Corn
Price action: Corn futures ended marginally to 6 cents lower for the day, but for the week posted slight gains.
5-day outlook: Even though this week’s Pro Farmer Midwest Crop Tour results were disappointing, upside potential for futures was limited as there are indications of demand destruction.
30-day outlook: The flip of the calendar to September could bring more focus to outside markets, as investors in the euro-zone return from vacations and focus on the financial situation -- which hasn’t improved much. Negative outside markets could make it more difficult for corn to extend its rally and could trigger sharp price pressure. Still, downside risk for corn should be limited by the tight supply situation.
90-day outlook: The small crop is already a known factor for the market and harvest has already begun in the Midwest. There will be a lot of anticipation producers will work to increase 2013 U.S. corn acreage as the price ratio favors corn over soybeans.
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 the day stronger on crop concerns and posted strong gains for the week. Meal and soyoil followed suit.
5-day outlook: Soybean futures posted contract highs this week in reaction to disappointing Pro Farmer Midwest Crop Tour results, reminding the market that small crops get smaller. The market is now searching for a price that slows demand and as long as China comes in on the weekly buyers’ sheet, there is more upside price potential for futures.
30-day outlook: Planting in South America is in its early stages and recent rains are chipping away at the drought. Timely rains will be needed throughout the growing season to keep soil moisture replenished, but there is hope the region’s soybean production will recover from last year’s drought.
90-day outlook: The corn:soybean price ratio currently favors an increase in U.S. corn acres in 2012. If South America delivers a plentiful crop it will reduce the market’s urgency to bid for soybean acres. But given tight global supplies, the market can’t afford to lose many U.S. acres in 2013.
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 profit-taking today to end 2 to 7 cents lower in the nearby contracts at all three exchanges. For the week, futures posted slight losses.
5-day outlook: Wheat futures continue in their follower’s role to corn and need fresh demand news to trade on their own fundamentals. Talk continues to circulate that Russia will impose restrictions on exports and exportable supplies from Europe and the Black Sea region are tightening quickly. This could return demand to U.S. wheat.
30-day outlook: The International Grain Council lowered its 2012-13 global wheat production forecast by 3 million metric tons (MMT) this week to 662 MMT — 34 MMT below last season’s record. IGC lowered global carryover 3 MMT to 180 MMT, 17 MMT lower than last season. While tighter than previous estimates, global wheat stocks are still adequate.
90-day outlook: Much-needed rains are in the forecast for the Central and Southern Plains near-term. But follow-up rains will be needed to assure proper establishment of the hard red winter wheat crop.
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 pressured by a lack of fresh news and strength in the U.S. dollar to close out the week, but still posted slight gains for the week.
5-day outlook: Cotton needs a dose of fresh news to keep bulls interested, especially given signs the global economy is improving too slowly. China’s manufacturing data is concerning as it points to slowing demand for this major cotton consumer.
30-day outlook: Traders aren’t too concerned about the drought-stressed U.S. crop as global stocks are still projected to be plentiful this year. But if crop concerns in other areas of the world persist -- mainly India and Pakistan -- the global stocks situation could tighten somewhat.
90-day outlook: Global economic concerns will remain a key factor in the cotton market, with traders looking to outside markets for guidance.
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: 100% sold on old-crop. 50% priced on expected new-crop production via forward contract for harvest delivery.
