Crops Analysis (VIP) -- June 3, 2013

June 3, 2013 09:37 AM
 

Corn

Price action: Corn futures settled mostly 4 to 8 cents lower, which was generally near the middle of today's trading range.

Fundamental analysis: Traders brushed aside concerns about corn planting delays and the impact that could have on planted acreage and yield prospects during the day session after being supported by those worries overnight. But with more rain in the forecast this week, those concerns may resurface.

The key "fundamental" factor today was fund selling. Funds sold an estimated 10,000 contracts (50 million bu.) of corn for the day. The key question now is whether this is a hint of what funds will do this month or just a one-day event?

Technical analysis: December corn futures stopped 1/4 cent shy of key resistance at the March high of $5.73 3/4 and narrowly missed posting a bearish reversal for the day. The March high remains key near-term resistance. Today's low at $5.52 1/4 is initial support, followed by the May 28 gap from $5.41 1/2 to $5.36 3/4.

Hedgers: 100% sold on 2012-crop in the cash market. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery

Cash-only marketers: 75% sold on 2012-crop production. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

 

 

Soybeans

Price action: Soybean futures enjoyed strong gains throughout today's session and ended mostly 18 3/4 to 22 1/2 cents higher for the day, which was off session highs but still a high-range close.

Fundamental analysis: Funds flocked to the soybean market to start the month of June as the November contract closed above its 200-day Moving Average Friday (a key buy signal for these buyers) and concerns about slow planting are mounting. Funds bought an estimated 7,000 contracts (35 million bu.) of soybeans today.

Pre-report expectations are for USDA to peg soybean planting at 57% complete as of June 2 this afternoon; and more rain in the forecast this week signals additional delays are likely. While the planting date for beans is not as crucial as that of corn, the delays will extend the time until new-crop supplies come available, adding to worries about tight old-crop supplies.

Technical analysis: November soybean futures traded through and settled well above Friday's high and the late-February spike high, setting the contract up for a test of the 2013 high of $13.50 3/4. Former psychological resistance at $13.00 is now support.

Hedgers: 100% sold on 2012-crop in the cash market. 50% of expected 2013-crop production is hedged in November soybean futures at $12.19. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 90% sold on 2012-crop. 10% of expected 2013-crop production is sold via forward contract for harvest delivery.

 

 

Wheat

Price action: Wheat futures were pulled between weakness in the corn market and strength in the bean pit and in the end posted slight gains. Chicago wheat closed 2 3/4 to 6 cents higher and Minneapolis ended steady to 5 3/4 cents higher. Kansas City wheat ended 1/4 to 2 cents higher.

Fundamental analysis: Early support came on spillover from corn and soybeans, but as corn drifted lower on profit-taking, so did wheat futures. But sharp weakness on the U.S. dollar index eventually helped pull wheat back into positive territory.

Also providing support was news that initial tests show no traces of GMO content in U.S. wheat shipments to South Korea. Traders are also keeping a close eye on the weather situation as planting delays are ongoing across the U.S. Northern Plains and Canadian Prairies. Meanwhile, isolated showers are in the forecast for the Southern Plains, but it's getting too late to greatly boost HRW wheat yield potential.

Technical analysis: September Chicago wheat futures posted a slight upside day of trade on the daily chart to build on last week's gains. Near-term boundaries are resistance at the May high of $7.44 and support at the April low of $6.73 3/4.

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.

 

 

Cotton

Price action: Cotton futures favored a firmer tone throughout the day but rallied sharply in late trade to push July futures their 300-point limit higher, while October ended 297 points higher. December through October contracts ended 161 to 209 points higher.

Fundamental analysis: Futures were supported by concerns about planting delays, which is raising concerns about acreage being shifted to another crop or not being planted this spring. Plus, yield concerns exist about areas that have been planted. Cool and wet conditions in the Mississippi Delta and dry weather in Texas have traders' attentions.

Weakness in the U.S. dollar index was also supportive for the commodity complex today. The dollar weakened on disappointing manufacturing data.

Technical analysis: December cotton futures posted a bullish reversal after seeing weaker trade in the early going. Followthrough from today's high-range close is needed tomorrow to signal a near-term low is in the works. But to confirm a low, the contract needs to rise above the May high of 87.25 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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