Price action: Corn futures closed 3 1/2 to 5 1/4 cents lower in the December through July 2013 contracts, which was in the lower half of today's range but off session lows. Far-deferred futures closed mostly 2 to 3 cents higher.
Fundamental analysis: Buying interest was limited as traders await USDA's October crop reports tomorrow morning, which caused futures to drift lower today. While USDA is expected to lower its crop estimate and 2012-13 carryover projection from last month, traders were hesitant to add long positions in case there's a bearish surprise.
Long wheat/short corn spreading also weighed on the corn market today. Traders have widened that spread by 23 1/2 cents so far this week in pre-report positioning.
Technical analysis: Key near-term boundaries for December corn futures lie at the Sept. 28 low of $7.05 and the Oct. 1 high of $7.68 1/2. A breakout from this range is likely to trigger the next trending move.
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 sharply extended losses in mid-morning trade and posted a low-range close, finishing 12 to 26 3/4 cents lower in November through May contracts. Far-deferred soybeans ended mostly 3 to 5 cents lower. Meal and soyoil futures also most posted sizable losses on the day.
Fundamental analysis: Early pressure was limited by news China bought 120,000 MT of soybeans for 2012-13, as it signals prices have yet to ration use. But selling picked up as traders turned their focus to forecasts for rains in Brazil and tomorrow morning's USDA reports. Traders look for USDA to raise its U.S. crop estimate by around 136 million bu. and for carryover to be increased by around 19 million bu. from last month. While carryover is still expected to be tight, traders felt more comfortable shedding risk ahead of the report -- especially given heightened global economic concerns.
Technical analysis: November beans posted a sharp downside day of trade on the daily chart. The low-range close gives bears momentum heading into tomorrow, although price action should be muted overnight as traders are thought to be positioned for the report. Support is now layered between last week's low of $15.04 and the bottom of the early July gap at $14.78. Resistance starts at yesterday's high of $15.74.
Hedgers: 100% sold on 2012-crop in the cash market for harvest delivery. The Nov. $14.00 put options purchased for 42 3/8 cents on 25% of 2012-crop should be held as a crop insurance hedge.
Cash-only marketers: 75% sold on 2012-crop production for harvest delivery.
Price action: Wheat futures at all three locations favored a firmer tone most of the day and ended mid- to high-range. Chicago and Minneapolis wheat ended mostly 5 1/4 to 6 1/4 cents higher. Kansas City wheat saw slightly higher gains.
Fundamental analysis: Wheat futures benefited from some spread trading with corn today as traders bet on a rise in wheat prices. Adding to this idea are expectations USDA will lower its carryover estimate by 71 million bu. from last month to 627 million bushels. USDA's world wheat production estimate is also expected to be reduced from last month.
Today, Russia's president said officials were not discussing grain export restrictions at a meeting, but the country's exports will nevertheless slow in the months ahead as supplies are dwindling. There are also dryness concerns in Australia, the Black Sea region and the U.S. Plains. Plus, France AgriMer expects the country's 2012-13 wheat stocks to be the tightest on record (since 1999-2000).
Technical analysis: December Chicago wheat futures remain within the extended, choppy range that has bound action since July. Initial support stands at the September low of $8.49 1/4, while near-term resistance is at the September high of $9.31. The contract must move through the July high of $9.53 1/4 to break out of this range.
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 traded in a narrow range today amid low trading volume. Futures ended high-range with gains of 26 to 37 points in most contracts.
Fundamental analysis: Cotton traders focused on readying position for tomorrow morning's USDA reports, which is expected to favor market bulls. Pre-report expectations are for USDA to trim production by 100,000 bales from last month to 17 million bales and for it to knock 300,000 bales off its ending stocks projection, bring it to 5 million bales. Traders also expect USDA to raise its export forecast from 11.8 million bales in September to 12.0 million bales.
But traders were hesitant to add risk because any surprise in USDA's corn or soybean pegs tomorrow could have strong spillover implications. Plus, harvest-related hedge pressure is still weighing on the market, with harvest 21% complete as of Sunday.
Technical analysis: For the December cotton contract, uptrending support drawn off the October lows intersects near 71.77 cents tomorrow. The October high of 72.65 cents is near-term resistance, followed by the September triple-top area of 77.29 cents.
Hedgers: 50% priced on expected 2012-crop production via cash forward contract for harvest delivery.
Cash-only marketers: 50% priced on expected 2012-crop production via forward contract for harvest delivery.