Price action: Corn futures benefited from light short-covering to wrap up the week, and the market ended near session highs with gains of roughly 5 to 7 cents. Nevertheless, futures posted slight losses for the week.
5-day outlook: USDA's Crop Progress and Condition update Monday will likely reflect more deterioration and accelerated development with the corn crop that could encourage light followthrough short-covering to start the week, but then attention will shift to Thursday's Crop Production and Supply & Demand Reports. FSA prevented-plant acreage data will likely not be included in the report, but heat and dryness in recent weeks could cause USDA to lower its production estimate.
30-day outlook: Bulls have struggled to gain any traction since the market has largely discounted the impact of late-season heat and dryness on a late-planted crop. The October Crop Production Report, which will incorporate FSA prevented-plant data, and early harvest results could "surprise" traders as the true impact of a poor start and finish to the growing season in major production regions like Iowa become known.
90-day outlook: Another reason the corn market has struggled to rally is because 2012 illustrated that the corn exporters are sensitive to high prices and the market is still working to rebuild its demand base. There is still a lot of uncertainty as to what prices are needed to encourage more active use.
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: September soybeans ended 14 cents higher today, while the November and January contracts were 1/4 and 1 cent higher, respectively, and farther-deferred futures were weaker. For the week, November beans posted slight gains amid highly volatile trade.
5-day outlook: Weather will remain a focal point for soybean traders next week as much-above-normal temps and limited rainfall is expected across the western Corn Belt, while cooler and wetter conditions are anticipated in the far eastern Corn Belt. USDA's second crop estimate on Thursday will also be key for price action next week. The old adage is that big crops get bigger, but stressful late-season conditions could cause USDA to trim its estimate from last month.
30-day outlook: The recent heat wave has pushed crop maturity and largely eliminated the risk of a killing freeze ending the growing season early. But the rapid crop maturity over the past several weeks also means top-end yield potential has likely been trimmed. If late-season conditions remain stressful, we may have to lower our crop estimate.
90-day outlook: A strong demand base continues to limit the downside in the soybean market. While corn demand was dramatically cut by last summer's runup to record prices, soybean demand declined just modestly. Historically, Chinese demand for U.S. soybeans has been very strong through the first two quarters of the new marketing year as new-crop supplies come available. We expect that to be the case again this year.
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: Wheat futures closed out the week with modest corrective gains. Wheat futures still posted slight losses for the week.
5-day outlook: Wheat will continue to turn to the corn market for price direction. Unless corn finds sustained short-covering interest or gets a bullish report from USDA on Thursday, the upside is limited, and therefore, so is the upside for wheat futures.
30-day outlook: Export demand for U.S. wheat has improved, but traders are still concerned about Black Sea origin supplies being priced below U.S. wheat. Until those concerns are erased by a large purchase of U.S. wheat or a flurry of smaller purchases, export demand won't be strong enough to rally wheat on its own.
90-day outlook: Much of the key HRW wheat areas of the Plains remain gripped with drought, though the severity has declined. Still, with soil moisture conditions across the Plains the best they have been in years, winter wheat seeding should be relatively successful and it's unlikely traders will get concerned with the crop this fall.
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 69 to 101 points higher. But for the week, cotton futures finished slightly lower.
5-day outlook: Much of the price action next week will be determined by preparations for USDA's Crop Production and Supply & Demand Reports on Thursday and then the reaction to that data once its released. Informa Economics reportedly expects USDA to raise its cotton crop estimate by 406,000 bales from August.
30-day outlook: The move into the lower end of the extended, choppy price range triggered an increase in export demand, signaling there's still solid demand under the market. The problem, however, is that demand wanes if prices rise. To trigger sustained buying interest in futures, another source of support must be found.
90-day outlook: The market is eagerly waiting to see what China does with its cotton policy. There is an expectation China will end its government stockpiling program and switch to a farmer-subsidy policy. If that happens, how China deals with its massive stockpiles -- more than 50% of world supplies -- will be key to global prices.
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.