Corn
Price action: Corn futures saw two-sided trade but didn’t stray too far from unchanged as traders reevaluated positions. Futures ended near session lows with losses mostly around 3 to 4 cents.
Fundamental analysis: Early gains were spurred by short-covering following back-to-back days of sharp price losses. Increased harvest-related pressure from the South limited the market’s ability to rally and contributed to deterioration in Gulf basis.
Yesterday’s condition report provided early support, as it showed the crop continues to deteriorate. But rains at this point in the season will only slow harvest in some areas and provide limited relief to others.
Technical analysis: December corn spent the day in the lower half of yesterday’s trading range, respecting support at yesterday’s low of $7.86. The next key level of support lies at $7.63 1/4, which marks a 25% retracement of the rally from the June low, while contract-high resistance stands at $8.49.
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.
Soybeans
Price action: August soybean futures expired 23 3/4 cents higher at $16.80. Deferred months saw two-sided trade and ended mid-range and narrowly mixed. Soymeal ended with slight gains while soyoil ended mostly slightly lower.
Fundamental analysis: Soybean futures were initially supported by better-than-expected NOPA soybean crush data that along with firmer Gulf basis point to still-strong soybean demand and the need for more price rationing.
But uncertainty persists about how much the recent improvement in weather has added the crop, which encouraged some profit-taking today. As reflected by the slight improvement in USDA’s soybean condition ratings yesterday, the soybean crop can still benefit from improved temps and precip; the near-term forecast is friendly on both of these fronts.
Technical analysis: November soybean futures closed just below $16.00, making bears’ next target last week’s low of $15.55 1/4, followed by the July 25 low of $15.36. Near-term resistance is Friday’s high of $16.68 and then the contract high at $16.91 1/2.
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.
Wheat
Price action: Wheat futures softened as the day progressed, which resulted in Chicago and Kansas City wheat ending with losses mostly in the mid- to upper-teens. Minneapolis wheat closed with slightly lighter losses.
Fundamental analysis: Wheat futures enjoyed gains early this morning, but as the corn market came under pressure, so too did wheat. Profit-taking increased on news Egypt’s state buyer skipped over the U.S. in favor of Russia and Ukraine in its 120,000-metric-ton (MT) wheat purchase. This emphasized U.S. wheat is currently priced above other global suppliers.
Pressure on Minneapolis wheat was limited by USDA’s crop condition and progress reports yesterday that showed harvest is now 65% complete and that the amount of wheat rated “good” to “excellent” declined by two percentage points from last week to 61%.
Technical analysis: September Chicago wheat futures settled well below the support levels of recent weeks, opening downside risk to the psychological $8.00 level that roughly coincides with the bottom of the July 5 upside gap. Friday’s high of $9.31 3/4 is near-term resistance.
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.
Cotton
Price action: Cotton futures were slightly higher throughout the day and saw a narrow price range. Futures ended 22 to 77 points higher.
Fundamental analysis: Cotton benefited from short-covering following two straight days of sharp losses. But the inability to generate any more than light short-covering signals traders’ attitudes have become less friendly. USDA last week reminded the market there would be plenty of cotton to satisfy global demand, which has taken the air out of bulls’ sails.
Technical analysis: December cotton futures posted an inside day of trade on the daily chart. Near-term boundaries are resistance at last week’s high of 77.07 cents and support at the July 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.
