Crops Analysis (VIP) -- March 19, 2014

March 19, 2014 10:07 AM
 

Corn

Price action:
Corn futures ended 1 to 1 3/4 cents higher through the May contract, with futures not straying too far from unchanged throughout the session.

Fundamental outlook: Corn was mixed in overnight trade and saw limited spillover from strong gains in the wheat and soybean markets. Traders were hesitant to aggressively extend long positions as they are fearful higher prices will trim demand. As a result, all eyes will be on tomorrow's weekly export sales data for a snapshot on export interest. Meanwhile, an uptick in domestic ethanol production strongly suggests prices are not curtailing ethanol processors.

Trader are also keeping a close eye on political unrest in the Black Sea region, as heightened tensions could eventually lead to increased U.S. export business.

Technical outlook: May corn futures posted a slight upside day of trade on the daily chart, but remained within the boundaries of the two-week consolidation range. Near-term resistance is at the March high of $5.02 1/2 and support is at the March 11 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: Bull spreading was the dominant factor in the bean market today, with old-crop futures ending 10 3/4 to 15 cents higher and new-crop futures up mostly around 6 cents. Meal was stronger and soyoil ended weaker amid spreading.

Fundamental outlook: Concerns about tight old-crop supplies kept traders interested in adding premium into old-crop futures. Traders are more comfortable adding to long positions heading into tomorrow's weekly export sales data, as previous reports have shown only limited cancellations of old-crop soybeans. Ongoing shipping delays in South America are also supportive, as these are keeping the U.S. export window open longer than usual.

Technical outlook: May soybean futures posted a strong upside day of trade on the daily chart, but finished mid-range. Back-to-back closes above the $14.00 level signal a near-term low has been posted, making bulls' next target the March high of $14.60. November soybean futures also posted an upside day of trade on the daily chart and a high-range close. Bulls need a close above the March high of $11.97 1/4 to reopen upside potential to the August high of $12.35, with support at Monday's low of $11.68.

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 improved as the day progressed and futures ended high-range with gains ranging from 19 to 25 cents across all three flavors.

Fundamental outlook: Wheat traders returned to the market with an eye toward bargain buying today, renewing the rally and pushing a number of SRW wheat contracts through the tough $7.00 resistance level, triggering buy stops. Fundamental support came from dry, windy conditions across the Southern Plains, with stories and pictures of windstorms in the region reminding of ongoing winter wheat crop deterioration.

Meanwhile, traders continue to believe unrest in Ukraine will result in increased business for the U.S. Plus, the situation is thought to be slashing spring grain sowing for the 2014 crop.

Spillover from the soybean market adds to the positive tone.

Technical outlook: May SRW wheat futures surged through resistance at $7.00 and settled well above this level, turning it into support. Bulls' initial target is the $7.22 1/2 area, which capped rallies in July and October.

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 ended 21 to 31 points lower through the May 2015 contract, with far-deferred futures posting slightly lighter losses.

Fundamental outlook: Cotton futures opened firmer, but early gains were met with light profit-taking pressure. Strength in the dollar index added to the slightly negative tone. Otherwise, there was little fresh news for the market to digest. Traders will get some guidance tomorrow morning from the weekly export sales data, which will direct early price action.

Technical outlook: May cotton futures saw limited trade above the 93.00-cent level, but once again settled below this level. Futures continue in the boundaries of the uptrend, which currently marks support around 91.00-cents. Last week's high of 93.75 cents is initial resistance.

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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