Crops Analysis (VIP) -- May 6, 2013

May 6, 2013 09:32 AM
 

Corn

Price action: Old-crop corn futures posted a low-range close and finished 20 3/4 to 24 3/4 cents lower, with September down 19 1/2 cents. New-crop futures finished off the daily lows, but still posted sharp losses of 14 to 15 1/4 cents. Funds were sellers of 12,000 contracts (60 million bu.) of corn today.

Fundamental analysis: Futures were pressured today by expectations producers will finally make strong headway with planting this week. A string of three to four days of dry weather is helping to dry out Midwest fields after the recent wet spell, but rains are expected to return by Wednesday night in the western Corn Belt.

Futures were also pressured by lackluster demand. This morning's USDA Weekly Export Inspections Report showed just 6.506 million bu. of corn left the country the week ended May 2, which is below the needed pace to reach USDA's export projection.

Technical analysis: December corn futures gapped sharply lower on the open and extended losses, but closed near the opening level. Near-term boundaries are support at the April low of $5.17 and resistance at the April 30 high of $5.70.

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: Soybean futures faced pressure throughout the day session and ended low-range with losses of 10 1/2 to 18 cents for the day.

Fundamental analysis: Heavy spillover from corn futures pressured the bean market today. And strength in the U.S. dollar index added to the negative tone. Pressure on corn stemmed from what traders perceive as a much-improved weather outlook for planting as precip forecasts have been scaled back. But considering the outlook for below-normal temps that will not quickly dry out soils, more than a few producers are skeptical.

News Cargill will temporarily idle a soy processing plant due to tight supplies and poor processing margins as well as a lackluster export inspections report added pressure.

Technical analysis: November soybean futures posted a downside day of trade but respected near-term support at the psychological $12.00 level. Last week's high of 12.40 1/4 is near-term resistance.

Hedgers: 100% sold on 2012-crop in the cash market. 50% 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 closed mostly 10 to 18 cents lower in Chicago, mostly 20 to 21 cents lower in Kansas City and mostly 11 to 18 cents lower in Minneapolis. Futures at all three exchanges finished low-range.

Fundamental analysis: Wheat futures were pressured by weather today as forecasts call for beneficial rains through the Central and Southern Plains this week, while warmer and drier conditions are in the outlook for the Northern Plains. While it's debatable how much impact the improved weather outlook will have on the HRW crop and on spring wheat planting, it was enough to keep wheat futures under pressure today.

Spillover pressure also played a major role in wheat price action today. Corn futures were sharply lower, while the U.S. dollar posted solid gains.

Technical analysis: After moving to the top of the March 28/April 1 trading boundaries last week, Chicago July wheat futures are threatening to drop into the lower end of the range. Key near-term support lies at $6.87 3/4. If that level is violated, it would open downside risk to the April low at $6.64 3/4.

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 settled 59 to 107 points higher, which was near session highs in all but the lead-month May contract.

Fundamental analysis: Cotton futures were able to shake off pressure from a firmer dollar and heavy selling in grains today. Instead, cotton traders are worried about planting delays and lingering drought in Texas. Plus, traders are anticipating a lower carryover forecast from USDA in Friday morning's Supply & Demand Report. That report will also include the first look at the 2013-14 balance sheet, which is expected to show a further reduction in ending stocks.

Technical analysis: Last week's high at 87.62 cents is key near-term resistance for July cotton futures. A push above that level would open door to an extended price recovery as the contract has already retraced more than 38% of the decline from the March high.

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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