Price action: Corn futures faced pressure throughout the day and ended 18 1/4 cents lower in the front-month and 10 to 12 1/2 cents lower in deferred contracts.
Fundamental analysis: Favorable weather and spillover from the soybean market weighed on the corn market today. Parts of the Corn Belt received rain yesterday and today and more is in the forecast this week. Milder temps add to the favorable weather outlook and helped keep attention away from USDA's report that corn crop conditions declined last week.
The December contract's move through key support at $4.90 spurred some technical selling as well. Funds sold 17,000 corn contracts (85 million bu.) today. The key going forward will be if the price break attracts active end-user buying, as has been the case in the past. A surge in Gulf basis for near-term delivery today indicates this may well be the case.
Technical analysis: December corn futures took out key support at the 2013 low of $4.90 today, but bears had a tough time pushing the contract much beyond that point. The next area of chart support is the November 2010 low of $4.60. The contract must move back above the psychological $5.00 mark, followed by June low of $5.12 to signal a low is in the works.
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 fell hard today with the August closing down 57 3/4 cents and near the day's low. The September through May contracts closed 20 to 28 cents lower, which was also near their session lows.
Fundamental analysis: Rains in areas of the western Corn Belt overnight coupled with benign weather forecasts turned traders bearish today despite the drop in the condition of the crop reported by USDA Monday. Interior and Gulf basis levels also widened, suggesting recent price strength had attracted a pickup in farmer selling. In addition, unconfirmed rumors China might sell 3 MMT of soybeans from government reserves, potentially reducing export demand for U.S. soybeans, contributed to today's selloff.
Funds were big sellers, dumping an estimated 13,000 contracts (65 million bu.) of beans today.
Technical analysis: Technical damage was done to soybean charts as wide bearish reversals were posted and key support areas were broken. The August contract failed to find support at the psychological $15.00 level and dropped all the way to $14.60. There is wide ban of support from that level down to $14.01. The $15.00 level is now resistance. November futures failed to break through resistance at $13.00 and slumped near support starting at $12.60.
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: Chicago wheat closed 5 to 7 cents lower, Kansas City wheat was 3 to 11 cents lower and Minneapolis wheat was mostly 1 to 3 cents lower. Futures finished in the lower end of today's range.
Fundamental analysis: Much of today's price pressure came on spillover from heavy selling in the corn and soybean markets. On days like today when those markets are under heavy pressure, wheat doesn't have the strength to stand up on its own. To encourage buying in wheat futures, corn must find a bottom and some fresh wheat export demand news must surface. While wheat exports have strengthened recently, consistent demand news is needed to fuel active buying in wheat futures.
Pressure on the U.S. dollar helped limit selling in wheat today, but that is not enough on its own to spark buying in wheat futures.
Technical analysis: September Chicago wheat futures dipped to a new contract low and also posted a contract-low close. Next support comes from the weekly continuation chart at the June 2012 low of $6.07 1/2, closely followed by the psychological $6.00 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 closed 29 to 64 points lower, which was near the middle of today's range in most contracts.
Fundamental analysis: A modest uptick in cotton crop ratings yesterday afternoon put pressure on cotton futures today. USDA rated 44% of the cotton crop "good" to "excellent" as of Sunday, which was a 2-point increase from the previous week. Heavy pressure on row-crop futures also weighed on cotton today. But selling interest faded into the close as traders are unwilling to actively sell futures as there are still some crop concerns.
Weakness in the U.S. dollar index also helped ease selling pressure late in the session.
Technical analysis: The technical pattern for December cotton futures is decidedly sideways. Key boundaries lie at the June low of 81.72 cents and the June high at 89.56 cents, giving the contract a lot of room to continue to chop sideways without any technical significance.
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.