Crops Analysis (VIP) -- March 31, 2014

March 31, 2014 09:59 AM


Price action:
Corn futures faced pressure leading up to USDA's report, but following this release the market firmed to post gains of 9 to 10 1/4 cents through the May 2015 contract, with far deferreds around 6 cents higher. Most contracts posted bullish reversals for the day. Funds added an impressive 20,000 corn contracts (100 million bu.) today.

Fundamental analysis: Traders reduced risk leading up to the reports, but both prospective plantings and grain stocks data came in on the friendly side of pre-report expectations, spurring buying interest. As of March 1, USDA says producers intended to plant 91.691 million acres to corn, which would be down 3.674 million acres from 2013. This was also more than 1 million acres below expectations. Also, traders did a good job anticipating March 1 grain stocks; the figure came in just 93 million bu. below the average pre-report trade guess at 7.006 billion bushels.

A move higher for the wheat markets and old-crop beans added to the positive tone. Nearby contract's ability to close above the $5.00 mark is a bullish technical signal, especially since this roughly coincides with the top of the market's recent consolidated trading range.

Technical analysis: May corn futures posted a bullish reversal on the day. The contract traded down to the bottom of its consolidated trading range but ending well above Friday's high and the just above $5.00, turning it into support. The contract settled within 3/4 cent of resistance at the top of this consolidation range.

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: Traders responded to USDA's report data with aggressive bull spreading. Old-crop contracts finished 9 to 27 1/2 cents higher for the day; September ended a penny higher; and new-crop beans were roughly 2 to 3 cents lower. Funds bought 11,000 bean contracts (55 million bu.) today.

Fundamental analysis: As expected, USDA's data today confirmed tight old-crop supplies and soybean planting intentions a new record. USDA's prospective plantings peg came in even higher than expected at 81.493 million acres, as survey data signals all major production states except Missouri plan to increase bean acres this year. March 1 grain stocks came in just 3 million bu. above expectations at a tight 992 million bushels.

Light support for old-crop contracts also stemmed from today's export inspections report. While inspections of 506,039 MT fell short of expectations, this is still a strong tally considering the U.S. export window would typically be closed by this point.

Technical analysis: May soybean futures posted a bullish reversal for the day and hit a new contract high of $14.66 1/2. This turns the former contract high of $14.60 into support. Resistance is layered in 10-cent increments higher to the $15.00 mark.

November beans tested but respected support at this month's low of $11.64 before rebounding for a high-range close. Resistance is at $12.00.

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: Wheat faced heavy profit-taking pressure this morning, but the market reversed course around 11:00 a.m. CT with the release of USDA's report data.

Fundamental analysis: Early pressure on the wheat market following weekend rain and the forecast for more in some areas of winter wheat country gave traders additional incentive to exit long positions ahead of USDA's reports. But lower-than-expected all wheat and spring wheat planting intentions spurred a reversal in the market. Wheat futures also benefited from a bullish reaction to planting data in the corn market today.

But while wheat futures ended well off session lows with mild gains, the market's recent downtrend remains intact.

Technical analysis: While May SRW wheat futures posted slight gains for the day and ended high-range, some tough obstacles remain for the market to halt its recent slide. Initial resistance stands at $7.00, but the contract must move above resistance drawn off the lower highs since mid-month, which intersects around $7.08 tomorrow.

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 ended mid-range and mixed for the day, with nearbys 6 to 22 points lower and October and later contracts 6 to 14 points higher.

Fundamental analysis: Traders in the cotton market had a limited response to USDA's prospective plantings data that forecast a 694,000-acre increase in cotton plantings this year, largely due to a 600,000-acre increase in Texas. The overall cotton plantings tally came in about as expected at 11.101 million acres.

A bullish response to USDA's grain stocks and planting data in the grain markets also helped cotton settle well off session lows.

Technical analysis: May cotton futures remain within the market's uptrending channel. Steep uptrending support drawn off the November and January lows intersects around 91.77 cents tomorrow. Below that, last week's low of 89.84 cents marks support. Resistance stretches from the 95.00-cent area to the 2014 high of 97.35 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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