Price action: New-crop corn futures traded higher through the overnight hours, but quickly lost ground during the day session and closed in the lower end of today's range. September futures finished the day 3 cents higher while December futures closed 6 3/4 cents lower. The March through July 2014 contracts closed down 6 1/2 cents.
Fundamental analysis: Traders initially reacted to disappointing weekend precipitation along with hot and dry forecasts for this week, but weakening basis and a stronger dollar raised questions about export opportunities. Meanwhile, with harvest underway in the South and advancing north into the far southern Corn Belt, reports of strong yields spooked traders. However, export inspections released today came in 5.4 million bu. better than the previous week and above trader expectations.
Technical analysis: December futures filled the gap left Monday Aug. 26, erasing all of the price gains posted last week. The market did find support at the bottom of the gap, however. The $4.90 area once again proved resistance as prices probed that area in early trading and then collapsed. It takes a close above $4.90 to take the bearish cast off the chart.
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 finished 9 3/4 to 30 1/4 cents higher through the August 2014 contract, though that was in the lower portion of today's range.
Fundamental analysis: Bulls dominated price action today on support from the weather as weekend rainfall was extremely scattered and forecasts are hot and dry this week, especially in the western Corn Belt. For a crop that's trying to fill pods, that's not the recipe for building bigger yields. Therefore, traders built some weather premium into the market. But the inability to push through last week's highs and corn's drop during the day session triggered a round of intra-day profit-taking in the soybean market.
Funds purchased a net 9,000 contracts (45 million bu.) of soybeans today, adding to their building long position in the market.
Technical analysis: Key near-term resistance for November soybean futures stands at last week's high of $14.09 1/2, followed by the contract high just 1/4 cent above that level. A push to a new contract high could trigger a fresh wave of chart-based buying. To the downside, key support lies at the bottom of the Aug. 26 gap at $13.31 1/2. Filling that gap would suggest a short-term technical top is in place.
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: A number of wheat contracts for all three flavors posted bearish reversals today. Futures settled low-range, with SRW around 6 cents lower, HRW mostly 4 cents lower and HRS 16 1/2 cents lower in the front-month contract with other contracts 5 1/4 to 7 3/4 cents lower.
Fundamental analysis: The wheat market followed corn's cue today, gapping higher for the overnight session but softening amid profit-taking during day trade. Action in the market will likely remain tied to that of corn as wheat is currently a follower market. Strength in the U.S. dollar index today stirred concerns about the competitiveness of U.S. wheat on the global export market. News Egypt bought 355,000 MT of Russian, Ukrainian and Romanian wheat over the weekend added to such ideas.
Countering this, however, was yet another strong showing in the Weekly Export Inspections Report. Inspections of 36.410 million bu. rose more than 5 million bu. from the week prior and topped expectations. Inspections for 2013-14 are running 31.8% ahead of year-ago; USDA's export forecast for this marketing year is for a 9.2% increase from the previous marketing year.
Technical analysis: The bearish reversal for December SRW wheat futures should give bears the technical advantage to start the overnight session. They will target the contract low of $6.35 1/2. On a corrective bounce, bulls would eye the August double-top high of $6.79 3/4.
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: October and December cotton futures closed 88 and 78 points lower, respectively, while the March through October 2014 contracts ended with losses of 21 to 47 points.
Fundamental analysis: After back-to-back weeks of improvements in USDA's weekly cotton condition update, traders exited long positions ahead of today's 3:00 p.m. CT update. Strength in the U.S. dollar index added incentive for traders to exit long positions.
On the other hand, fresh selling interest was limited by better-than-expected economic data out of China, which could translate to improved export demand. However, traders are waiting to see how China handles its cotton stockpiling program and what it will do with the massive amount of cotton supplies the government has stockpiled.
Technical analysis: December cotton futures saw an inside day of trade, leaving support at the June low of 81.72 cents, while initial resistance is at the July high of 87.11 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. 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.