Crops Analysis (VIP) --March 28, 2013

March 28, 2013 09:57 AM
 

Corn

Price action: Corn futures plummeted on the release of USDA's highly bearish Quarterly Grain Stocks Report. Old-crop corn ended their 40-cent limit lower, while new-crop corn posted losses mostly in the 30s. Futures had been working on weekly gains, but today's action erased those gains and then some.

5-day outlook: USDA data showed much heavier grain stocks than anticipated. This sets the stage for more "price discovery" moving forward as traders search for a price that attracts demand. Pressure on new-crop futures should be limited by expectations for near steady plantings relative to last year.

30-day outlook: Today's stocks report ups the odds of a major corn carryover increase in the April 10 Supply & Demand Report. And any increase to 2012-13 ending stocks will eventually mean more of a supply "cushion" for 2013-14.

90-day outlook: Odds of a weather scare are high for the 2013 growing season in light of the drought still in effect for some areas of the western Midwest and a cold, wet start to spring. Timely rains will be needed throughout the summer, along with more moderate temps.

Hedgers: 100% sold on 2012-crop in the cash market. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 75% sold on 2012-crop production. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

 

Soybeans

Price action: Soybean futures ended 38 3/4 to 49 cents lower through the August contact, September futures were 30 1/4 cents lower and new-crop contracts were around 26 to 28 cents lower today. Today's sharp losses resulted in sharp declines for the week.

5-day outlook: USDA's report data was mixed for soybeans -- slightly negative for old-crop and friendly for new-crop. But heavy spillover pressure from corn hammered the market. Bulls are now on their heels and must defend key support next week or it would open sharp downside price risk.

30-day outlook: USDA's soybean planting intentions figure came in 100,000 acres lower than year-ago and 1.4 million acres lower than anticipated. Most likely, this will be the low-water mark of the year for soybean plantings, especially if conditions remain cold and wet across the Corn Belt and Mid-South.

90-day outlook: Old-crop soybean supplies are tight, just not as tight as anticipated. But with the export season for U.S. soybeans winding down, even a modest increase in soybean supplies from expectations limits upside potential in old-crop soybeans.

Hedgers: 100% sold on 2012-crop in the cash market. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Cash-only marketers: 75% sold on 2012-crop production. 10% of expected 2013-crop production is sold via cash forward contract for harvest delivery.

Wheat

Price action: Chicago and Kansas City wheat futures posted losses in the 40s in most contracts following USDA's reports today. Minneapolis wheat ended with losses in the low 30s. Today wiped out weekly gains and futures settled sharply lower for the week.

5-day outlook: Quarterly wheat stocks came in on the bearish side of expectations, but even more significant was a much heavier-than-anticipated corn stocks projection. Given today's price action, bulls must dig in their heels and defend key support. Otherwise, there's risk of the market moving the next leg lower.

30-day outlook: The state of the winter wheat crop will draw more attention as weekly crop condition ratings start up again next week. Recent freeze events in the Central and Southern Plains with another cold blast possible next week could take a toll on a crop already off to a poor start.

90-day outlook: Extended weather forecasts call for below-normal precip for much of winter wheat country. And U.S. wheat has recently benefited from much improved export demand. This should keep prices from falling too far.

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 finished narrowly mixed today. Price action was volatile this week, but futures showed very little net price movement for the week.

5-day outlook: The battle lines for cotton futures have been drawn between the March low and high. That's a wide range, however, which suggests prices will very likely be choppy within these boundaries unless there's unexpected market-moving news next week.

30-day outlook: USDA's Prospective Plantings Report signaled cotton acres will be down sharply, but not as much as the National Cotton Council's survey in early February indicated. Market action over the next month will determine if cotton acres increase or drift lower from early March intentions.

90-day outlook: Demand, specifically Chinese demand, remains the key to the longer-term price outlook for the cotton market. China is going to sell more cotton reserves into the domestic market starting in April, but the country also plans to continue its aggressive stockpiling for government reserves in 2013-14.

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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