Price action: Corn futures ended the day mixed, but posted gains for the week. December corn is back testing the October high.
5-day outlook: Corn followed soybeans and wheat futures higher this week, which shifted some attention back to the tight supply situation. Basis improvement this week at the Gulf and across the interior provided a reminder of the tight supply situation, but also hints that demand may have picked up. To build on this week's improvement next week, traders need some fresh demand news.
30-day outlook: A plentiful supply of feed wheat around the globe will continue to limit corn exports, but many traditional corn importers are thought to be short-bought on near-term feed coverage, which could result in an uptick in corn purchases. Export sales this week upticked thanks to Japan returning to the market.
90-day outlook: With 2012-13 carryover projected to be very tight, corn needs to add acres. We project corn acres anywhere from down 2 million to up 1 million from this year as more producers return to a normal corn-soybean rotation. See "Evening Report" for Informa's latest acreage estimates.
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: Profit-taking in soybeans increased as the day progressed. This resulted in futures finishing roughly 10 to 12 cents lower for the day, but slightly above last week's close.
5-day outlook: The close above last week's finish could signal a short-term low is in place, though the low-range close for the day adds uncertainty. The worst of harvest pressure is behind the market and the reality is that supplies are tight -- regardless of reports that harvest was "less bad" than expected.
30-day outlook: But soybeans will need a steady stream of demand news to rally above previous highs. Lacking that, futures will likely chop sideways as recent action has shown end users see sub-$15.00 beans as a value buy.
90-day outlook: Attention will be on what is expected to be a record-large South American bean crop. The crop is off to a decent start, but most of the growing season lies ahead and the region is no stranger to transportation issues. Meanwhile, basis levels in the U.S. will likely rise as supplies tighten, limiting downside risk for futures. The market will also be bidding for acres. Currently, the roughly 2:1 soybean to corn ratio for the May contracts favors corn plantings.
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 pared earlier gains and finished just slightly higher in Chicago, mixed in Kansas City and slightly weaker in Minneapolis. For the week, wheat futures posted modest gains as the market rebounded from early losses.
5-day outlook: With wheat futures holding just above key support and fresh fundamental news likely to be limited, technical trade and outside markets will be key to price action in the wheat market next week. Futures must continue to respect support at the bottom of the extended, sideways range to avoid a technical selloff.
30-day outlook: News Ukraine plans to ban wheat exports starting Nov. 15 was not a surprise. In fact, Russia is expected to follow suit despite repeated denials by Russian officials. As wheat supplies from the Black Sea region tighten, it should open the door for more U.S. wheat export demand, although supplies from France, Argentina and Australia are all priced under current U.S. wheat prices.
90-day outlook: Many areas of the Plains and Midwest have gotten enough rainfall recently to help the winter wheat crop emerge. But subsoil moisture is very short and the long-term weather outlook is not promising. Still, it will be difficult to get traders too concerned with the crop this fall unless conditions are really poor.
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 closed mixed, from 84 points lower to 58 points higher today. After strong gains the first three days this week, futures eased mildly, but still finished sharply higher for the week.
5-day outlook: The "squeeze" in the cotton market appears complete for now, which caps the upside unless there's fresh bullish news. But price action late this week also suggests traders aren't overly eager to pump money into the short side of the market given the tightest certified (deliverable) stocks in 17 years.
30-day outlook: USDA will update its cotton crop estimate in November and December, but barring unforeseen late-season problems with the crop, the updates should consist of little more than fine-tuning. The fundamental focus is shifting to the demand side.
90-day outlook: To spark sustained buying interest in the cotton market, demand must perk up. While China's economy is showing signs of stabilizing, it's hard to imagine China will be more than a value buyer on price dips since the country is holding around 40% of the world's cotton stocks. Still, value buying from China should keep a solid floor of support under the market.
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.