Price action: Corn futures closed mostly around 3 to 7 cents higher and near session highs.
Fundamental analysis: Much of the support for corn futures today came from pressure on the U.S. dollar. With the greenback nearing the September lows, there's a little more interest in the long side of the corn market. For corn to actively build on today's gains, however, some bullish demand news is likely needed. That could either come via an overnight purchase or a bullish surprise in the weekly export sales data tomorrow morning.
Aside from the support from the weaker dollar, corn was also supported by gains in the soybean market. With beans still in a downtrend, however, there are no signs that market is ready to lead a sustained rally -- unless China resurfaces as a strong buyer.
Technical analysis: December corn futures are at a key juncture. The Sept. 28 low at $7.05 looks like a bottom, but if the contract finishes poorly this week, that level is likely to be tested. However, a strong finish to the week would point to a near-term test of the Oct. 11 high at $7.76. A breakout from those boundaries would likely 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 strengthened into the close to finish 15 1/2 cents higher in the November through March contracts. Deferred months posted slightly lighter gains. Meal and soyoil saw spillover strength.
Fundamental analysis: Price action in the bean pit was rather lackluster much of the day, but late-session buying -- tied to weakness in the U.S. dollar index and recognition of the tight supply situation -- kicked in to produce a strong close. There is some talk that traders were covering short positions ahead of tomorrow morning's weekly export sales data, as it's expected to show sales above last week's pace -- which if realized, would be well above what's needed to reach USDA's export projection.
The U.S. dollar index moved to its lowest level in about a month amid positive signs in the euro-zone and a surge in U.S. housing starts. The Continuous Commodity Index posted strong daily gains to advance its recovery from Monday's reaction low.
Technical analysis: November soybean futures tested support at Monday's low of $14.85 3/4 before returning above the $15.00 mark, which has served as a pivot point so far this week. But futures continue in the downtrending channel established from the September high and need closes above last week's high to $15.74 to suggest a near-term low is in the works.
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 enjoyed gains most of the day and rallied into the close to finish 3 to 8 1/2 cents higher in Chicago, roughly 8 to 11 cents higher in Kansas City and mostly 8 to 15 cents higher in Minneapolis.
Fundamental analysis: A late surge in the soybean market helped wheat to rally into the close. The market had enjoyed gains most of the day, thanks to sharp weakness in the U.S. dollar index and ideas demand for U.S. wheat will soon improve as global wheat stocks shrink.
But buying interest was generally limited to short-covering as the market has recently done some technical damage and recent rains have improved crop prospects in the U.S. Plains, the Former Soviet Union and Australia.
Technical analysis: December Chicago wheat futures nearly matched yesterday's price action, signaling the contract is settling into a sideways to gradually lower pattern. Monday's low of $8.40 1/4 is near-term support, while last week's high of $8.94 is resistance.
Hedgers: 75% cash sold on 2012-crop in the cash market.
Cash-only marketers: 75% of 2012-crop production is sold.
Price action: December cotton futures finished their 300-point daily trading limit higher, while deferred months ended 100 to 140 points higher.
Fundamental analysis: The sharp extension of yesterday's rally in December cotton futures was again attributed to certified (deliverable) cotton stocks falling to 17-year lows. This supply squeeze, while it may be very strong, will be short-lived, however, as new-crop supplies will become more readily available. The cash market won't fully participate in the run-up in futures as even low-quality cotton will be used in some capacity.
Sharp weakness in the U.S. dollar index and generally improved risk appetite added to the positive tone as traders readied for USDA's Weekly Export Sales Report tomorrow.
Technical analysis: December cotton futures closed limit up at 77.86 cents, which is a four-month high. Followthrough buying would have bulls working to close the May 11 downside gap at 79.37 cents. Initial support is at old resistance of 77.49 cents, although consecutive higher closes above that level are needed to turn it into solid support.
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.