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Published June 08, 2015, 09:42 AM

Markets: June offers hope as grains make gains

Wheat traded with strong gains last week, with much of the strength coming from winter wheat production concerns. Traders are concerned that disease will soon start to reduce the quality and quantity of the crop. The corn market bounced off the eight-month lows from the week ending May 29 and closed with green numbers last week. Support came from strength in the wheat complex, with quality concerns and a lower performing dollar.As of the June 3 close, July soybeans were 12.5 cents higher for the week, while November soybeans were up 18.25 cents. At 10 a.m. June 5, July soybeans were down 3 cents and the November contract was down 4 cents.

By: Ray Grabanski,

Wheat

Wheat traded with strong gains last week, with much of the strength coming from winter wheat production concerns. Traders are concerned that disease will soon start to reduce the quality and quantity of the crop. For the week ending June 4, July Minneapolis increased 45 cents, September Minneapolis gained 43.4 cents, July Chicago gained 46.75 cents and July Kansas City picked up 42.5 cents.

The first two sessions of the week brought strong gains to all three of the wheat exchanges. Early support came from weather concerns. Traders are concerned about too much rain in the U.S., which is very likely and would result in disease pressure in parts of Oklahoma and Texas. Harvest activity should be advancing rapidly north, but so far combines have been sitting in the sheds as heavy rains continue to plague a majority of the Southern Plains. Additional support came from reports that northern North Dakota and Canada had freezing temperatures, which could result in a dramatic reduction in the wheat crop, as well as canola. A sharply lower U.S. dollar (which was pressured by expectations that Greece will be able to make its debt payments without issue) added support.

The June 3 session had wheat ending with losses, after starting with gains. Early support came from continued concerns of disease pressure in the winter wheat crop. By midsession, wheat lost its gains and turned lower. Profit taking came from weather forecasts calling for warm, dry conditions for much of the U.S., which will help harvest progress. Light selling was a result of pressure from a bearish production estimate from a private analyst. The estimate put U.S. winter wheat at 1.48 billion bushels, which is 9 million bushels above the U.S. Department of Agriculture’s May estimate and 103 million above last year.

Gains returned to the wheat exchanges June 4. Not even a negative export sales estimate could keep from pushing higher. Support was mainly because of continued concerns toward this year’s harvest activity, or the lack of harvest activity.

As of May 31, 91 percent of the nation’s spring wheat crop had emerged, compared with 80 percent the previous week and 69 percent for the five-year average. Spring wheat’s crop condition rating improved 2 percent to 71 percent good to excellent, 25 percent fair and 4 percent poor or very poor. Eighty-four percent of the nation’s winter wheat crop was headed, compared with 77 percent the previous week and 77 percent for the five-year average. Winter wheat crop conditions declined 1 percent to 44 percent good to excellent, 36 percent fair and 20 percent poor or very poor.

Corn

The corn market bounced off the eight-month lows from the week ending May 29 and closed with green numbers last week. Support came from strength in the wheat complex, with quality concerns and a lower performing dollar. Five percent of this year’s crop is yet to be planted and it is in areas of excessive moisture. Will some of these acres be switched to another crop? If these acres do get planted, they risk pollinating during the peak heat of the summer. USDA will release its monthly supply and demand and production report, June 10. As of the June 4 close, the May contract was up 12 cents for the week, while December gained 13 cents.

Corn was able to close with green numbers for the first four days of the week. Support came from the break in the dollar and strength in the wheat complex. The weather reports are mixed, with the eastern U.S. receiving some timely moisture, while conditions in the west and southern plains remain wet, delaying the last acres to be planted. There are also some acres that need to be replanted because of poor stands. The European Union is estimating its corn production at 68.1 million metric tons, down from last year’s record 77.8 million. Traders were expecting a 2 percent increase in the crop condition ratings for last week’s report. The report stated 95 percent of the crop is planted and the conditions were left unchanged at 74 percent good to excellent. Additional support came from strong ethanol processor margins, and last week’s report showed corn use up and stocks lower.

The upside was limited, with a disappointing export sales report and private estimates of larger production numbers in Ukraine and South America. There are some areas that have weather concerns, but the eastern Corn Belt looks to be in good shape with an early planted crop. The weather will continue to drive the market.

