Price action: Corn futures traded stronger through the overnight session and continued to trade higher during daytime hours. Prices trailed off in late-morning trading but recovered at the close to result in a mid-range close. September futures finished 9 cents higher while the December through next July contracts were 7 1/4 cents higher.
Fundamental outlook: The modest downgrade in corn crop conditions reported by USDA Monday afternoon caught traders by surprise and challenged their view that all was well with the nation's corn crop. The report brought new attention to the late development of the crop. However, updated weather models released in late-morning trading showed cooler temps and increased chances for precipitation for the Corn Belt this weekend through late next week, which tempered gains.
Funds bought an estimated 6,000 contracts (30,000,000 bu.) of corn today. If weather/crop concerns build, funds will move money back into the long side of the market after recently going through an extended liquidation phase.
Technical outlook: The $5.05 area provided support for December corn futures today. Recent price action is signaling the range from last week's low at $4.90 to $5.10 appears to be building as a support zone. Last week's high at $5.28 1/4 remains upside resistance.
Hedgers: 100% sold on 2012-crop in the cash market. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.
Cash-only marketers: 100% sold on old-crop. 25% of expected 2013-crop production is sold via forward contract for harvest delivery.
Price action: Soybean futures finished 19 1/4 to 22 3/4 cents higher through the March contract. Farther deferred contracts were mostly 14 to 15 cents higher. Futures finished in the upper half of today's range, but well off session highs.
Fundamental outlook: Soybean futures were supported by the unexpected drop in crop condition ratings in Monday afternoon's weekly update from USDA. With signs that recent hot and dry conditions are taking a toll on the crop, traders pumped money into the long side of the market today. Intra-day profit-taking was seen as midday weather updates signaled better rain chances for areas of the Corn Belt through late next week, but bulls maintained solid control.
Funds purchased an estimated 8,000 contracts (40 million bu.) of soybeans today. Near-term fund money flow will very likely be dictated by weather forecasts.
Technical outlook: November soybean futures matched last week's high at $12.97 today. A push above that level and the psychological $13.00 mark could spark enough chart-based buying interest to trigger a challenge of tougher resistance at the June high of $13.33. Support is at $12.50 1/4 and $12.25.
Hedgers: 100% sold on 2012-crop in the cash market. 20% forward priced on expected 2013-crop production for harvest delivery.
Cash-only marketers: 100% sold on old-crop. 20% of expected 2013-crop production is sold via forward contract for harvest delivery.
Price action: Wheat futures benefited from spillover from neighboring markets, but they couldn't sustain prices strength and gains were trimmed into the close. Chicago wheat ended steady to 1 cent higher in most contracts, with Kansas City and Minneapolis wheat ending mostly 1 to 3 cents higher.
Fundamental outlook: Corn and soybean futures built on overnight gains in early daytime trade, but as buying subsided in neighboring markets, wheat futures moved off session highs. Minneapolis futures were also supported by a decline in USDA's spring wheat crop ratings.
Traders also digested news that Russia has harvested about 40% of its wheat crop that is expected to be around 50 MMT, which is a lofty improvement from last year. While wheat futures have benefited recently from strong demand improvement, this news provided traders with a reminder that U.S. wheat likely faces increased global competition, especially from the Black Sea region.
Technical outlook: September Chicago wheat futures filled yesterday's gap area to the upside before slipping below support at yesterday's low. But the contract avoided posting a bearish reversal. Followthrough pressure tomorrow would have bears targeting contract-low support of $6.52 1/4, with resistance at last week's high of $6.93.
Hedgers: 50% of 2013-crop is sold in the cash market. 100% sold on of 2012-crop.
Cash-only marketers: 25% of 2013-crop sale is sold. 100% sold on 2012-crop.
Price action: Cotton futures posted bearish reversals in many contracts and closed 60 to 99 points lower.
Fundamental outlook: Early gains were tied to concerns about the crop after yesterday's USDA crop condition report revealed a two-percentage-point decline in the portion of crop rated "good" to "excellent" compared to last week. But buying dried up in thin-volume trade, resulting in the price reversal.
Otherwise, there was little fresh news for the market to digest. Cotton also benefited in early trade from spillover from sharp gains in soybean futures and weakness in the dollar index. But traders also noted cotton export sales have softened dramatically recently as the dollar remains in the upper reaches of its broad trading range.
Technical outlook: December cotton futures saw trade outside of both ends of yesterday's trading range today and posted a bearish reversal despite finishing well off session lows. Today's low of 83.91 cents is support tomorrow, followed by the late-June low of 83.05 cents.
Hedgers: 50% of expected 2013-crop production is hedged in December cotton futures at 83.87 cents. 50% of expected 2013-crop production is also sold via cash forward contract for harvest delivery. 100% sold on old-crop in the cash market.
Cash-only marketers: 85% sold on old-crop. 50% of expected 2013-crop production is sold via cash forward contract for harvest delivery.