Price action: Corn futures favored a stronger tone through the day, with nearbys posting double-digit gains and high-range closes. Far-deferred futures were mixed.
Fundamental analysis: Corn was largely supported by spillover from the soybean pit and nearby corn contracts strengthened into the close amid concerns about tight supplies. Additional support today came from indications of a smaller Chinese crop due to significant army worm infestations.
But weakening of Gulf corn basis limited buying at times due to the availability of new-crop supplies in the South. Traders will also monitor tomorrow morning's weekly export sales data for signs of price rationing.
Technical analysis: December corn tested support at yesterday's low of $7.86 3/4 in early morning trade but posted a strong comeback to return and close above the $8.00 level. Violation of this support would weaken the technical outlook following Friday's bearish reversal and Monday's followthrough selling. But if futures avoid this support, it would suggest the market is marking time in a consolidation range and gaining energy for the next trending move.
Hedgers: 100% sold on 2011-crop in the cash market. 40% of expected 2012-crop production is covered in Dec. $6.50 put options for 31 1/2 cents. 35% cash forward sold on expected 2012-crop production -- 25% for harvest delivery; 10% for March 2013 delivery.
Cash-only marketers: 100% sold on 2011-crop. 35% forward priced on expected 2012-crop production -- 10% for harvest delivery; 10% for March 2013 delivery; and 15% for May 2013 delivery.
Price action: Soybean futures were supported throughout the day by tightening supplies. Nearby soybean futures ended 30-plus cents higher, with soymeal and soyoil seeing strong spillover support.
Fundamental analysis: Gulf basis levels have surged recently to suggest supplies are tightening and demand remains strong. And while the crop in some areas has benefited from recent rains, there is still concern about the ability of the crop to properly fill pods as rains haven't been widespread and drier conditions are expected next week.
Traders will monitor tomorrow morning's weekly export sales data for demand signals. Traders look for sales to be up substantially from last week's lackluster 300,400 metric-ton level.
Technical analysis: November soybean futures posted an upside day of trade on the daily chart but remained confined within last week's trading range, which marks near-term support at $15.55 1/4 and resistance at $16.68.
Hedgers: 100% sold on old-crop in the cash market. 25% of expected 2012-crop production is covered in Nov. $14.00 put options for 42 3/8 cents. 50% of expected 2012-crop production is sold via cash forward contract for harvest delivery.
Cash-only marketers: 100% sold on old-crop. 50% sold on expected 2012-crop production for harvest delivery.
Price action: Wheat futures enjoyed gains for most of the session but pared gains into the close. Nearby Chicago wheat futures closed around 7 to 8 cents higher; nearby Kansas City wheat saw gains of roughly 3 to 4 cents; and nearby Minneapolis wheat ended around a dime higher.
Fundamental analysis: There was little fresh news for the wheat market today, leaving it to again follow corn. SovEcon did lower its 2012 Russian grain production forecast from 72 million metric tons (MMT) to 75 MMT to 70 MMT to 74 MMT, but this did not include any changes to the wheat component of the balance sheet.
Today, Algeria added to the list of countries turning to sources outside the U.S. for fulfilling their wheat needs. This reminder that high prices have caused demand destruction will continue to limit buying interest in the wheat pit to short-covering over the near-term.
Technical analysis: September Chicago wheat futures traded within the lower half of yesterday's trading range today, leaving support intact at yesterday's low of $8.38 1/4 followed by the bottom of the July 5 upside gap at $8.00. Initial resistance is Friday's high of $9.31 3/4.
Hedgers: 75% cash sold on 2012-crop for harvest delivery. 100% sold on 2011-crop in the cash market.
Cash-only marketers: 75% of 2012-crop production is sold for harvest delivery. 100% sold on 2011-crop.
Price action: Cotton futures saw two-sided trade today but a late surge helped the market finish high range with gains of 95 to 112 points.
Fundamental analysis: There was little in terms of fresh news for the cotton market today, leaving it more susceptible to outside influences. While a firmer U.S. dollar index encouraged profit-taking at times today, spillover support from strong gains in the soybean market helped cotton futures end in positive territory.
Monsoon rains in India have been disappointing this season, but USDA last Friday eased global supply concerns with confirmation the U.S. cotton crop should be plentiful. The market will need fresh news from the demand front to break out of its trading range.
Technical analysis: December cotton futures appear to have settled back into a choppy range after last week's false breakout. The contract must move through resistance at the June high of 74.80 cents to signal it is making another move to the upside. Support lies at the July 25 low of 69.40 cents.
Hedgers: 100% sold on old-crop in the cash market. 50% priced on expected new-crop production via cash forward contract for harvest delivery.
Cash-only marketers:s100% sold on old-crop. 50% priced on expected new-crop production via forward contract for harvest delivery.