Corn
Price action: Corn futures didn’t stray too far from unchanged through the day but benefited from late-session buying to end 4 1/4 to 5 3/4 cents higher in the September through July contracts. Far-deferred futures ended 2 3/4 to 10 1/4 cents higher.
Fundamental analysis: Early buying in the corn pit was limited as traders still have yesterday’s higher-than-expected corn crop estimate on their minds. This morning’s weekly export sales data also didn’t have a bullish hint, as it came within expectations. But late buying was spurred by weakness in the U.S. dollar index, as investors are reacting to the Federal Reserve’s announcement that it plans to purchase $40 billion in mortgage-backed securities beginning tomorrow. This spurred widespread commodity buying and could attract followthrough buying tomorrow.
Technical analysis: December corn futures posted an inside day of trade on the daily chart. The contract needs to climb back above the mid-August low of $7.86 to climb back into the previous consolidation range. The next important level of support lies at the July 24 low of $7.45 1/2.
Hedgers: 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: 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 faced pressure most of the day but firmed when the Federal Reserve announced it will embark on a third round of quantitative easing. Futures ended high-range with slight gains in the September through January contract, while deferred months closed double-digit higher. Soymeal settled mixed and soyoil closed with gains.
Fundamental analysis: Soybean futures faced profit-taking pressure ahead of midday after USDA’s confirmation of tight supplies led to an impressive rally in the bean market yesterday. But the 11:30 a.m. CT announcement that the Federal Reserve would move to stimulate the economy gave the commodity sector a boost.
Plus this morning’s strong weekly export sales tally of 628,200 metric tons (MT) along with steady to firmer Gulf basis levels this week reminds the market that more rationing will be needed to make supplies last.
Technical analysis: November soybean futures remain within the consolidation trading range bound by last week’s contract high of $17.89 and this week’s low of $16.93 1/2, respectively.
Hedgers: 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: 50% sold on expected 2012-crop production for harvest delivery.
Wheat
Price action: Wheat futures rallied into the close to end with gains ranging from roughly 10 to 12 cents at all three locations.
Fundamental analysis: Gains in the corn market along with sharp losses in the U.S. dollar index following the Fed’s announcement that it will launch an unconventional bond-buying program to stimulate the economy returned buyers to the wheat market today. Bulls were encouraged by USDA’s slightly smaller-than-expected 2012-13 carryover tally yesterday and news Strategie Grains had cut its 2012-13 soft wheat production estimate for the European Union by 1.7 million metric tons (MMT) to 123.6 MMT.
Plus the market took news that Egypt had purchased 235,000 metric tons (MT) of Russian Ukrainian and French wheat and that Syria had purchased 50,000 MT of wheat from the Black Sea region as a sign that the region’s supplies are tightening.
Technical analysis: December Chicago wheat futures moved back above the psychological $9.00 mark, with next resistance at Monday’s high of $9.17 1/2. Strong support lies at the August low of $8.57 1/4.
Hedgers: 75% cash sold on 2012-crop in the cash market.
Cash-only marketers: 75% of 2012-crop production is sold.
Cotton
Price action: Cotton futures ended 12 to 44 points higher after a quiet day of trade.
Fundamental analysis: Pressure on futures was limited during the day by a solid weekly export sales report and by weakness in the U.S. dollar index. Weekly export sales of 317,500 running bales were primarily for China and up from the previous week. Export commitments are now running 24% behind year-ago, compared to 31% behind last week.
Traders will be keeping a close eye on outside markets after the Federal Reserve announced further economic stimulus that traders view as positive for the commodity markets. See “Evening Report” for more.
Technical analysis: December cotton futures posted an inside day of trade on the daily chart, remaining in the lower half of today’s trading range. Near-term boundaries are support at the mid-August low of 71.59 cents and resistance at the August high of 77.49 cents.
Hedgers: 50% priced on expected 2012-crop production via cash forward contract for harvest delivery.
Cash-only marketers: 50% priced on expected 2012-crop production via forward contract for harvest delivery.
