Crops Analysis (VIP) -- March 20, 2014

March 20, 2014 10:11 AM


Price action:
Corn futures ended low-range with losses of 7 3/4 to 9 1/4 cents.

Fundamental outlook: Profit-taking pressure dominated the corn market today, but losses were not enough for futures to break out of their consolidated trading range. Strength in the U.S. dollar index along with spillover pressure from soybeans and especially wheat added pressure. Traders were also discouraged by a combined 10-cent slide in Gulf basis for immediate delivery this morning.

On the other hand, futures' downside remains limited by ongoing unrest in Ukraine as well as increasing talk that a slow thaw could lead to planting delays in the northern U.S. this spring. Today, NOAA noted "incredibly deep frost depth" and remaining snow pack as likely delays to spring planting.

Technical outlook: May corn futures closed at session lows and near the lower half of the market's recent consolidated trading range that stretches from $4.73 1/4 to $5.02 1/2. These prices mark tough support and resistance, respectively.

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.



Price action: May soybean futures ended 2 1/2 cents higher, with the rest of the market ending 3/4 to 5 1/4 cents lower. Meal ended stronger, with soyoil lower amid spreading.

Fundamental outlook: Early gains gave way to profit-taking, with sharp weakness in the wheat market and strength in the dollar adding to the negative tone. Early support came from this morning's weekly export sales data, which showed sales topping expectations and no major old-crop cancellations. Furthermore, exports topped 1.119 MMT, with China as the lead destination. USDA also announced an 120,000-MT new-crop soybean sale to China, taking the country's booking pace above 4.2 MMT to represent a very strong start.

Technical outlook: May beans saw trade above $14.50, but were unable to sustain trade above that level. The contract posted a daily low of $14.22 1/4 and ended in the lower third of the day's range. November soybeans saw an outside day of trade by posting a new-for-the-move high of $11.98 and then falling to $11.80 1/4 before ending mid-range.

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.



Price action: Traders took advantage of yesterday's sharp gains by booking profits in the wheat market today. SRW wheat ended mostly around 11 cents lower, with HRW down 6 1/4 to 9 cents and HRS closing with 4- to 8 3/4-cent losses.

Fundamental outlook: While traders remain on alert regarding political tensions in the Black Sea region, traders signaled they believe enough premium has been built into the market for the time being; they will await more signs as to what impact the situation will have on grain trade before pushing prices higher. That triggered a round of profit-taking, causing traders to ignore a dry near-term forecast for the U.S. Southern Plains and a solid showing from the weekly export sales report.

Given the bullish technical posture, key tomorrow will be if traders continue to take some profits out of the market or return the premium built in recently as a result of unrest in Ukraine and weather concerns in the Southern Plains.

Technical outlook: May SRW wheat futures posted a new-for-the-move high of $7.23 1/2, which also eclipsed the October high, before profit-taking set in. The contract saw trade below the $7.00 level, but ended up closing back above that important psychological mark. The steep uptrend from the January lows remains intact.

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.



Price action:
Cotton futures settled 44 to 1 point lower through the March contract, with most months posting single digit losses. Far deferred contracts posted slight gains.

Fundamental outlook: Cotton traders were generally unimpressed by this morning's weekly cotton export sales data. Sales of 50,800 RB for 2013-14 and 135,900 RB for 2014-15 were decent, but not impressive. Exports of 329,000 RB were up 25% from the week prior and 7% above the four-week average, however.

A general move to book profits across the commodity sector helped give bears an edge, as did strength in the U.S. dollar index.

Technical outlook: May cotton futures posted a downside day of trade, but the market remains well within its uptrending channel. Futures must drop all the way down to the 90.66-cent area to test steep uptrending support tomorrow. Tough resistance is at last week's high of 93.75 cents.

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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