Crops Analysis (VIP) -- May 17, 2013

May 17, 2013 09:35 AM
 

Corn

Price action: July corn futures closed 11 1/4 cents higher and September corn was 2 1/4 cents higher, while new-crop contracts finished around 4 cents lower. Old-crop contracts were firmer this week, while new-crop posted weekly losses.

5-day outlook: Corn planting progress should near two-thirds complete in Monday's update. For now, traders' concerns with corn planting progress have eased. If concerns don't rise after an expected wet weekend, new-crop futures are at risk of violating support at the April low and moving the next leg lower.

30-day outlook: Because a portion of the crop has been/will be "mudded in," due to wet conditions, it will be more vulnerable to poorer emergence and potential issues down the road. How the crop recovers from the late start will be monitored closely. But unless there are serious concerns, the price slide in new-crop corn futures could extend into mid-summer.

90-day outlook: Around the third week of July is when much of the corn crop will pollinate across the Corn Belt. After that, weather during grain fill will be critical to determining yield. The extended weather outlook from the National Weather Service calls for above-normal temps over the southern, far eastern and far western Corn Belt through August, while there are "equal chances" for above-, normal and below-normal precip.

Hedgers: 100% sold on 2012-crop in the cash market. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 75% sold on 2012-crop production. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

 

Soybeans

Price action: Old-crop soybean futures finished 18 to 24 cents higher, while new-crop contracts were 9 to 10 cents higher. Futures posted strong weekly gains, with old-crop contracts leading the price advance.

5-day outlook: Tight old-crop supplies will remain a focal point next week. Traders will watch Brazil for any signs of a slowdown in exports prompted by dockworker unions unhappy with the recently passed dock modernization legislation. Any disruption at that country's ports would drive demand to the United States. Meanwhile, today's surge by July futures through the 200-day moving average triggered buy stops. Traders will watch for followthrough strength as the contract has moved into the upper end of the choppy range that has contained prices since last fall. If buying stalls, a period of price weakness would be likely.

30-day outlook: The market seems to believe farmers will get the final portion of the corn crop planted without significant delays and that no major shift in acres from corn to soybeans is in the works. If the weather pattern is wet to end May, however, attitudes could change and revive acreage-shift concerns.

90-day outlook: August weather is the major determinant of eventual soybean yield and the last major unknown once total planted acreage is known. The acreage question will be answered June 28, assuming most of the crop gets planted within the next few weeks. That leaves weather. The National Weather Service's outlook for June through August calls for above-normal temps across the far western, southern and far eastern Corn Belt, while there are equal chances for below-, normal and above-normal temps across the rest of the region. The forecast also calls for "equal chances" of precip across the Corn Belt.

Hedgers: 100% sold on 2012-crop in the cash market. 50o% of expected 2013-crop production is hedged in November soybean futures at $12.19. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 75% sold on 2012-crop production. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

 

Wheat

Price action: Wheat futures faced pressure for most of the day session and ended roughly 4 to 5 cents lower in Chicago, around 7 cents lower in Kansas City and fractionally to 4 cents lower in most Minneapolis contracts.

5-day outlook: Market action this month has signaled a new catalyst is needed to spur buying interest as the market has ignored deteriorating HRW wheat conditions. Until this bullish catalyst arises, wheat will struggle to find buyers.

30-day outlook: The wheat market has recently benefited from improved export demand as the grain is competitively priced globally after a long period otherwise. But a surge in the U.S. dollar calls that back into question. If export demand slips, it could trigger a fresh wave of selling, especially as harvest gets rolling.

90-day outlook: Expectations for a large global wheat crop has acted as the market's "safety blanket" against concerns about a decimated HRW wheat crop and a slow start to spring wheat planting. But a global crop scare could shift attention back to the U.S. wheat crop. Already, there are concerns about dryness in Russia and Australia.

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.

 

Cotton

Price action: Cotton futures saw action on either side of unchanged today and ended high-range with gains of 34 to 61 points for the day. Cotton futures were also little changed for the week as the market continues to consolidate in an increasingly narrow range.

5-day outlook: Cotton futures were choppy this week and more such action is likely ahead as traders weigh expectations for a record-large world cotton stocks against domestic production concerns. Cotton acres are expected to be down sharply from year-ago, planting is off to a slow start and drought is in effect in Texas.

30-day outlook: Strength in the U.S. dollar index could eventually lead to a downside breakout of the market's consolidation range as this could limit export demand going forward. Economic data out of China will also be influential as to export demand as this country is the world's top importer of cotton.

90-day outlook: The state of the U.S. cotton crop will likely be increasingly in focus as the growing season progresses. The most recent outlook from the Climate Prediction Center calls for some drought improvement in the central part of Texas and Oklahoma, but drought is expected to persist or intensify in the western part of the South.

Hedgers: 50% of expected 2013-crop production is hedged in December cotton futures at 83.87 cents. 50% of expected 2013-crop production is also sold via cash forward contract for harvest delivery. 100% sold on old-crop in the cash market.

Cash-only marketers: 85% sold on old-crop. 50% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

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