Corn
Price action: Corn futures ended 5 1/4 to 7 3/4 cents lower in the September through July contracts, which was a low-range close. Far-deferred futures ended mixed.
Fundamental analysis: Futures were firmer in overnight trade, but softened this morning and extended losses as soybeans drifted lower. Corn needs a dose of fresh positive news to keep bulls energized, but signs of softening demand due to high prices are limiting buying interest. This morning’s weekly export inspections data pointed to more price rationing.
Technical analysis: December corn respected support at the psychological $8.00 level but still ended near session lows and posted a downside day of trade on the daily chart. Support lies at the August low of $7.81 1/4 and extends to the July 24 low of $7.45 1/2, with contract-high resistance 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: Soybeans rose to contract highs this morning, but this was followed by a round of profit-taking. Bears maintained the upper hand into the close and futures ended 2 3/4 to 13 cents lower, with nearbys leading to the downside. Soyoil and soymeal faced spillover pressure.
Fundamental analysis: Early support for soybeans stemmed from Pro Farmer’s production estimate of 2.6 billion bu., which emphasized the need for supply rationing. Daily and weekly bean sales along with strong basis levels indicate this has yet to occur. Plus, the forecast for heat and dryness in the Midwest this week raises concerns about further yield destruction.
But early gains encouraged profit-taking, as did a weekly export inspections tally that fell short of expectations. However, the pace of exports did gain on year-ago.
Technical analysis: November soybean futures surged to a new contract high $17.60 1/2 today, which is now resistance. But the contract closed low-range, which will give bears the upper hand to start the overnight session. Their initial target is the psychological $17.00 mark.
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 finished slightly lower in most contracts at all three exchanges following a choppy day of price action.
Fundamental analysis: With corn not providing support today, wheat futures were vulnerable to selling pressure. Fundamental pressure came from rains, which are expected to move into winter wheat areas this week and provide needed soil moisture ahead of planting. The demand side of the market also provided pressure as Egypt bought Russian and Romanian wheat over the weekend, reminding traders that current U.S. prices are not competitive.
Technical analysis: Near-term boundaries for December Chicago wheat futures lie at the Aug. 14 low of $8.57 1/4 and the July high at $9.53 1/4. A breakout from that wide range would likely trigger the next strong trending move.
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 held in a relatively tight trading range and closed 83 to 104 points higher today.
Fundamental analysis: Cotton futures were supported by concerns with potential crop damage from Tropical Storm Isaac. Heavy rains and potentially high winds could hurt yields and crop quality in portions of the Delta and Southeast as the storm plays out over the coming days. Unless there’s widespread damage, however, the upside is limited as traders are concerned about potential reduced demand from China if economic conditions worsen.
Technical analysis: December cotton futures are holding in the upper end of the sideways trading range, but have not been able to post an upside breakout. The contract needs consecutive higher closes above last week’s high a 77.49 cents to signal a likely breakout.
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.
