Price action: Corn futures ended just off session highs with gains around 5 cents in all but the front-month contract today, which was 2 1/2 cents lower. Funds added 6,000 long positions (30 million bu.) today.
Fundamental analysis: Confirmation from USDA of crop deterioration yesterday proved an underlying source of support today as traders began to cover short positions in anticipation of bullish figures in USDA's Crop Production and Supply & Demand Reports Thursday. Traders expect USDA to cut both its production estimate and its carryover projection for 2013-14 due to poor end-of-season weather.
Meanwhile, hot conditions in the Midwest continue to stress the crop and rain remains largely absent from the forecast. Nevertheless, the increasing availability of supplies as harvest picks up on early planted fields is pressuring basis levels and limiting buying interest in futures.
Technical analysis: December corn futures continue to chop just above near-term support at the September low of $4.57. Resistance is layered from the psychological $5.00 area to the August high of $5.08 1/4.
Hedgers: 100% sold on 2012-crop in the cash market. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.
Cash-only marketers: 100% sold on old-crop. 25% of expected 2013-crop production is sold via forward contract for harvest delivery.
Price action: Soybean futures closed fractionally weaker to unchanged in the November through July 2014 contracts in mostly corrective trading. Most contracts closed high-range, with November futures down 1 1/2 cents and January futures down 1/2 cent.
Fundamental analysis: Futures shrugged off the decline in crop condition rating issued by USDA on Monday, believing much of the decline has already been factored into prices. Futures set back as a result. Futures also felt some pressure from a widening basis seen in the Gulf and interior points due to the start of harvest in some locations. But the market did gain some support from today's announcement from USDA that 121,000-MT of beans had been sold to an unknown destination.
Technical analysis: November futures probed lower in followthrough profit-taking after yesterday's early morning highs. But support was uncovered at $13.40. Support exists from that price level down to $13.31 1/2, the bottom of the Aug. 26 gap. There is resistance from yesterday's high of $13.84 to $14.09 1/2, the Aug. 27 high.
Hedgers: 50% of expected 2013-crop production is sold via a forward-price cash contract for harvest delivery. 100% sold on 2012-crop in the cash market.
Cash-only marketers: 50% of expected 2013-crop production is sold via a forward-price cash contract for harvest delivery. 100% sold on 2012-crop in the cash market.
Price action: SRW wheat futures finished mostly 3 to 5 cents higher, HRW closed mostly 5 to 6 cents higher and HRS ended mostly 2 to 3 cents higher.
Fundamental analysis: Wheat futures were supported by mild short-covering today as traders started to focus on squaring positions ahead of Thursday's monthly crop reports. While traders are expecting a modest uptick to projected 2013-14 wheat ending stocks, there could be more light pre-report short-covering tomorrow and early Thursday as traders look to lighten their short exposure in case there's a bullish reaction to the corn data since wheat continues to follow the corn market.
Barring a strong rally in corn, the upside is limited to mild corrective buying in wheat as areas of the Plains are getting needed precip ahead of winter wheat planting and amid semi-regular reminders that U.S. wheat is priced above that of our competitors. The latest reminder came via Egypt's purchase of 235,000 MT of Romanian, Russian and Ukrainian wheat just ahead of the close today.
Technical analysis: December SRW wheat futures are holding just above contract-low support at $6.35 1/2. To spark an extended correction, the contract must push above the last reaction high at $6.76 1/2.
Hedgers: 50% of 2013-crop is sold in the cash market. 100% sold on of 2012-crop.
Cash-only marketers: 25% of 2013-crop is sold. 100% sold on 2012-crop.
Price action: Cotton futures closed with a mixed tone. The October through May contracts were 24 to 114 points higher, while far-deferred contracts finished slightly lower.
Fundamental analysis: Cotton futures were supported by short-covering today as the market rebounds from the recent drop into the bottom of the broad, sideways range. Traders attributed the corrective buying to yesterday's crop progress data, which showed the cotton crop continues to run behind the normal pace. But in reality, much of the corrective buying is likely due to traders evening positions ahead of USDA's monthly crop reports on Thursday.
Technical analysis: After stopping just shy of key support at 81.72 cents last week, December cotton futures have strung together three days of corrective gains. A fourth day of gains would suggest the contract has put in a low and an extended correction is in the works.
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. 100% sold on 2012-crop in the cash market.
Cash-only marketers: 50% of expected 2013-crop production is sold via cash forward contract for harvest delivery. 100% sold on 2012-crop.