Crops Analysis (VIP) -- July 18, 2013

July 18, 2013 09:58 AM


Price action: Corn futures spent much of the day in negative territory, but the market ended with just slight losses around a penny in all but the September contract, which settled 2 1/2 cents higher. Futures ended just off session highs.

Fundamental outlook: A favorably wetter and cooler forecast for the weekend and for the 6- to 10-day outlook kept bears in control of the corn market today as the first big wave of pollination is quickly approaching. Spillover from heavy pressure in the bean market also contributed to the negative tone. The December contract gapped below the the key $5.00 mark overnight, triggering some technical-based selling.

But signs that current prices are attracting active bargain buying limited pressure. While traders are not overly concerned about troubles with the corn crop in key states such as Iowa and Minnesota, recent strong end-user buying signals not only do they see current new-corp prices as a value buy, but their level of crop concern may be increasing.

Technical outlook: December corn futures dipped below the $5.00 mark today, but the contract was unable to sustain selling below that level and settled just above it -- a positive technical sign. Resistance stands at the July high of $5.28 1/4.

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 faced pressure throughout the day, but the market did move off its lows into the close. August beans ended 8 1/4 cents lower, while most other contracts posted losses of 13 to 17 3/4 cents.

Fundamental outlook: The forecast for cooler temps and rain tomorrow and into next week weighed on the soybean market today. This has eased concerns about dryness in some areas of the Corn Belt stressing a slow-developing crop. However, hot, dry weather this week likely caused the condition of the bean crop to deteriorate. Therefore, Monday's Crop Progress and Condition Report could cause a shift in attitudes.

The more favorable forecast kept attention away from a much-improved net weekly soybean export sales tally of 702,300 MT (110,600 MT for 2012-13 and 591,700 MT for 2013-14), which narrowly topped expectations and more than doubled the prior week's tally.

Technical outlook: November soybean futures posted a downside day of trade, but the contract moved well off its lows into the close, which could set the stage for some corrective short-covering overnight. Key support is at the $12.50 area. Resistance stands at the July double-top of $12.97.

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 saw a choppy day of trade, but bears had the advantage into the close. Futures ended 3 to 6 cents lower in most contracts at all three locations.

Fundamental outlook: Pressure on the wheat market today largely stemmed from spillover from the corn and soybean markets. Also, a strong weekly export sales tally of 996,600 MT was overshadowed by news Egypt purchased 300,000 MT of Romanian, Ukrainian and Russian wheat, which reminded the market that Black Sea prices are below those of the U.S.

Meanwhile, the GMO wheat situation with Japan remains unresolved, though it appears steps are being taken by Japan to restart imports of U.S. western white wheat -- possibly in August. Industry sources in Japan told Reuters the country wants USDA to test a composite sample of each western white wheat shipment, give shippers a letter that certifies it holds no GMO wheat and send samples to Japan for testing there before each vessel arrives from the U.S.

Technical outlook: September Chicago wheat futures continued their week-long slide toward contract-low support at $6.52 1/4. A rebound would have bulls eyeing last week's high of $6.93, followed by the psychological $7.00 mark.

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 enjoyed gains for much of the session and the market ended in the mid- to upper part of today's trading range with gains of 92 to 126 points. October cotton posted a bullish reversal today.

Fundamental outlook: Cotton futures saw some corrective short-covering today. While weekly cotton export sales were far from impressive, sales of 50,400 MT for 2012-13 were up 54% from the previous week, with China as the lead buyer.

Light support also stemmed from today's Drought Monitor update, which showed drought expanding in the South. Recent rains in Texas and Oklahoma were largely confined to areas that were already free of drought.

Technical outlook: December cotton futures continued in their recent choppy action between the June low of 81.72 cents and the June high of 89.00 cents. On a more near-term basis, support stands at yesterday's low of 83.58 cents and resistance is at last week's high of 87.11 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.


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