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Published June 22, 2015, 09:22 AM

Markets: Soybeans take charge

Wheat started the week sharply lower, while weather concerns affected the corn market and soybeans traded higher.

By: Ray Grabanski,

Wheat

Wheat started last week off on the wrong foot (sharply lower) and spent the rest of the week trying to dig itself out of the hole. For the week ending June 18, July Minneapolis lost 21.5 cents, September Minneapolis gave back 6.75 cents, July Chicago lost 15.75 cents, and July Kansas City retreated 27.75 cents. Selling dominated the wheat market to start the week.

Fund-selling and concerns about Greece’s probable default on its debt payments was the main driving force. That news helped support the U.S. dollar, which, in turn, is not good news for U.S. commodities. Fundamental news continues to be friendly wheat as rain continues to fall over much of the Southern Plains. This is slowing harvest activity and causing disease issues in much of hard red winter wheat and soft red wheat growing regions.

The June 16 and 17 sessions were a little calmer. For the most part, wheat was mixed with support coming from forecasts calling for heavy rains for much of the eastern regions of Oklahoma and Kansas. This will further delay harvest activity, and result in further disease pressure.

This should allow for combines to roll and harvest to maybe get underway. The western regions of Kansas and Oklahoma are dry, and that should have combines rolling in those regions.

Wheat took the path of least resistance June 18, trading on both sides of the fence early but slipping lower into the close. Early support came from rain. This has lead to extreme flooding and concerns toward the quality and potentially size of this year’s winter wheat crop. The major area of concern is eastern regions of Texas, Oklahoma and Kansas. The western regions have not seen the extreme rainfall that eastern regions have, resulting in an improvement in the region for wheat crop. Forecasts are calling for warmer, drier weather for much of the Southern Plains, adding selling pressure to wheat.

The U.S. Department of Agriculture estimated the previous week’s wheat export shipments pace at 13.9 million bushels. This brings wheat’s year-to-date export shipments pace to 19.4 million bushels, compared with 32.1 billion bushels last year.

As of June 14, spring wheat’s crop condition rating increased 1 percent to 70 percent good to excellent, 26 percent fair and 4 percent poor to very poor. Ninety-six percent of the nation’s winter wheat crop was headed, compared with 91 percent the previous week and 89 percent for the five-year average. Winter wheat harvest is 11 percent complete, compared with 4 percent the previous week and 20 percent for the five-year average. Winter wheat crop conditions were unchanged at 43 percent good to excellent, 35 percent fair and 22 percent poor to very poor.

Corn

The corn futures were firm last week with weather concerns. The weather continues to be the talk of the market with excessive rain and flooding creating plant health concerns, stand counts and producers trying to wrap up planting. The weather will continue to drive the market until the stocks and acreage report comes out on June 30. As of close June 18, the May contract was up 5 cents for the week, while December gained 3.75 cents.

The corn market traded under pressure on June 15 with the sharp losses in the wheat complex, while the December contract made a new contract low. Additional weakness came from talk that China canceled six cargos of dried distillers grains June 19. Traders were also thinking the crop condition ratings would be steady to higher last week, while rain was not as heavy as forecast. On June 16, the corn market bounced off the fresh contract lows made in the new-crop contracts June 16 with short covering and increased buying interest. Additional support came from a drop in the crop condition ratings June 16, while traders were expecting at least a steady to slight increase last week. The report showed the good to excellent category fell by 1 percent to be rated at 73 percent, and the poor category increased by 1 percent. The corn market remained firm on June 17 with continued short covering and light commercial buying. Support came from excessive moisture in the Southern Plains and Midwest, as rain continued to fall from Texas to Ohio. Some areas were flooding, creating concerns with plant health and stand counts. The futures closed slightly lower June 18, with talk that rain makes grain. The ethanol report also showed corn use down from the previous week and stocks were larger, but the weekly demand was above USDA’s estimate.

