Price action: July corn rallied and ended 12 cents higher after the release of friendly grain stocks data for corn, while new-crop plunged and finished around 27 cents lower following the release of a bearish acreage update from USDA. July corn ended with slight weekly gains while new-crop sharply extended weekly losses today.
5-day outlook: Today's reports will likely set the market up for more bull spreading next week, especially since new-crop corn took out key support at the 2013 lows and tested 2012 lows today. Bears will likely try for a test of the psychological $5.00 mark next week in the December contract.
30-day outlook: A pickup in end-user buying is likely needed to spark a price recovery and keep futures in the choppy range that has bound action since April. Prices are at levels that have spurred demand in the past, supporting ideas additional downside risk for corn may be limited.
90-day outlook: But if end-user buying does not come back to the market, new-crop futures are likely in for an extended price slide as the market views weather prospects as favorable -- that is, at least until the August Crop Production Report and yield reports from Iowa and Minnesota hit the market. Yield drag and prevent-plant acres should limit overall downside risk for the market, especially considering tight old-crop grain stocks.
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: Old-crop soybean futures posted an upside breakout and sharp gains for the week, while new-crop futures posted sharp weekly losses and extended the decline from the June high.
5-day outlook: Bull spreading was the dominant trend of the market this week and USDA's reports today reaffirmed traders' bullish attitudes toward the old-crop stocks situation. While USDA didn't raise planted soybean acreage from March intentions by as much as expected, the estimate still came in 602,000 acres above March intentions and USDA said it will resurvey bean acres for the August Crop Production Report (see "Evening Report" for more).
30-day outlook: The weather pattern is currently non-threatening for early July, which was also behind this week's price slide in new-crop futures. Trends are typically either reversed or accelerated following the key July Fourth timeframe. Unless the weather pattern abruptly changes, there is more near-term downside risk unless fresh demand surfaces.
90-day outlook: Given the delayed start to the planting season, an extended growing season will be needed to maximize yield potential. As a result, we should get another chance to increase cash sales toward the top of the choppy trading range. We expect China -- and other end-users -- to extend coverage on the price break, eventually rebuilding a base of support.
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 finished 15 to 19 cents lower in Chicago and 11 to 14 cents lower in Kansas City, which were low-range closes. Minneapolis wheat ended mostly 8 to 9 cents lower, which was also low-range. For the week, wheat futures posted sharp losses.
5-day outlook: With winter wheat harvest in full swing, the wheat market will continue to face seasonal price pressure. If corn futures extend this week's sharp losses, wheat would be vulnerable to spillover pressure, which would do technical more chart damage -- especially since support at the spring lows failed this week. Be prepared to make new-crop cash sales as we look to lighten downside risk.
30-day outlook: A sharp drop in wheat prices should encourage more end-user demand. But with the GMO wheat situation unresolved and global supplies forecast to increase, especially in the Black Sea region, it may take a deeper-than-hoped price drop to attract active demand.
90-day outlook: When end-users do return to the market, we anticipate a price recovery as seasonal pressure will have subsided. As a result, we'll be looking to replace cash sales we make now with long futures or call options -- once the market shows signs of bottoming.
Hedgers: 100% sold on 2012-crop in the cash market. No 2013-crop sales advised yet.
Cash-only marketers: 100% sold on 2012-crop. No 2013-crop sales advised yet.
Price action: July and October cotton futures ended 42 and 52 points lower, respectively. The December contract forward closed 21 to 59 points higher. The July contract led weekly losses.
5-day outlook: Cotton futures have returned to the bottom of the recent, broad trading range. How traders react at this level will set the price tone for next week. If buyers again surface at the bottom of the range, futures are likely to rebound. If buying interest doesn't perk up, futures are at risk of a technical-based selloff.
30-day outlook: USDA increased cotton plantings by 225,000 acres from March intentions, with the vast majority of that increase coming in Texas. While Texas plantings are up, however, traders are growing concerned with ongoing drought in the state. Over one-third of the Texas cotton crop is rated "poor" to "very poor."
90-day outlook: Crop prospects will dominate traders' fundamental focus through summer, but demand is the real key longer-term. If China's economy slumps or importers can't get needed lines of credit, Chinese imports of U.S. cotton could slump more than forecast.
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.