Corn
Price action: Corn futures saw profit-taking pressure today, with futures ending 1 to 7 1/2 cents lower.
Fundamental analysis: While traders continue to be disappointed by results from the Pro Farmer Midwest Crop Tour, they spent the day reevaluating positions and took some profits out of the market. Traders will continue to watch for results from the Tour to gauge the urgency to ration remaining supplies. Traders will also look to tomorrow morning’s weekly export sales data for signs of price rationing.
Technical analysis: No technical chart damage was done today, which signals bulls still have the clear technical advantage. December corn futures posted an inside day of trade on the daily chart, trading in the upper half of yesterday’s trading range. 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: Soybean futures ended mid- to high-range with September through March futures steady to 5 1/2 cents lower and deferred months 2 3/4 to 6 3/4 cents firmer. Soymeal posted losses while soyoil ended with gains for the day amid spreading.
Fundamental analysis: Yesterday, disappointing Pro Farmer Midwest Crop Tour pod counts pushed the soybean market to new contract highs. While these concerns remain close at hand, reports of relatively better results today (though far from “good”) and a firmer dollar for much of the day encouraged traders to book some profits. See “Evening Report” for preliminary Day 3 route reports.
Tomorrow traders will watch the weekly export sales to gauge if high prices have slowed use. Recent data, including high cash basis levels, have yet to show this is the case.
Technical analysis: November soybean futures topped yesterday’s contract high by 1/4 cent today, making today’s high of $17.34 1/4 new resistance, followed by the psychological $17.50 area. Support stands at $17.00.
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 faced pressure throughout the day, but the market settled high-range. Chicago wheat ended mixed with a downside bias; Kansas City and Minneapolis wheat closed roughly 1 to 4 cents lower.
Fundamental analysis: Ample U.S. wheat supplies mean the wheat market needs either spillover support from corn or a fresh dose of fundamentally supportive news to rally. Both were lacking today, which encouraged profit-taking following yesterday’s strong gains. Beneficial rain chances for winter wheat country added light pressure.
Minutes from the Federal Open Market Committee meeting released late today signal many members are eager to engage in additional monetary policy easing soon, which caused the dollar to soften late and helped wheat to move off its lows into the close.
Technical analysis: September Chicago wheat saw an inside day of trade, leaving resistance at the August high of $9.31 3/4 and support at the psychological $8.50 area.
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 saw light profit-taking today but ended high range with losses of 12 to 38 points in all but the July contract, which was 7 points higher.
Fundamental analysis: Spillover pressure from corn and soybeans along with a broad risk aversion today left the cotton market vulnerable to some profit-taking after strong gains yesterday. Plus, rain in the southern U.S. is improving depleted soil moisture reserves.
Traders also readied positions for USDA’s Weekly Export Sales Report tomorrow. Recent reports have been consistent if not impressive. China has more than doubled its cotton imports thus far in 2012 compared to last year at this time. Traders will be for this trend to continue.
Technical analysis: December cotton futures saw an inside day of trade, making initial resistance yesterday’s high of 77.49 cents, followed by the top of the May 11 downside gap at 79.37 cents. Support lies at the June high of 74.80 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.
