Crops Analysis (VIP) -- June 4, 2013

June 4, 2013 09:33 AM
 

Corn

Price action: July corn futures ended 4 3/4 cents higher, with the rest of the market closing 4 to 7 cents lower. Funds added about the same amount of short and long positions today for little net change in their position.

Fundamental analysis: Despite ongoing planting delays and further indications USDA's March acreage figure is the high-water mark of the season, new-crop corn futures saw profit-taking pressure today. Bull spreading was the featured activity given tight old-crop supplies.

Pressure on new-crop futures was limited by planting delays and the first crop condition ratings of the year that showed corn beginning the season in worse shape than last year, but strength in the dollar index limited general interest in the commodity sector today.

Technical analysis: December corn futures ended mid-range and just above support at yesterday's low. Today's low of $5.46 1/4 is initial support, followed by the bottom of last week's gap area at $5.36 3/4. Initial resistance is at yesterday's high of $5.73 1/2.

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 traded lower on profit-taking but the early losses were trimmed leaving futures to end in the upper third of the day's range despite a 3- to 6-cent lower close for old-crop contracts and a 9- to 10-cent lower close for new-crop contracts.

Fundamental analysis: Rain is again hampering planting in the western Corn Belt and forecasts call for the precipitation pattern to linger into Thursday. But traders were more focused on the forecast for drier weather by late this week and a warmer, drier outlook for next week. That gives traders some hope of active planting progress -- at least enough hope for them to take some profits following recent, strong gains.

Technical analysis: Even though soybean futures broadly closed lower they finished in the upper third of the day's range to post a relatively modest inside day down. Uptrends remain intact with Monday's high providing resistance. On November futures, the February high of $13.50 3/4 is the upside target if Monday's high of $13.31 1/4 is exceeded. There is solid support around the pivotal $12.80 area.

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 saw trade on either side of unchanged today, and futures were little changed for the day. Chicago wheat closed from 1 cent lower to 1 cent higher. Kansas City and Minneapolis also ended narrowly mixed with most contracts favoring the downside.

Fundamental analysis: Wheat futures chopped around unchanged throughout the day as spread unwinding with corn and crop concerns were enough to stymie selling interest, but not enough to spur active buying. USDA's condition update yesterday reflected ongoing deterioration in the HRW wheat crop as well as a pullback in the rating of the SRW crop. Meanwhile, spring wheat planting remains well behind the usual pace for this time of the year.

Uncertainty about USDA's ongoing investigation of the GMO U.S. wheat finding remains a wet blanket on the market. Spillover from corn and strength in the U.S. dollar index also made it tough for bulls to gain any traction today.

Technical analysis: July Chicago wheat futures ended near steady with today's open and yesterday's closing level, signaling a lack of near-term direction. The May high and low mark near-term support and resistance at $6.74 and $7.35, respectively.

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: After a mixed start, cotton futures rallied to strong gains, though the market moved well off its highs into the close. July cotton ended 220 points higher, while deferred contracts posted gains of 93 to 124 points through the July 2013 contract.

Fundamental analysis: Followthrough buying today after the market's limit- to near-limit higher close yesterday suggests a near-term low may be in place. The front-month contract continues to benefit from ideas cotton mills took advantage of the recent price break by booking supplies.

Deferred contracts, meanwhile, benefited from increasing concern about drought in the South and its eventual impact on supplies. Cotton planting picked up last week to 82% complete, just 1 point shy of the average pace, though the crop continues to lag from a development standpoint. Four percent of the crop is squaring compared with 7% on average.

Technical analysis: This week, July cotton futures have erased all of last week's declines and then some, as the market views the dip below support at 80.00 cents as overdone. Bulls' next target is the May high of 88.40 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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