Corn
Price action: Corn futures surged 13 1/4 to 20 3/4 cents in the September through July contracts, while farther deferred months saw lighter gains. Futures ended high-range.
Fundamental analysis: Traders shifted their attention back to the stressed corn crop today. The generally weak condition of corn stalks this year means heavy rain and especially wind that is expected in areas of the Corn Belt could further deplete yield potential.
But watch for some attention to shift back to demand destruction (or a lack thereof) with the release of USDA’s Weekly Export Sales Report tomorrow. Recent reports have pointed to a pullback in export demand due to high prices.
Technical analysis: December corn futures closed back above the $8.00 level today. The next area of resistance for the contract is last week’s high of $8.40, followed by the contract high of $8.49. The $7.87 to $7.80 level is support.
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 built price strength through the session, rallying into the close to finish 24 3/4 to 30 3/4 cents higher in the September through March contracts. Farther deferred futures posted slightly lesser gains.
Fundamental analysis: Weather played a key role in price action in the soybean market today. Hot and dry conditions are stressing soybeans across the Corn Belt this week, raising concerns about further yield losses. Traders are also keeping a close watch on Isaac as the storm treks further inland, producing heavy rains and high winds. In addition to potential crop damage in some areas, the rains will slow harvest activity. As a result, some interior basis levels in the eastern Corn Belt jumped sharply today.
Technical analysis: November soybean futures came within 6 1/2 cents of the contract high of $17.69 1/2 today, but posted the highest close in the life of the contract. To the downside, key near-term support is at the old high of $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 extended gains at the start of open outcry trade and then ahead of noon CT and ended near session highs. Nearby futures at all three exchanged ended around 30 cents higher.
Fundamental analysis: Early support came on spillover from neighboring pits, but wheat was the upside price leader at times in the grain markets as traders remain concerned about global supplies. Specifically, there is speculation that Russia will announce plans to reduce its wheat exports after its ag ministry meets on Friday. But there is no indication from Russian leaders of a pending announcement.
While there has been a pickup in global wheat business this week, the fact that Egypt purchased Russian wheat instead of U.S. supplies signals prices here are not competitive on the global market. Tomorrow morning’s weekly export sales data will provide more insight as to demand for U.S. wheat.
Technical analysis: December Chicago wheat posted a big upside day of trade on the daily chart, closing above the psychological $9.00 level. Next resistance is last week’s high of $9.26 1/4 followed by the August high of $9.45 1/2 and then the July high of $9.53 1/4. Contract-high resistance stands at $9.77 1/2. Support lies at the August low of $8.57 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 a choppy start, but ended 41 to 104 points higher, which was good for a high-range close. Nearby futures led gains.
Fundamental analysis: Ideas global stocks are tighter than previously thought helped lift cotton futures today. The China Cotton Association says the country will issue additional cotton import quotas and release state reserves soon to ease difficulties faced by textile mills and to stabilize the market. The group didn’t specify the size of the quotas or volume of the reserve sales, but it did say many plants have suspended or limited production and demand for cotton isn’t expected to improve in the near-term.
Strength in the U.S. dollar index limited buying in the cotton pit, although traders remain optimistic the U.S. and euro-zone will soon announce additional stimulus measures, which would be supportive of commodity buying.
Technical analysis: December cotton futures posted an upside day on the daily chart. Next resistance stands at the Aug. 21 high of 77.49 cents and above that resistance is at the May 11 gap from 79.37 cents to 79.17 cents. Initial support is 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: 100% sold on old-crop. 50% priced on expected new-crop production via forward contract for harvest delivery.
