Crops Analysis (VIP) --March 7, 2013

March 7, 2013 08:55 AM
 

Corn

Price action: Corn futures closed 3/4 to 3 1/2 cents higher through the July contract. New-crop futures were mostly 2 1/2 to 3 1/4 cents lower.

Fundamental analysis: Bull spreading returned to the corn market today despite weakening corn basis and a dismal weekly export sales performance, especially for 2012-13. Traders covered short positions in old-crop contracts after yesterday's sharp price pressure. New-crop futures continued to slide amid easing concerns with the upcoming cropping season following recent heavy precip across the Corn Belt.

USDA reported net sales cancellations of 49,800 MT for 2012-13 and sales of 206,400 MT for 2013-14 for the week ended Feb. 28. The old-crop sales reductions are yet another reminder of dismal export demand.

Technical analysis: December corn futures have failed to gain traction below $5.50. That suggests the contract is headed for a test of last summer's low at $5.11. Below that, bears will target the psychological $5.00 mark.

Hedgers: 100% sold on 2012-crop in the cash market -- 10% for March 2013 delivery. No 2013-crop sales recommended yet.

Cash-only marketers: 75% sold on 2012-crop --10% for March 2013 delivery; 15% for May 2013 delivery. No 2013-crop sales recommended yet.

 

Soybeans

Price action: March soybeans closed 19 cents higher, while other old-crop contracts were 2 1/2 to 7 1/2 cents higher. New-crop contracts ended 3/4 to 1 1/2 cents lower.

Fundamental analysis: There was fresh bull spreading in soybeans today following yesterday's unwinding of bull spreads. With traders expecting USDA to mildly lower its old-crop carryover projection tomorrow and export demand for 2012-13 U.S. soybeans lasting longer than anticipated, there's still buying interest in old-crop soybeans.

Weekly export sales were stronger than anticipated at 392,000 MT for 2012-13 and 990,600 MT for 2013-14. China bought 91,900 MT of old-crop beans and 934,000 MT of 2013-14 beans for the week ended Feb. 28.

Technical analysis: May soybean futures continue to climb toward tough resistance at $14.99 1/4. A push above that level would potentially be explosive after a long consolidation period beneath it. But this level has stalled the past three rally attempts, so clearing it will be difficult.

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 were the upside leader in the grain and soy markets much of the day and futures settled high-range with gains of around 8 to 12 cents in most contracts at all three locations.

Fundamental analysis: Weakness in the U.S. dollar index along with ideas the downside has been overdone in the wheat market encouraged corrective short-covering today. This picked up after the release of weekly export sales data that topped expectations by a wide margin, signaling the drop in U.S. wheat prices attracted some decent demand.

Light support also came from efforts to correct the Chicago wheat/corn spread and a reminder that drought remains in effect for the Southern and Central Plains, despite recent precip. Traders also worked to ready positions for USDA's Supply & Demand Report tomorrow.

Technical analysis: May Chicago wheat futures saw an inside day of trade, leaving near-term support at the psychological $7.00 mark, followed by the March high of $7.26 3/4. Yesterday's low of $6.81, closely followed by the June low of $6.79, mark support.

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 faced pressure for much of the day and ended 9 to 74 points lower through the May 2014 contract, with old-crop contracts leading losses. This was low-range for nearby contracts and high-range for deferred months.

Fundamental analysis: Traders in the cotton market focused on reducing risk ahead of USDA's Supply & Demand Report tomorrow after the market's recent runup in price. This was in spite of solid weekly export sales tallies this morning of 150,200 RB for 2012-13 and 67,100 RB for 2013-14. Weekly exports of 512,500 RB were a marketing-year high. China was notably absent from the list of buyers, however. In fact, the country canceled 23,000 RB in orders for 2012-13 delivery.

Technical analysis: May cotton futures posted losses for the day, but the contract remains within its uptrending channel and well above uptrending support drawn off the lows since November, which intersects around 82.50 cents tomorrow. Yesterday's high of 87.59 cents is near-term resistance.

Hedgers: 50% priced on expected 2012-crop production in the cash market.

Cash-only marketers: 50% priced on expected 2012-crop production in the cash market.

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