Crops Analysis (VIP) --March 8, 2013

March 8, 2013 08:47 AM


Price action: Corn futures finished 7 1/4 to 13 3/4 cents higher in old-crop contracts and around 5 cents higher in new-crop contracts today. But for the week, corn futures ended lower.

5-day outlook: Old-crop corn futures remain supported by tight stocks. But that hasn't proven to be enough to encourage sustained buying interest. New-crop corn futures are struggling to find footing as recent precip has reduced concerns about drought lingering this summer.

30-day outlook: While old-crop corn supplies are tight, the market has known that for months. The tight supply situation is more of a cash market issue. As a result, we expect corn basis to remain very strong, but futures must find fresh support to fuel a rally. As spring arrives, traders will shift their attention to planting intentions.

90-day outlook: While soil moisture has been partially recharged across much of the Corn Belt, there are still dry areas in northwestern areas of the region. As a result, timely summer rains will be needed to build a big yield. History says yields will not recover to trendline levels coming off of last year's major drought.

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.



Price action: All but March soybeans, which are in delivery, ended lower today. March beans closed 5 cents higher. Deferred contracts were 2 1/2 to 11 3/4 cents lower, with the August and September contracts leading losses. Soybean futures still posted gains for the week.

5-day outlook: Key to price action next week is demand. If China or any other end-user shows up as a buyer of U.S. soybeans, it will keep the market supported. But if export demand dries up, it will be hard to generate buying interest.

30-day outlook: A delayed start to the export season in Brazil has kept the window for U.S. soybean exports open longer than anticipated. Barring a major labor dispute, however, Brazilian beans will be actively flowing onto the world market by late March/early April. Once Brazilian bean exports start, demand for U.S. soybeans will slow. USDA left its export forecast unchanged again this month under that assumption.

90-day outlook: The drought footprint has declined, giving traders hope that production will rebound. But while drought is receding, there are still moisture deficits over the western one-third of the Corn Belt.

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.



Price action: Wheat futures ended mixed to mostly lower in Chicago, slightly lower in Kansas City and steady to lower in Minneapolis today. For the week, wheat futures extended their price slide.

5-day outlook: To halt the price slide, the wheat market needs fresh demand news. Unfortunately, the rising U.S. dollar has offset much of the price drop. Plus, India is more actively selling wheat onto the world market. Unless bullish export demand news surfaces next week, the upside is limited to corrective buying.

30-day outlook: Recent precip across the Central and Southern Plains has eased traders' concerns with the HRW crop. As a result, wheat futures are at risk of more near-term price pressure. When USDA begins releasing weekly crop condition ratings at the beginning of April, traders' concerns may resurface.

90-day outlook: The long-term weather outlook is not promising for significant drought relief across the Plains. The further prices drop now, the greater the odds of a spring weather rally.

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.



Price action: Cotton futures ended slightly higher through the July 2014 contract today and extended the price rally this week.

5-day outlook: USDA delivered a bullish report this morning as it lowered its 2012-13 cotton carryover projection. But the market had a muted response, signaling the price rally may be running out of steam. A constant dose of bullish news will be needed to extend the rally.

30-day outlook: Traders are anticipating a sharp drop in cotton planting intentions in USDA's Prospective Plantings Report at the end of the month. Most were anticipating cotton acreage will fall to around 10 million acres, but the National Cotton Council's survey in early February indicated only 9 million acres will be seeded to cotton this year.

90-day outlook: USDA raised its 2012-13 export forecast this morning, but if the U.S. dollar continues to rally, demand for U.S. cotton may be curbed. China has already slowed its purchases of U.S. cotton.

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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