Price action: Corn futures faced end-of-the-week selling to finish near week-ago levels and back near the bottom of the month-long consolidation range.
5-day outlook: Strength in the U.S. dollar index weighed on the commodity sector today. Confirmation of a near-term low in the dollar by followhrough buying next week would open fresh downside risk for corn futures. Traders' focus will also be on evening positions ahead of the November USDA reports. Private crop estimates released this week reveal expectations that USDA will raise its corn production estimate slightly. Given slow export demand, expectations carryover will rise could also put bulls at a disadvantage next week.
30-day outlook: Overall downside risk in the corn market should limited by tight supplies. While demand has softened, the national average corn basis continues to firm to reflect the tight supply situation. But range-bound trade will continue unless demand surprisingly improves.
90-day outlook: With 2012-13 carryover projected to be tight, corn needs to add acres. But adding more than 1 million compared to last season could be difficult as farmers were disappointed by corn-on-corn yields this year and some would prefer to get crop rotations back in order.
Hedgers: 100% sold on 2012-crop in the cash market -- 90% for harvest delivery; 10% for March 2013 delivery. Also, Dec. $6.50 put options, which were purchased on 40% of 2012-crop for 31 1/2 cents, are held as a crop insurance hedge.
Cash-only marketers: 75% sold on 2012-crop -- 50% for harvest delivery; 10% for March 2013 delivery; and 15% for May 2013 delivery.
Price action: Soybean futures came under heavy pressure today, finishing with losses in the teens to 30-plus cents and on weekly lows. For the week, soybean closed with losses that were about the same as today's declines.
5-day outlook: Rains are forecast for some of the driest areas of Brazil over the next week, which could further pressure the market if they develop. Traders are also expecting a bigger crop estimate from USDA next Friday, which is likely to limit buying interest and could put more pressure on futures.
30-day outlook: Planting delays in Brazil and Argentina are getting a lot of attention because the world needs South American supplies following a short 2011-12 South American crop and a "small" U.S. crop this year. Given the wide planting window in Argentina and Brazil, conditions would have to be very poor for a long time for the soybean crop to not fully get planted. In fact, soybeans may pick up some intended corn acres if unfavorable weather persists past mid-November.
90-day outlook: While we expect soybean plantings to be fully completed, yields could be negatively impacted if unfavorable weather persists. Some private forecasters have already started to lower their South American production forecasts, although production is still expected to be record-large.
Hedgers: 100% sold on 2012-crop in the cash market. No futures/options positions at this time. No 2013-crop sales advised yet.
Cash-only marketers: 75% sold on 2012-crop production for harvest delivery.
Price action: Wheat futures saw another choppy week of trade and finished near steady to marginally higher for the week. Today, Chicago wheat posted slight losses, Kansas City saw slight gains and Minneapolis wheat ended narrowly mixed.
5-day outlook: Traders will have reports to process and prepare for next week. First up is USDA's Crop Progress and Condition Report. This week, traders were surprised by a low condition rating to start the year due to dryness across much of the Plains. Little improvement is expected on Monday. Then traders will ready for the Supply & Demand Report Friday, though the market's reaction will likely be heavily influenced by how the corn market reacts to the Crop Production Report. Initial signs indicate it may favor bears.
30-day outlook: Wheat futures have chopped sideways to lower since July. This will likely remain the trend until the market sees signs tightening global wheat stocks have translated to improved demand for U.S. wheat. The U.S. has been passed over again and again as it is not competitively priced.
90-day outlook: The U.S. winter wheat crop is off to a fragile start in dry soils. Thus, the condition of soils as the crop nears the time for it to come out of dormancy will garner more attention, especially if snow cover this winter is again light.
Hedgers: 75% cash sold on 2012-crop in the cash market.
Cash-only marketers: 75% of 2012-crop production is sold.
Price action: Cotton futures faced pressure mid-week and saw just light short-covering thereafter. Most contracts ended with slight losses for the day and for the week.
5-day outlook: The cotton market will likely trend sideways to lower next week as the export sales report will probably be disappointing. It will reflect demand the week of the short-lived tight certified stock-inspired rally. Traders will also work to ready positions for Friday's USDA reports. Informa Economics reportedly says it expects USDA to lower its cotton production estimate slightly, but bearish corn or soybean numbers would likely overshadow such news.
30-day outlook: While upside potential is likely capped by plentiful supplies and generally unimpressive demand, downside risk is also limited to the June contract lows as China is expected to continue to buy any price breaks, especially considering recent signs that the country's economy appears to be stabilizing. Prices are at levels that have attracted export demand in the past.
90-day outlook: Some buying interest may return to cotton next quarter as cotton prices will need to compete with beans for acres. As this occurs, attention will also shift more so to the coming growing season and the need for rain in the South. Drought has maintained its grip on this region and the extended forecast is not favorable for relief.
Hedgers: 50% priced on expected 2012-crop production via cash forward contract for harvest delivery. A breakout from that range is needed to spark a trending move.
Cash-only marketers: 50% priced on expected 2012-crop production via forward contract for harvest delivery.