For the week ending June 14, corn emerged was at 97 percent, compared with 96 percent last year and the five-year average of 95 percent. The crop was rated 73 percent good to excellent, 22 percent fair, and 5 percent poor to very poor.

Soybeans

As of the June 18 close, July soybeans were 37.75 cents higher for the week, while November soybeans were up 38 cents. On June 19, July soybeans were down 5.5 cents and the November contract was down 3.25 cents.

Soybeans opened the week narrowly mixed with small gains in the front month July and no change in the November contract. Rain has slowed planting in parts of the country, and the forecast calls for continued delays, particularly in Missouri where planting is only 42 percent completed, compared with 79 percent for the five-year average for that state.

Despite the problems in Missouri, traders expected planting to be near the average pace in the June 15 crop progress report. Conditions were expected to be near unchanged from the previous week’s ratings, as well. The monthly National Oilseed Processors Association crush report was released June 15, showing 148.4 million bushels of soybeans crushed in May, a new record for the month and an increase of 15 percent over May of last year. Soy oil stocks were pegged at 1.58 billion pounds, more than expected. Finally, the June 15 export inspections were decent, keeping ahead of the pace needed to match USDA’s projection.

Soybeans closed sharply higher June 16 with commercial buying in new-crop contracts leading the way. Short profit taking was evident, following the June 15 test of the contract lows. The June 15 crop progress report showed planting at 87 percent, just behind the five-year average of 90 percent. After being only 30 percent complete the previous week, Kansas and Missouri moved to 57 percent and 42 percent planted last week, respectively.

Soybeans continued to trade higher June 17 and 18, recovering more of the previous week’s losses and setting a new one-month high on June 17. Moisture concerns continue to be the primary supportive factor with some ideas that as much as 1 million to 2 million acres might go unplanted because of wet fields.

Rains continued to move across Missouri and into the Ohio River Valley heading into the weekend. In addition to hindering planting the rains are bringing a risk of flooding, as well. Looking forward to July, the forecast looks mostly favorable for soybeans, though Missouri and Illinois are expected to continue to receive above average precipitation.

Barley

For the week ending June 12, the barley export inspections at 54,520 bushels. This brings the year-to-date export sales pace for barley to 400,000 bushels, compared with 1 million bushels last year at this time. For the week ending June 14 barley conditions were rated at 75 percent good to excellent, 22 percent fair and 3 percent poor very poor. For the week ending June 18 cash feed barley bids in Minneapolis were at $2.60 and there was no bid for malting barley.

Durum

For the week ending June 12, the durum export inspections at 53,277 bushels. The durum export sales were reported at 800,000 bushels. This brings the year-to-date export sales pace for barley to 7.4 million bushels, compared with 4.7 million bushels last year at this time. For the week ending June 18, 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 18, the front month July canola contract gained $9.80 to $495 (Canadian). Canola started the week with losses June 15 tied to weakness in CBOT soybean and soy oil futures, as well as some rainfall in dry portions of western Canada.

June 16 and 17 brought sharp gains as Chicago Board of Trade soybean futures moved higher. Western Canada’s dryness continued to be cause for concern. Profit taking and beneficial rain in the forecast for western Canada led to a lower close June 18. Excessive moisture in the U.S. and cold overnight temperatures in Manitoba and Saskatchewan provided support.

For the week ending June 18 cash canola bids in Velva, N.D., increased 22 cents to $18.04 per hundredweight.

Sunflowers

USDA estimated last week’s export sales pace for soybean oil at -0.1 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 740.7 thousand metric tons, compared with 737.1 thousand metric tons for last year.

For the week ending June 14, sunflowers were 86 percent planted, up from 69 percent the previous week and the five-year average of 66 percent. For the week ending June 18, July soybean oil futures were 89 cents lower to $32.25. Cash sunflower bids in Fargo, N.D., were up 80 cents on the week at $22 per hundredweight.

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