Crops Analysis (VIP) -- October 24, 2013

October 24, 2013 10:04 AM


Price action: Corn futures were slightly weaker today, closing midrange with losses ranging from 1 3/4 to 2 3/4 for the December 2013 through December 2014 contracts. Funds sold 5,000 contracts (25 million bu.) of corn today.

Fundamental outlook: Corn edged higher initially on news export sales topped 1.341 MMT for 2013-14 delivery for the week ended Oct. 3. Additionally, USDA also announced a 210,000-MT corn sale to Mexico for 2014-15. But harvest-related hedge pressure weighed on the market and eventually pressed prices into the negative. Traders took a positive view of reports Gulf basis bids firmed slightly, possibly signaling more export business is in the works.

Technical outlook: December corn posted an inside day versus Wednesday's already narrow range. December futures are compressed in a narrow trading range with $4.50 serving as resistance and $4.32 as support.

Hedgers: 25% of expected 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: Soybean futures favored the upside for much of the day session, but bears took the reins heading into the close and futures settled 1/4 to 3 1/4 cents lower for the day.

Fundamental outlook: Soybean futures enjoyed light buying interest for much of the day thanks to confirmation of solid export demand this morning by USDA's export sales update for the week ended Oct. 3. But the tally was within expectations and somewhat overshadowed by the strong corn sales figure of more than 1.3 MMT. Plus, strong demand is known.

Thus, the front-month contract's inability to move above the 50-day moving average at $13.19 today triggered a round of profit-taking and resulted in a low-range close.

Technical outlook: November soybean futures saw an inside day of trade and settled low-range. Near-term support is at the $13.00 mark, while the 50-day moving average, which intersects around $13.19 and yesterday's high, is resistance.

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

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



Price action: Wheat futures slumped with 2013-crop futures closing near their daily lows. December SRW futures closed down 5 1/4 cents while March and May futures finished 2 3/4 to 4 1/2 cents lower. December through May HRW futures closed 6 to 6 1/2 cents lower. December through July HRS futures finished 4 1/2 to 6 3/4 cents lower.

Fundamental outlook: Wheat futures moved lower on profit-taking and technical-related selling as futures failed to punch through resistance areas. Today's export sales report from USDA showed sales through Oct. 3, the most recent data available, slipped back as prices of U.S. wheat rose. The reporting period ended prior to the slump in the U.S. dollar index prompted by the government shutdown and debt-ceiling deal. Meanwhile, weather forecasts continue to project favorable growing conditions in the Southern Plains for the HRW crop.

Technical outlook: December SRW wheat futures finished low-range again today after failing to penetrate resistance above recent highs at $7.11 1/2. The slump pushed prices through psychological support at $7.00. That contract has stronger support at $6.80 to $6.90. The fall uptrend line also offers support at $6.89.

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 fell 84 to 143 points, with prices posting a lower-third close.

Fundamental outlook: Cotton futures saw further followthrough selling after Wednesday's sharply lower plunge. The negative technical picture kept traders on the sell side of the market. Adding to the pressure was disappointment over the low export sales through Oct. 3 reported by USDA. Just 44,000 RB were sold for 2013-14 (down 52% from the prior four-week average), and a net sales reduction of 4,400 RB was posted for 2014-15.

Adding to the negative tone are weather forecasts that appear favorable for cotton harvest.

Technical outlook: December cotton futures are searching for support following the plunge through support at the June low at 81.72 cents. That serves as resistance. Prices sliced through psychological support at the 80-cent mark and the contract is testing support at the January consolidation area ranging from 79.74 cents down to 77.80 cents.

Hedgers: 50% of expected 2013-crop production is hedged in December cotton futures at 83.87 cents. 50% of expected 2013-crop production is also sold via cash forward contract for harvest delivery.

Cash-only marketers: 50% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

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