For the week ending May 31: 95 percent of corn was planted versus 94 percent last year and the five-year average of 94 percent. Corn emerged was at 84 percent versus 77 percent last year and the five-year average of 79 percent. The crop was rated 74 percent good to excellent, 23 percent fair and 3 percent poor.

Soybeans

As of the June 3 close, July soybeans were 12.5 cents higher for the week, while November soybeans were up 18.25 cents. At 10 a.m. June 5, July soybeans were down 3 cents and the November contract was down 4 cents.

Soybeans traded lower June 1, setting new contract lows early in the session before a small bounce. The favorable forecast for continued planting pressured the market with warmer and drier weather expected for the southern Plains. The June 5 crop progress report showed planting and emergence near the five-year averages, as expected. Last week’s export inspections were poor, coming in below the amount needed to keep pace with USDA’s projection. Commercial selling in soymeal kept pressure on the soy complex, while strong gains in soy oil supported. Soy oil was at its highest level in six months after the May 29 biodiesel mandate and frost for Canada’s canola crop.

Soybeans finished higher June 2 with support from commercial buying in soybean and soymeal futures. Sharp losses in the U.S. dollar provided additional support. Following a couple of sharply higher days, the soy oil futures set back June 2, closing with moderate losses. The crop progress report showed planting and emergence both slightly ahead of the five-year average pace, and the weather should allow planting to continue into midweek before more potential rain delays.

On June 3, midday trade saw gains in soybeans with support tied to weakness in the U.S. dollar and early gains in corn and wheat. As the day wore on, the grains began to slip and soybeans finished lower, pressured by generally favorable growing conditions. The southern states should see good planting progress with warm, dry weather in the forecast, while some struggles could be seen around Iowa, with more rain expected. Demand for soybeans remains decent, but soy oil has been the leader recently. The July soy oil contract closed at its highest level in seven months, as concerns linger about Canadian canola after the freeze.

Soybeans finished higher June 4, as traders took advantage of low prices. Export sales remain well above USDA’s estimate of 1.8 billion bushels, with last week adding another 4.8 million to the total. Rains in the Corn Belt are providing some support to soybeans, as planting is slowed.

For the week ending May 31, soybeans were 71 percent planted, compared with 61 percent the previous week and 70 percent for the five-year average. Emergence was at 49 percent, compared with 32 percent the previous week and the five-year average of 45 percent.

Barley

USDA reported barley export inspections for the week ending May 29 at 802,131 bushels. There were no export sales reported the week ending May 29 for barley. This brings the year-to-date export sales pace for barley to 6.8 million bushels, compared with 8.2 million last year at this time.

For the week ending May 31, barley was 95 percent emerged, up from 86 percent the previous week and 70 percent for the five-year average. Barley conditions were rated at 74 percent good to excellent, 22 percent fair and 4 percent poor or very poor.

For the week ending May 29, cash feed barley bids in Minneapolis were at $2.50 per bushel and there was no bid for malting barley.

Durum

USDA reported durum export inspections for the week ending May 29 at 551,146 bushels. There were no export sales reported the week ending May 29 for durum. This brings the year-to-date export sales pace for durum to 25.7 million bushels, compared with 19.5 million last year at this time.

For the week ending June 4, cash bids for milling quality durum were at $8.75 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was at $8.75.

Canola

For the week ending June 4, the front month July canola contract gained $24.90 to $497.70 (Canadian). Canola had a strong week, opening with new highs on June 1 and again testing new highs on June 4. June 2 saw a small pull-back in canola because of profit taking and increased farmer selling before June 3 resumed the climb higher. The primary support was a frost event that might have hit as much as 10 percent of Canadian canola. Concerns about dry conditions in some parts of Canada supported, as well. Strength in Chicago Board of Trade soybean and soy oil futures throughout the week also helped support canola prices.

For the week ending June 4, cash canola bids in Velva, N.D., increased 85 cents to $18.03 per hundredweight.

Sunflowers

USDA estimated soybean oil export sales pace for the week ending May 29 at 32.7 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 737.5 thousand metric tons, compared with 654.9 thousand metric tons for last year.

For the week ending May 31, sunflowers were 49 percent planted, up from 24 percent the previous week and the five-year average of 29 percent.

For the week ending June 4, July soybean oil futures were $1.20 higher to $34.53. Cash sunflower bids in Fargo, N.D., were down 20 cents on the week at $21.15 per hundredweight.

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