Crops Analysis (VIP) -- November 12, 2013

November 12, 2013 08:40 AM


Price action:
Corn futures softened with the start of daytime trade and posted a low-range close with losses of 2 to 3 1/4 cents.

Fundamental analysis: After unwinding spreads with soybean futures yesterday, traders were back aggressively buying soybean futures today. Losses in corn were extended on a disappointing weekly export inspections tally of 16.701 million bu., as it came in below traders' expectations. Traders had hoped for a stronger shipment total after strong sales in October.

Otherwise, there was little fresh news for the market to digest, which returned focus to spreading with soybeans. Negative outside markets also weighed on corn futures. The U.S. dollar index was slightly firmer and crude oil and gold were sharply lower.

Technical analysis: December corn futures briefly traded above yesterday's high of $4.37 1/4 in overnight trade before selling picked up in daytime trading. The contract needs to return above yesterday's high to renew talk of a near-term low being struck. Slipping below $4.30 tomorrow would have bears targeting the November low of $4.15 1/2.

Hedgers: 25% of 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 25% of expected 2013-crop production is sold via forward contract for harvest delivery.



Price action: After favoring a weaker tone overnight, soybean futures turned higher and extended gains into midday. Light profit-taking was seen into the close, but contracts still posted strong gains of 11 1/4 to 14 3/4 cents.

Fundamental analysis: After unwinding long soybean/short corn spreads yesterday, traders returned to buy soybean futures today on indications of strong demand. Not only did China's Ministry of Commerce raise its November soybean import forecast, USDA also announced the country purchased 116,000 MT of soybeans for 2013-14. A 35,000-MT soyoil sale to an unknown buyer was also announced. Weekly export inspections of 79.697 million bu., also came within traders' lofty expectations.

Key tomorrow will be if traders' focus remains on strong demand expectations or if their focus returns to expectations for record South American crop production.

Technical analysis: January beans saw buying pick up on a return above the $13.00 level, with today's high of $13.19 3/4 serving as initial resistance. Bulls' next upside objective is the June high of $13.37. Support begins at $13.00 and extends to the November low of $12.47.

Hedgers: Get to 100% sold in the cash market on 2013-crop production. We'll manage risk on the board the remainder of the marketing year.

Cash-only marketers: Get to 75% sold on 2013-crop production.



Price action: Wheat futures saw spillover from the corn market today. SRW and HRS futures ended mostly 1 to 3 cents lower, with HRW down 3 to 7 cents.

Fundamental analysis: Concerns the U.S. has lost its competitive edge weighed on wheat futures today. Given indications that demand for corn has strengthened recently, wheat was vulnerable to spillover from corn futures today. This morning's weekly export inspections report showed inspections within expectations of 12.228 million bushels. It will take an uptick in exports to bring buyers back to the wheat pit.

Traders expect this afternoon's crop condition data from USDA to reflect recent moisture improvements across the Plains. Traders look for USDA to boost the percentage of the crop rated "good" to "excellent" from last week.

Technical analysis: December SRW wheat futures posted a low-range close, which raises the risk of followthrough pressure tomorrow. The contract is hovering above support at last week's low of $6.44. Violation of that support tomorrow would suggest the market is headed to a retest of contract-low support of $6.35 1/2.

Hedgers: 75% sold on 2013-crop in the cash market. No 2014-crop sales are advised.

Cash-only marketers: 50% sold on 2013-crop. No 2014-crop sales are advised at this time.



Price action: Cotton futures were choppy today and ended mixed. Nearbys ended 9 to 94 points firmer, with deferreds weaker amid spreading.

Fundamental analysis: Traders are hesitant to add long positions due to warnings a release of China's stockpiles appears imminent. This would curb demand for U.S. cotton after a pickup in sales in October. Traders have to wait until Friday morning for the weekly export sales data to see if China's buying spree is over.

Technical analysis: December cotton futures posted an upside day of trade on the daily chart, but finished off the session high. Near-term boundaries are resistance at last week's high of 78.94 cents and support at the November low of 75.27 cents.

Hedgers: 50% of expected 2013-crop is sold in the cash market.

Cash-only marketers: 50% sold on 2013-crop production.

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