Crops Analysis (VIP) -- March 11, 2013

March 11, 2013 09:34 AM



Price action: Corn futures settled mostly 6 1/2 to 10 1/4 cents higher, which was in the upper end of today's range though off session highs.

Fundamental analysis: Corn futures followed up last Friday's corrective gains with more price strength today. Fundamental support is coming from tight old-crop stocks, especially after USDA left its 2012-13 carryover projection unchanged at a razor-thin 632 million bu. Friday.

Weather also provided mild support for new-crop futures as it appears there won't be an early start to the planting season following another round of heavy precip across the Midwest. But the positive benefit of moisture is still seen as greater than any potential planting delays by most traders, which limits the upside to short-covering.

Technical analysis: December corn must push above the January double-bottom at $5.70 to spark an extended price recovery. Last week's low at $5.38 1/2 is key near-term support.

Hedgers: 100% sold on 2012-crop in the cash market -- 10% for March 2013 delivery. No 2013-crop sales recommended yet.

Cash-only marketers: 75% sold on 2012-crop --10% for March 2013 delivery; 15% for May 2013 delivery. No 2013-crop sales recommended yet.




Price action: Soybean futures favored a firmer tone in choppy trade and closed 6 1/4 to 8 1/2 cents higher through the July contract. The rest of the market ended mostly 1 to 3 cents higher. .

Fundamental analysis: Bull spreading was the dominate feature in the soybean market today, with traders responding to the tight old-crop stocks situation and indications fresh demand news is on the horizon. While traders are disappointed USDA didn't trim carryover in its March Supply & Demand Report, they expect the export figure to eventually be raised again to tighten stocks further. This morning, Gulf basis was 4 cents higher for immediate delivery and held steady into midday.

Meanwhile, upside potential for new-crop futures was limited by the widespread weekend precip event that is helping to recharge soil moisture. But in some areas, the rains have caused flooding because soils are frozen and not able to soak in the moisture.

Technical analysis: May soybean futures posted an inside day on the daily chart and closed in the upper quarter of the day's range. The contract tested last week's high of $14.84 3/4, which is initial resistance. Closes above that level and the February high of $14.97 would keep the trend of higher lows and higher highs from the November low in place.

Hedgers: 100% sold on 2012-crop in the cash market. No futures/options positions at this time. No 2013-crop sales advised yet.

Cash-only marketers: 75% sold on 2012-crop production for harvest delivery. No 2013-crop sales advised yet.




Price action: Wheat futures saw two-sided trade today but bulls held the upper hand for most of the daytime hours and into the close. Chicago closed 3 to 4 1/2 cents higher, Kansas City ended mixed with an upside bias and Minneapolis settled fractionally to 4 3/4 cents higher in most contracts.

Fundamental analysis: Wheat futures faced pressure during the overnight hours, but the market firmed as corn strengthened with the start of the open-outcry session. Plus, today's weekly export inspections tally of 27.856 million bu. topped expectations, reminding traders of improved export demand for U.S. wheat at recent lower prices.

But buying interest was largely restricted to short-covering as weekend precip and more in the extended forecast for the Central Plains is expected to improve crop prospects. Plus, in contrast with corn and soybeans, USDA's latest Supply & Demand Report confirmed ample wheat carryover supplies.

Technical analysis: May Chicago wheat futures settled at psychological resistance at $7.00. The next level of key resistance is the January low of $7.45 1/4. Near-term support is at last week's low of $6.81.

Hedgers: 75% sold on 2012-crop in the cash market. No 2013-crop sales advised yet.

Cash-only marketers: 75% of 2012-crop is sold. No 2013-crop sales advised yet.




Price action: Cotton futures finished steady to mildly higher in all but some of the far-deferred contracts, which were slightly lower. Futures closed high-range for the day.

Fundamental analysis: Cotton futures faced light profit-taking for much of the day. But the late recovery signals attitudes remain bullish. That limits near-term downside risk to corrective selling. If the market posts a sharp pullback, it would signal a potential trend change.

The market's ability to close higher today despite disappointing Chinese economic data that was released over the weekend also signals attitudes are bullish. Traders remain hopeful China will continue to buy U.S. cotton, although the country's economic recovery must be closely watched for any signs of a hiccup, which could slow cotton demand.

Technical analysis: Last Friday's high at 88.78 cents stands as solid near-term resistance. A close above that level would make 90.70 cents bulls' target. The last correction low at 81.39 cents is key near-term support.

Hedgers: 50% priced on expected 2012-crop production in the cash market.

Cash-only marketers: 50% priced on expected 2012-crop production in the cash market.

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