Price action: July corn futures, which expire on Friday, closed 12 1/4 cents higher. Most other contracts ended 16 to 21 1/4 cents higher. Corn futures ended high-range for the day.
Fundamental analysis: Corn futures built on Monday's corrective gains amid a combination of weather support and technical-based buying. Traders looked past the 1-percentage-point rise in the "good" to "excellent" categories in Monday afternoon's crop condition data. Instead, their focus shifted to forecasts calling for hotter and dry conditions the second half of the month, when a good portion of the Corn Belt crop will be pollinating.
In addition to the demand concerns, there was a pickup in end-user buying on the recent price break, suggesting prices got to "value" levels. For a sustained rally, the end-user demand must continue as prices rebound.
Funds were active buyers today, purchasing an estimated 18,000 contracts (90 million bu.) of corn. That came on the heels of them buying 9,000 contracts (45 million bu.) of corn Monday.
Technical analysis: By closing back above $5.00 yesterday and above old support at $5.12 today, December corn futures are signaling the recent downside breakout attempt was a bear trap. Followthrough buying tomorrow would suggest the contract is headed back to the top of the broad, choppy range where resistance is layered from $5.70 to $5.73 3/4.
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 enjoyed followthrough buying today and ended 4 to 12 3/4 cents higher in old-crop contracts and 19 to 24 cents higher in new-crop contracts. This was well off daily highs. Funds bought 9,000 contracts (45 million bu.) of soybeans today.
Fundamental analysis: Soybean futures benefited from ideas the downside has been overdone, especially given tight carryover supplies, new-crop uncertainty and signs demand may be picking up. While the bean crop is generally rated in favorable condition, development is well behind the norm, exacerbating concerns about the forecast for above-normal temps the latter half of July. Basis also ticked up today, signaling end-users may be taking advantage of the recent price break in new-crop futures to book needs.
But the market pared gains heading into the close as traders are hesitant to push futures too far in either direction ahead of USDA's reports Thursday.
Technical analysis: November soybean futures gapped higher on the open and traded through near-term support around $12.85 before settling around a dime off this level. Today's high of $12.86 3/4 is near-term resistance, followed by the $13.00 mark. Support is layered between $12.50 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: Chicago and Kansas City wheat futures ended high-range with gains of roughly 14 to 16 cents. Minneapolis wheat staged a mid-range close with futures 7 to 8 1/2 cents higher in all but the front-month contract, which ended 25 cents higher.
Fundamental analysis: Recent Chinese SRW wheat buys of at least 1.32 MMT lifted wheat futures again today. This signals prices recently dipped to "value" levels. The fact that harvest has moved past half complete also means that seasonal hedge pressure is easing. Minneapolis also benefited from concerns about the slow development of the spring wheat crop. Just 45% of it is headed, compared with 53% at this time for the five-year average.
Focus tomorrow will be on evening positions for USDA's Supply & Demand and Crop Production Reports, in which USDA will issue its first survey-based estimate for the spring wheat crop and all wheat production. These are expected to come in at 504 million bu. and 2.057 billion bu., respectively. Both figures would be down from year-ago.
Technical analysis: September Chicago wheat futures continued in their gradual uptrend toward resistance, first at the $7.00 mark followed by the June high of $7.24. Last week's contract low of $6.52 1/4 marks strong support.
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 settled 7 to 78 points higher for the day, which was anywhere from low- to high-range.
Fundamental analysis: Cotton futures were supported by a drop in weekly crop condition ratings. On Monday, USDA reported a 3-percentage-point drop in the "good" to "excellent" categories from the previous week. There are concerns with dryness through the Southwest and too much moisture in some of the Southeast.
Traders are also starting to square positions ahead of USDA's Supply & Demand Report on Thursday. Pre-report positioning limited buying interest today and is likely to keep price action light and choppy tomorrow.
Technical analysis: December cotton futures are right in the middle of the broad range from the June low of 81.72 cents to the June high of 89.56 cents, a virtual no-man's land, on the daily price chart.
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.