Price action: Corn futures faced pressure for much of the day, but rebounded late to finish narrowly mixed.
Fundamental analysis: Given a lack of bullish news today, corn futures were pressured by heavy spillover from the soybean and wheat markets and macro-economic uncertainty. But with harvest surging past the halfway point and given the tight supply situation, selling interest proved to be light. Bullish fundamentals limit the downside, but building macro-economic concerns are likely to also limit the upside, pointing to choppy near-term trade.
Corn traders continue to closely monitor end-user buying to see if there are signs of increased demand following the recent, sharp price break. While South Korea was an active buyer last week ahead of USDA's Quarterly Grain Stocks Report, buying interest following the report has been muted, suggesting most end-users are waiting to see if prices will slide further.
Technical analysis: December corn futures must close above the downtrend from the late-August high and Monday's high at $7.68 1/2 to signal a potential short-term low. The trendline intersects around $7.55 3/4 tomorrow. The Sept. 28 low at $7.05 is key near-term support.
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 faced stepped-up liquidation pressure, with the November through August contracts posting double-digit losses. Nearby futures ended 27 to 29 3/4 cents lower. Meal and soyoil saw sharp spillover pressure.
Fundamental analysis: Yesterday's crop progress report showed 41% of the nation's soybean crop was harvested as of Sunday, which signals that hedge-related pressure will likely continue this week. This, combined with a lack of fresh news as China is on vacation, triggered stepped-up liquidation pressure today. Gulf soybean basis was 3 to 7 cents lower for nearby delivery today, reflecting an adequate supply situation -- at least for now.
Recent rains in South America are also encouraging producers to begin planting soybeans, although more rain is needed to erase the drought. But an increase in acreage there has traders anticipating more plentiful supplies next year.
Technical analysis: November soybean futures hit sell stops on the move through the August low of $15.55 1/4 and then the July 25 low of $15.36. Next support is the halfway point of the rally from the June low to the September high, which lies near $15.17. Violation of this support would have bears targeting the 62% retracement level, which is near the psychological $14.50 mark.
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 faced pressure throughout the day, but they did move off their lows into the close. Losses ranged from 10 1/2 to 14 3/4 cents in nearby contracts.
Fundamental analysis: Spillover from soybeans along with investor risk aversion encouraged more selling pressure in the wheat market today. Plus yesterday's Crop Progress Report confirmed that recent rain has sped winter wheat planting in the Southern Plains, though northern regions of winter wheat country remain dry and well behind schedule.
But wheat's downside remains limited by ongoing concern about tightening Black Sea supplies. Ukraine has already exported 65% of the 4 million metric tons (MT) the government and exporters agreed to cap wheat exports at last month. Adding to such concerns is news Russia hopes to export 500,000 MT of government intervention wheat stocks to Siberia and eastern parts of the country to cool domestic prices.
Technical analysis: December Chicago wheat futures remain within their extended, choppy trading range, the perimeters of which are last week's low of $8.49 1/4 and the 2012 high of $9.53 1/4. Near-term resistance is at the September high of $9.31.
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 saw two-sided trade today, but the market ended high-range with gains of 4 to 65 points through the October 2013 contract.
Fundamental analysis: With China celebrating a holiday this week, traders do not anticipate much demand news. This limited buying interest to short-covering amid dollar weakness today. Plus, the International Cotton Advisory Committee (ICAC) warned it expects 2012-13 cotton imports of just 2.5 million metric tons (MMT) -- less than half the record amount sold in 2011-12. As a result, ICAC expects international cotton prices to decline in 2012-13.
Helping to somewhat offset this are expectations for global cotton acreage to decline this marketing year due to tepid demand and more fiscally attractive alternative crops. Morgan Stanley says it expects global cotton acreage to decline by 7% in the 2012-13 marketing year.
Technical analysis: December cotton futures chopped around yesterday's close and ended high-range. Near-term resistance is the Sept. 12 low of 72.75 cents, followed by the August high of 77.49 cents. Initial support is at yesterday's low of 70.22.
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.