Crops Analysis (VIP) -- September 26, 2013

September 26, 2013 09:40 AM
 

Corn

Price action: Corn futures were choppy today and firmed into the close to finish mostly 2 cents higher.

Fundamental analysis: Much of the support in the corn market came on spillover from wheat futures as well as spread unwinding with soybeans. Additionally, this morning's weekly export sales report reflected prices are stimulating a pickup in demand, with sales of 640,100 MT for the current marketing year coming in above traders' expectations.

But ongoing harvest progress and reports of 200-plus bu. per acre yields in the eastern Corn Belt limited buying. Interior basis levels have softened sharply on the availability of new-crop supplies.

Tomorrow, traders' will put more focus on evening positions ahead of Monday's key Grain Stocks Report. Traders look for the report to set 2012-13 carryover near 688 million bushels.

Technical analysis: December corn futures so far this week have managed only a 9 3/4-cent trading range, but posted a fresh weekly high close. The contract has a lot of work ahead in order to signal a near-term low has been posted. The first clue would be a close above $4.70. Support lies at the August low of $4.45 3/4.

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.

 

Soybeans

Price action: Soybean futures faced pressure for most of the session and the market ended 5 to 8 1/4 cents lower through the August 2014 contract today. Soymeal and soyoil posted slight losses for the day.

Fundamental analysis: Reports of better-than-expected yields on early harvested beans weighed on the market today. Harvest pressure will likely remain a weight on basis and futures until it passes halfway complete. But the impact of new supplies coming available was blunted by some positive export demand news today.

For one, weekly export sales of nearly 2.817 MMT topped expectations and the tally was the highest since Jan. 4, 1990. Steady to firmer Gulf basis today signals more export demand news may be on the horizon. Also limiting selling was news of poor demand at China's weekly auction of state reserves, despite lower prices.

Technical analysis: November soybeans saw an inside day of trade and ended mid-range, leaving support at the bottom of its recent consolidation range at $13.05 1/4, while near-term resistance is at the June high of $13.33.

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.

 

Wheat

Price action: Wheat futures stumbled slightly at the open but then gained strength through today's session, finishing near the day's highs. December SRW wheat futures closed up 7 3/4 cents, December HRW finished 9 cents higher and December HRS closed up 6 1/4 cents.

Fundamental analysis: Wheat saw a brief bout of profit-taking at the open of pit trading on thoughts concerns about losses to the Argentine wheat crop due to frost were overdone. But futures soon trimmed those losses and moved higher as traders responded to more positive export news.

USDA reported weekly export sales totaled 620,200 MT, which met traders' expectations. In addition, traders noted total exports for the week ending Sept. 19 of 1.029 MMT marked the first time since 2007 that exports have topped 1 MMT for two consecutive weeks. The trade shrugged off reports the International Grains Council increased its forecast of 2013-14 global wheat production by 2 MMT, raising its total to 693 MMT.

Technical analysis: December SRW moved higher and closed just under resistance at the August high of $6.79 3/4. Closing above that resistance would confirm a double-saucer bottom and project a move to the $7.17 area, which coincides with a small gap at $7.13 1/2. However, resistance lies at $6.80 and $7.05 3/4 on the way to reaching that possible chart objective. The December SRW contract now has support at $6.60.

Hedgers: 50% of 2013-crop is sold in the cash market.

Cash-only marketers: 25% of 2013-crop is sold.

 

Cotton

Price action: Cotton futures edged higher through the trading day and closed near the highs of the day. Futures finished about 40 to 86 points higher.

Fundamental analysis: Traders lifted futures on continuing concerns over the quality of the Texas cotton crop, which is forecast to receive widespread rain this weekend. Quality concerns also plague the southeastern crop. Traders shrugged off today's disappointing export sales report, which suggests some resistance to recent price gains.

Technical analysis: December cotton futures continue to trend higher in a shallow uptrend line off the Sept. 5 low. The contract is testing resistance at last week's high of 85.78 cents. If that is taken out, the next upside objective would be the May high of 87.25 cents. Support exists at the 84.00-cent mark.

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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