Crops Analysis (VIP) -- March 13, 2014

March 13, 2014 09:52 AM
 

Corn

Price action:
March corn ended steady and the rest of the market was down 1 3/4 to 3 1/2 cents. This was low-range, but off session lows for most contracts.

Fundamental outlook: This morning's weekly export sales data showed sales of 683,400 MT for 2013-14 and sales of 103,600 MT for 2014-15, which came within expectations. But while the data didn't surprise the market, it reflects a still-strong demand pace. Otherwise, there was little fresh news for the market to digest and price action from neighboring pits influenced trade in the corn market. Building gains into midday for the soybean market helped to lift corn off session lows and into mixed trade at times. Key tomorrow will be how comfortable traders are with positions heading into the weekend vote in Crimea.

Technical outlook: May corn futures spent much of the day in negative territory and finished just off session lows. But the contract remains within the boundaries of the uptrending channel established from the January low. Resistance is at last week's high of $5.02 1/2 and support is at this week's low of $4.73 1/4.

Hedgers: 70% sold on old-crop. 30% of expected 2014-crop is sold via forward contract for harvest delivery.

Cash-only marketers: 60% sold on old-crop. 30% of expected 2014-crop is sold via forward contract for harvest delivery.

 

Soybeans

Price action: Extreme price volatility was seen in the soybean market today. The market faced light pressure this morning, but later firmed. Sharp gains around midday were trimmed into the close. Old-crop futures ended around 9 cents higher, with new-crop mostly around 3 cents higher.

Fundamental outlook: The return of bull spreading today signals traders' bout of evening positions has come to a close and focus has returned to tight old-crop supplies. Traders initially reacted to news reports that China has cancelled 10 cargoes of South American soybeans, which raised concern they would soon be doing the same with U.S. shipments due to poor crush margins. But this morning's weekly export sales data didn't reflect that. Instead, sales of 113,500 MT for 2013-14 and 776,900 MT for 2014-15 topped expectations.

But a sharp drop in Gulf soybean basis this morning for immediate delivery raises concerns about demand, which caused traders to trim gains into the close.

Technical outlook: May soybean futures returned above $14.00 and filled yesterday's gap, but the contract trimmed gains into the close and finished below that benchmark. Support is at yesterday's spike low of $13.65 1/2 and resistance begins at $14.00 and extends to last week's high of $14.60.

Hedgers: 25% of expected 2014-crop is sold via forward contract for harvest delivery. 100% sold in the cash market on 2013-crop production.

Cash-only marketers: 25% of expected 2014-crop is sold via forward contract for harvest delivery. 90% priced on old-crop.

 

Wheat

Price action: Wheat futures extended gains in the overnight hours, but the market softened with the start of day trading and ended low-range for the day. SRW wheat ended roughly 9 to 10 cents lower for the day, while HRW wheat finished 10 1/2 to 12 cents lower. HRS wheat posted losses of 10 to 15 1/2 cents in most contracts. Funds sold 7,000 (35 million) wheat contracts today.

Fundamental outlook: Ideas bullish reactions to the turmoil in Ukraine and Russia have been overdone encouraged some mild profit-taking in the wheat market today. But until there is more certainty as to how that situation will play out, downside risk will remain limited. Despite reassurances to the contrary from USDA and Ukraine's ag ministry, traders speculate importers will shift some business to more stable countries.

Much-needed rain in the forecast for the Central and Southern Plains added pressure. Also spurring technical sales was the March contract's blip above $7.00.

Technical outlook: May SRW wheat futures penetrated resistance in the $6.95 area that turned back several rally attempts this summer, but the contract was unable to sustain buying at that level and settled near session lows. Nevertheless, the uptrend remains clearly intact. The December high of $6.79 1/4 is again resistance, followed by today's high of $6.96 1/2.

Hedgers: 50% of expected 2014-crop is sold via forward contract for harvest delivery. 100% sold on 2013-crop.

Cash-only marketers: 90% sold on old-crop. 50% of expected 2014-crop is sold via forward contract for harvest delivery.

 

Cotton

Price action: Cotton futures saw two-sided trade and ended mixed, with nearbys down 11 to 52 points.

Fundamental outlook: May cotton futures briefly popped to its highest level since early 2012 on expectations for continued strong demand. Traders are keeping close track of exports after USDA raised its forecast and lowered carryover in Monday's S&D Report. But as traders digested this morning's weekly export sales data, they began to take some profits out of the market. Weekly sales of 60,000 bales for 2013-14 were down 62% from the previous week, although sales for 2014-15 surprised the market by topping 120,000 bales.

Technical outlook: May cotton futures posted a daily high of 93.75 cents, but posted a low-range close of 91.68 cents. Technicals remain favorable, however, as today's higher-high keeps the uptrend from the November low intact. In fact, the contract would have to violate the 90.00-cent level to spur talk of a near-term high being in the works.

Hedgers: 75% of 2013-crop is sold in the cash market. 25% of expected 2014-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 75% of 2013-crop is sold. 25% of expected 2014-crop production is forward sold for harvest delivery.

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