Price action: Corn futures traded slightly higher through mid-morning but slowly edged lower in very thin trade. Futures closed near their lows of the day, generally 1 1/2 to 2 cents lower.
Fundamental outlook: Corn futures found early support from light short-covering as traders prepare for several key USDA reports to be released on Friday. Futures were not able to hold their gains, however, due to bearish attitudes, strength in the U.S. dollar index and forecasts for precipitation to provide relief from recent heat and dryness in corn-growing areas of Argentina.
Funds were also on the short side of the market today, selling 4,000 contracts (20 million bu.) of corn. Unless funds are spooked out of their sizable net short position, it will be hard for corn futures to generate sustained buying interest.
Technical outlook: March corn futures encountered resistance at $4.30. The contract needs a close above the December high of $4.40 3/4 to ease the heavy bearish technical tone hanging over this market. The contract low of $4.17 provides support.
Hedgers: 25% of 2013-crop production is sold in the cash market. Be prepared to advance sales on an overdue bounce.
Cash-only marketers: 25% sold on 2013-crop. Be prepared to advance sales on a bounce.
Price action: Soybean futures ended split for the day after trading likewise for much of the session. The front-month ended 2 3/4 cents higher while deferred contracts ended fractionally to 9 1/4 cents lower on the day, with deferreds leading to the downside.
Fundamental outlook: Soybean futures saw bull spreading today, which resulted in the mixed close. USDA's announcement of a 350,000 MT sale to China for 2013-14 delivery limited selling interest in nearby contracts. But ideas South American supplies will soon result in Chinese order cancellations and expectations U.S. bean plantings will rise in the year ahead weighed on deferred months.
Private crop watchers indicate that recent heat in Argentina has caused some irreversible damage to the crop. But considering high plantings and the forecast for rains and more moderate temps for the country, concerns are relatively limited.
Technical outlook: January soybeans finished just 1/2 cent shy of tough resistance at $13.00 today. A move through and close above that level would open upside potential to the December high of $13.53 1/2. The 2014 low of $12.80 1/4 marks tough support.
Hedgers: 100% sold in the cash market on 2013-crop production. We'll manage risk on the board the remainder of the marketing year.
Cash-only marketers: 75% sold on 2013-crop production.
Price action: SRW wheat futures finished 2 to 3 cents lower, HRW contracts ended narrowly mixed with the first three contracts slightly higher and HRS futures closed slightly lower in all but the lead-month contract.
Fundamental outlook: Winterkill concerns with the winter wheat crop supported wheat futures at times today, but those worries weren't strong enough for sustained buying interest. Traders feel winterkill issues will be minimal.
Traders are also hesitant to actively cover short positions ahead of Friday's barrage of USDA report data. Expectations are winter wheat seedings will be reported up from year-ago and the report data will be yet another reminder of plentiful global supplies.
Unless the corn market appreciably works higher or there's a bullish fundamental surprise, wheat futures will struggle to find buying interest.
Technical outlook: March SRW wheat futures face an uphill battle to put in a low and work appreciably higher. The first hurdle for bulls is the downtrend from the October and December highs, which intersects around $6.32 1/2 tomorrow and declines roughly 1 3/4 cents every day thereafter. If that trendline is cleared, old support at the September low of $6.47 3/4 is tough resistance.
Hedgers: 75% sold on 2013-crop in the cash market. No 2014-crop sales are advised.
Cash-only marketers: 50% sold on 2013-crop. No 2014-crop sales are advised at this time.
Price action: March through July cotton futures settled 71 to 94 points higher. Other contracts posted gains of roughly 20 to 40 points.
Fundamental outlook: The cotton market was still reacting today to news we reported Monday that Chinese producers plan to cut planted acreage by nearly 9% this year. Gains were trimmed late, however, by a bearish forecast from Calcot. The California cotton marketing co-op says it doesn't expect China to stockpile cotton moving forward and, therefore, cotton imports will fall by 45% in 2014-15.
While traders are keeping a watch on China, their more immediate focus is on USDA's reports that will be released Friday. USDA will update its cotton production and demand forecasts.
Technical outlook: March cotton futures have seen volatility pick up, which is a potential sign the recovery rally is running out of steam. Near-term support and resistance stand at 82.66 cents and 85.29 cents, respectively. A more important level of support is at 81.64 cents. A close below that level would suggest a short-term top is in place. An upside breakout from the short-term range would open the upside to the October high of 87.62 cents.
Hedgers: 50% of 2013-crop is sold in the cash market.
Cash-only marketers: 50% sold on 2013-crop production.