Crops Analysis (VIP) -- March 15, 2013

March 15, 2013 09:52 AM


Price action: Corn futures ended the day 1/2 to 2 3/4 cents higher and closed higher for the week. May corn ended the week 13 1/2 cents higher than last week and December corn posted weekly gains of 13 1/2 cents.

5-day outlook: Followthrough buying next week could be hard to come by, especially for old-crop futures, as the market continues to get indications that end-users are searching for alternatives to high-priced corn. However, China has been a noted buyer of new-crop corn recently, which is helping to keep new-crop futures supported.

30-day outlook: Focus the next couple of weeks will continue to shift toward the new-crop supply situation, especially as traders ready for the March 28 Prospective Plantings Report. A more active weather pattern is leading to expectations yields will recover this year.

90-day outlook: Because of the larger drought footprint across the western Corn Belt compared to last year at this time, prices will likely be more volatile this growing season as it will take timely rains throughout the growing season to build yields.

Hedgers: 100% sold on 2012-crop in the cash market. No 2013-crop sales advised yet.

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




Price action: Soybean futures ended 5 1/4 to 9 1/2 cents lower through the August contract, September soybeans closed steady and new-crop contracts were 1 1/4 to 6 higher today. For the week, soybean futures posted losses, with old-crop contracts leading the decline amid bull spread unwinding.

5-day outlook: Price action this week signals a short-term top is in place for old-crop futures and that traders feel the U.S. export season is quickly coming to an end. As a result, old-crop soybean futures could face more near-term price pressure unless there are extended shipping delays out of Brazil.

30-day outlook: Brazilian port workers were planning a one-day strike for March 19, but that has been pushed back a week in hopes there will be progress on talks with the Brazilian government regarding the privatization of ports. While this would suggest a major work stoppage is not likely, union leaders say they could enact an extended strike if their concerns aren't addressed.

90-day outlook: The new-crop soybean:corn price ratio has narrowed recently, but there's some talk corn acreage may not be as great as some are anticipating, while soybean plantings may be higher. Weather may also play a role in some planting decisions as it appears conditions will be cool and wet through April.

Technical analysis: November soybean futures spent most of the day pivoting around support at yesterday's low of $12.56. Important support lies at the February low of $12.47 1/4, with initial resistance at last week's high of $12.82.

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 choppy trade today and ended likewise, with Chicago wheat slightly higher in most contracts, while Kansas City and Minneapolis wheat were slightly lower in most contracts. Wheat futures posted corrective gains for the week.

5-day outlook: Recent signs that U.S. wheat is attracting increased demand played a big role in his week's recovery. Whether the corrective recovery continues will be dependent upon a steady stream of demand news. Otherwise, the market will be at risk of fresh selling.

30-day outlook: Weekly winter wheat condition reports will start up again on April 1, giving traders a better idea of whether drought through the winter months have taken a toll on the crop or if recent precip has given the crop a boost. Recent state condition reports signal there has been modest improvement, but timely rains will be needed this spring.

90-day outlook: Drought remains in effect across most of HRW wheat country and most extended forecasts call for above-normal temps this spring and into early summer. However, some forecasters have noted a more active weather pattern of late.

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: Nearby cotton futures enjoyed strong followthrough buying today, with May and July futures up 171 and 132 points, respectively. Most deferred months settling slightly higher. For the week, all contracts posted strong gains.

5-day outlook: Ongoing demand despite high prices helped cotton futures sharply extend their price rally this week. Traders may exercise a bit more caution next week, however, as they gauge whether higher prices are sustainable.

30-day outlook: China is reportedly expected to issue around an extra 800,000 MT of cotton import quotas in April after the government completes its stockpiling program at the end of this month. Since domestic Chinese supplies are tight, demand for U.S. cotton could stay strong longer than anticipated. As long as export demand is strong, futures will be supported.

90-day outlook: The consensus is that cotton planted acres will decline notably for 2013-14. Once traders get planting intentions in USDA's Prospective Plantings Report on March 28, they will have a much better idea of just how many acres cotton will lose this year.

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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