Crops Analysis (VIP) -- January 9, 2013

January 9, 2013 09:00 AM
 

Corn

Price action: Corn futures favored a firmer tone throughout the day and ended mostly 4 to 5 cents higher, which was near session highs.

Fundamental analysis: Traders' focus was on evening positions ahead of Friday morning's USDA reports, which should set the price tone heading into spring. Traders expect the reports to show a slight drop in the size of the corn crop, but for carryover to tick up slightly due to dismal export demand. Check "Evening Report" for pre-report expectations.

Followthrough buying could be limited tomorrow as traders don't want to be caught too heavily long or short since the previous six January reports have produced a limit move in the corn market (up or down).

Technical analysis: March corn futures posted a slight upside day of trade on the daily chart but remained within the boundaries of the downtrending channel established from the November high. The contract needs to return above at least the $7.20 level to signal a near-term low is in the works. Violation of support at Monday's low of $6.78 would make bears' next target the psychological $6.50 level.

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.

 

 

Soybeans

Price action: Soybean futures closed 1 cent lower to 6 cents higher following a choppy day of price action.

Fundamental analysis: Pre-report positioning again dominated price action in the soybean market. Traders appear very unwilling to add new positions on either side of the market, which suggests more light and choppy price action will be seen tomorrow.

Conab, the supply agency of the Brazilian government, modestly raised its production estimate to a record 82.68 MMT. This had little market impact, however, as traders are already well aware of the record crop potential in Brazil.

Technical analysis: Key near-term support for March soybean futures lies at $13.56, which is the November low and was matched last Friday. Violation of that support would open the downside to the May low at $12.30.

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.

 

 

Wheat

Price action: Wheat futures closed roughly 5 to 6 cents lower in Chicago, 3 to 7 cents lower in Kansas City and 2 to 4 cents lower in Minneapolis. Most contracts ended near session lows at all three exchanges.

Fundamental analysis: Wheat futures were pressured by pre-report positioning today as traders anticipate higher winter wheat acreage compared to year-ago in Friday's Winter Wheat Seedings Report from USDA. Additional pressure came from corn/wheat spreading action.

While there are indications the sharp drop in prices is encouraging more export demand, the sales pace isn't strong enough to spark buying interest in futures. A sustained pickup in export sales activity is needed to help the market secure a short-term low.

Technical analysis: March Chicago wheat futures are consolidating around the $7.50 mark. Last week's low of $7.39 3/4 is key near-term support as a drop through that level would open the door to the contract moving the next leg lower.

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.

 

 

Cotton

Price action: Cotton futures slipped into the close to finish with slight losses.

Fundamental analysis: Futures didn't stray too far from unchanged today, with periods of support coming from expectations China was focused on further building state reserves. As a result, tomorrow's weekly export sales data takes on more importance as traders expect China to be the lead buyer.

Traders are also focused on evening positions ahead of Friday's key USDA reports, which are expected to reflect the recent export improvements. Still, supplies are seen as abundant.

Technical analysis: March cotton futures slipped below initial support at yesterday's low of 74.95 cents, but remained above last week's low of 73.72 cents. A move above resistance at the December high of 77.10 cents and the August high of 78.02 cents is needed to open fresh near-term upside potential.

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.

 

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