and futures will roll over.
90-day outlook: Cotton acres are expected to be down sharply this year, but we feel some calls for a 50% decline are too aggressive. The National Cotton Council will give the market the first real indication of expected plantings at its annual meeting Feb. 8-10.
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.