Crops Analysis (VIP) --March 22, 2013

March 22, 2013 10:31 AM
 

Corn

Price action: Corn futures faced profit-taking pressure today and ended 6 3/4 to 8 3/4 cents lower in old-crop futures and roughly 1 to 3 cents lower in new-crop.

5-day outlook: Action next week will center on preparing for and reacting to USDA's Prospective Plantings and Quarterly Grain Stocks Report. Informa Economics reportedly expects USDA to peg corn plantings at 97.753 million acres for 2013, which would be up 598,000 acres from last year and would be 1.2 million acres above its projection revealed at the Ag Outlook Forum last month.

30-day outlook: Extended forecasts point to better growing conditions, but better is not the same thing as good. Soils are dry and precip -- while necessary -- would delay planting, making it more difficult to reach lofty acreage projections.

90-day outlook: Rains will be key again this growing season as the three-month outlook calls for above-temps across major corn producing regions. Timely rains will be crucial throughout the growing season. Meanwhile, very tight old-crop supplies will likely continue to be rationed via the cash market.

Hedgers: 100% sold on 2012-crop in the cash market. No 2013-crop sales advised yet.

Cash-only marketers: 75% sold on 2012-crop, including 15% for May 2013 delivery. No 2013-crop sales recommended yet.

 

Soybeans

Price action: Traders booked profits in the soybean market ahead of the weekend and futures ended 7 1/2 to 11 1/2 cents lower. For the week, old-crop finished mildly higher while new-crop beans finished near steady with last week's close.

5-day outlook: Attention next week will be on USDA's Quarterly Grain Stocks and Prospective Plantings Reports from USDA on Thursday. In January, corn held a huge economic advantage over beans in the battle for Midwest acres, but that has since diminished. Most expect an increase in bean acres from 2012; the question is how much?

30-day outlook: Shipping delays in Brazil have kept the U.S. export window open longer than normal, but eventually these supplies will come available. Key will be whether importers like China can afford to wait for South America to sort out its shipping issues.

90-day outlook: Focus will shift even more to the U.S. production season. While the extended weather forecast points to better (not good) growing conditions for the western Corn Belt, it also points to planting season delays. Timely rains will be key.

Hedgers: 100% sold on 2012-crop in the cash market. No futures/options positions at this time. No 2013-crop sales advised yet.

Cash-only marketers: 75% sold on 2012-crop production for harvest delivery. No 2013-crop sales advised yet.

 

Wheat

Price action: Wheat futures faced pressure most of the day, but the market rebounded into the close to finish roughly 1 to 2 cents higher in Chicago and Kansas City and around 3 to 5 cents higher in Minneapolis. Chicago wheat futures posted slight gains for the week.

5-day outlook: Wheat futures continued their recovery from the March lows this week, but the market needs fresh demand news to remain pointed higher. Export sales the week ended March 14 fell short of expectations, raising concerns prices may have risen too far, especially when one takes into account recent dollar strength.

30-day outlook: The 30-day forecast calls for above-normal temps for the bulk of the Central and Southern Plains, which is concerning for the greening crop there as drought maintains its grip on the region. This should limit wheat's downside potential.

90-day outlook: The 90-day forecast is also unfavorable as it calls for above-normal temps for winter wheat country and below-normal precip for much of Texas. This should continue to limit wheat's downside. But the market's upside is also likely limited as global supplies are expected to remain ample.

Hedgers: 75% sold on 2012-crop in the cash market. No 2013-crop sales advised yet.

Cash-only marketers: 75% of 2012-crop is sold. No 2013-crop sales advised yet.

 

Cotton

Price action: Cotton futures saw volatile trade this week, surging the first part of the week and then falling on profit-taking the latter half. Futures ended with sharp losses for the week and 88 to 152 points lower for the day.

5-day outlook: Next week, traders will have planted acreage projections from USDA to digest. Most expect a major decline from 2012 to plantings in the 10-million-acre ballpark. Today, Informa Economics reportedly forecast cotton plantings of 10.367 million acres.

30-day outlook: While expectations for much smaller acreage in 2013 will keep a floor under cotton prices, recent news that India and China will sell government reserve stocks signals a slowdown in cotton buying is likely and with it, a downside correction for futures.

90-day outlook: With smaller acres planted to cotton, the weather will take on added importance. The drought footprint has improved somewhat, but the vast majority of Texas is still experiencing some form of drought. And extended forecasts are unfavorable for relief.

Hedgers: 100% sold on old-crop in the cash market. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 85% sold on old-crop. 25% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

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