Price action: Corn futures saw two-sided trade overnight, but the market softened with the start of the day session and sell stops were triggered as contracts took out key levels of support. The market ended low-range with losses of 7 to 9 cents. Funds sold 14,000 corn contracts (70 million bu.) today.
Fundamental outlook: Early pressure stemmed from efforts to reduce risk exposure ahead of what is expected to be a mildly bearish data set from USDA on Friday. Pre-report expectations are for USDA to raise its 2013 production estimate for corn by 68 million bu. from November to 14.053 billion bushels. Dec. 1 corn stocks are expected to come in around 10.77 billion bushels, while 2013-14 corn carryover is expected to come in around 1.844 billion bushels.
Favorable crop prospects in Brazil and timely Argentine rains added to the negative tone in the corn market today, as did strength in the U.S. dollar index.
Traders brushed off a strong weekly ethanol production report today (see "Evening Report").
Technical outlook: March corn futures broke through former contract-low support at $4.17 today and traded down to $4.14 3/4, before settling steady with the former contract low. Today's low sets a new target for bears, after which support stands at $4.00. March corn must settle above the November high of $4.49 1/2 to signal it may be working on a low.
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: January soybean futures closed 1 1/4 cents higher, while the other contracts posted losses of 6 3/4 to 13 1/2 cents, with new-crop contracts leading losses.
Fundamental outlook: January soybean futures found enough support from ongoing strong Chinese demand to finish slightly higher today. USDA announced a daily sale of 115,000 MT of soybeans to China for the current marketing year. While China continues to actively buy U.S. beans, traders fear cancellations are coming as soon as China knows it can get new-crop beans out of Brazil in a timely manner.
New-crop soybean futures extended their recent, sharp price slide today. With South America growing a record crop and prospects for increased planted acres in the U.S. next year, traders' attitudes are turning negative. Unless there are severe late-season problems with the South American crop and/or Brazil has logistical problems again this year, it's going to be difficult to improve traders' attitudes.
Technical outlook: January soybean futures are pivoting around the $13.00 mark. To the upside, rough resistance stands around $13.50. To the downside, key near-term support is at last week's low of $12.80 1/4. If that support is violated, it would open the downside to the November low at $12.47.
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: Wheat futures traded defensively throughout the day, losing ground in late-morning trade and plummeting at the close. SRW wheat futures led declines with losses of 12 to 13 3/4 cents. HRW wheat futures posted losses of 8 1/4 to 10 1/2 cents. HRS wheat futures fell 3 3/4 to 10 1/2 cents.
Fundamental outlook: Wheat futures edged higher in early trading but then lost ground throughout the day on growing bearish sentiments regarding Friday's USDA reports, a stronger U.S. dollar index and moderating temperatures in hard red winter wheat country. The forecast for warming temperatures across the Plains and into next week reduced concerns of winterkill. In addition, some regions are expected to pick up beneficial rains as well.
Traders turned their attention to the USDA reports due Friday and grew more bearish as they examined the numbers. Early expectations call for winter wheat seedings in 2014-15 to come in at 43.7 million acres, which would be up roughly 600,000 acres from 2013. Traders also look for USDA to peg Dec. 1 wheat stocks at 1.41 billion bushels. Ending stocks for 2013-14 are expected to come in around 559 million bu., which would be down 16 million bu. from December.
Technical outlook: March SRW wheat futures saw more technical damage done to an already negative chart picture today. Futures pushed through recent lows at $5.95 1/2, which resulted in followthrough selling near the close. The downside target now is the 2011 low at $5.72 1/4 on the weekly continuation chart. The $5.95 area now represents resistance. It will take a close above Monday's high of $6.12 3/4 to hint at an ebbing in negative attitudes.
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: Cotton futures sank into the close to finish 121 to 153 points lower, with nearbys leading losses.
Fundamental outlook: Strength in the dollar index weighed on cotton futures throughout the day, although selling picked up in late trade. In the early going, pressure was limited by indications cotton acreage in China will be lower in the year ahead. But negative outside markets ultimately led to stepped up price weakness in cotton futures, as crude oil and gold were also lower today.
Tomorrow, traders will also begin to more actively even positions ahead of Friday's USDA reports. Pre-report trade expectations have not yet been released.
Technical outlook: March cotton futures posted a downside day of trade on the daily chart, but respected support at Monday's low of 82.66 cents. Followthrough pressure tomorrow would violate uptrending support drawn off late November and early December lows. Resistance stands at the December high of 85.29 cents.
Hedgers: 50% of 2013-crop is sold in the cash market.
Cash-only marketers: 50% sold on 2013-crop production.