Corn
Price action: Corn futures closed out a choppy day of trade with losses of 4 3/4 to 5 1/5 cents in the September through July contracts. Far-deferred contracts ended slightly firmer.
Fundamental analysis: Fresh news was lacking in the corn market today, which led to the choppy price action. While crop condition ratings continue to decline, that’s already largely factored into the market.
Corn traders are keeping a nervous watch on Hurricane Isaac as it nears landfall later today. While the storm is likely to push some rains into the parched Corn Belt later this week, the precip is too late to have a positive impact on the corn crop. In fact, there are concerns heavy rains would cause lodging problems given stalk quality issues with the crop. Isaac is also impacting the cash market. Barge traffic on the lower Mississippi River is largely halted until the storm passes, which pressured Gulf basis today. But while Gulf basis softened, sharp gains were seen in some interior bids as competition for tight supplies is strong.
Technical analysis: Key near-term boundaries for December corn futures is at the contract high of $8.49 to the upside and the July 24 spike low at $7.45 1/2 to the downside. A breakout from this range would likely trigger the next strong price 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.
Soybeans
Price action: Soybean futures were highly choppy today but ended near opening levels to post slight gains. Nearby contracts ended around 2 to 3 cents higher, with deferreds posting slightly stronger gains in the range of 6 to 8 cents.
Fundamental analysis: Periods of profit-taking were met with fresh buying on signs prices have not yet rallied enough to dramatically slow demand. This morning USDA announced a sale of 110,000 metric tons (MT) of soybeans to China for 2012-13 and exporters say Taiwan purchased 58,000 MT of U.S. beans for November delivery along with 120,000 MT of Brazilian soybeans for 2013 delivery.
Some rains from Hurricane Isaac are expected to be beneficial for soybeans in the southern fringes of the Corn Belt as the system is expected to push north and eastward once it hits land, although the advanced maturity of this year’s crop may limit the impact of rains.
Technical analysis: November beans saw trade below last Wednesday’s low of $17.04 1/4 but recovered to post a near-session-high close. Contract-high resistance stands at $17.60 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 saw a choppy day of trade and favored the downside into the close. Chicago wheat led to the downside with losses of 1 to 7 1/4 cents. Kansas City and Minneapolis wheat ended with slight losses in most contracts.
Fundamental analysis: Wheat took its cue from the corn market today as it lacked the significant fundamental news the market needs to rally on its own merits. Plus, Hurricane Isaac is expected to bring significant precip to the Central and Southern Plains, which is a boon for soon-to-be-planted winter wheat.
But losses were limited by global production concerns. For one, signs the El Nino weather pattern is strengthening could accelerate dryness in Australia. Also, UkrAgroConsult cut its Ukraine grain crop forecast by 1.49 million metric tons (MMT) to 42.38 MMT. This keeps ideas exports from the Black Sea region will be reduced close at hand.
Technical analysis: December Chicago wheat futures traded in the lower quadrant of a consolidation range bound by the August low of $8.57 1/4 and the Aug. 21 high of $9.26 1/4.
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.
Cotton
Price action: Cotton futures saw two-sided trade today and bears dominated at the close. Futures ended 11 to 54 points lower in all but the July contract, which was marginally higher.
Fundamental analysis: News that China National Cotton Reserves Corp. will sell 200,000 metric tons (MT) to 300,000 MT of state-owned cotton reserves next week encouraged light profit-taking in cotton today. But the impact of this move will likely be limited as the country is thought to hold around 4 million MT in reserves and will soon start stockpiling new-crop supplies.
Also limiting selling in cotton futures is concern about the excess precip associated with Hurricane Isaac and how it will affect the quality of the U.S. cotton crop. As of Sunday, USDA reports 55% of Mississippi’s crop has bolls open and 61% in Louisiana.
Technical analysis: December cotton futures remain within their recent consolidated trading range, with support lying at the Aug. 13 low of 71.59 cents and resistance standing at the August high of 77.49 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: 100% sold on old-crop. 50% priced on expected new-crop production via forward contract for harvest delivery.
