Advertise in Print | Subscriptions
Published June 29, 2015, 09:25 AM

Grabanski: Weather concerns push market

Wheat traded with solid gains last week, as three out of four sessions posted strong gains while only one session showed losses. Stress from excessive rain continues to provide support for the corn market. For soybeans concerns about slow soybean planting continued to provide support.

By: Ray Grabanski,

Wheat

Wheat traded with solid gains last week, as three out of four sessions posted strong gains while only one session showed losses. For the week ending June 25, July Minneapolis gained 31.5 cents, September Minneapolis gained 33.5 cents, July Chicago gained 43.5 cents and July Kansas City wheat picked up 32 cents.

Wheat opened the first two sessions with gains. The market was supported early by spillover buying from the higher soybean complex, which is continuing to see support from planting delays caused by wet conditions. Wheat stumbled slightly when the U.S. Department of Agriculture’s weekly export inspections report was released (a bearish number, as it came in below expectations). But wheat was able to push higher off of fund buying. Traders are still concerned about slow harvest progress, as wet conditions have kept the combines out of fields. Weather forecasts are starting to be a little more bearish for wheat as hot, dry conditions are forecast to remain for much of the Southern Plains. The market was able to find strength in the weekly crop progress report, which showed a 2 percent reduction in winter wheat’s crop rating. Harvest progress was reported behind the five-year average.

The week ending June 24 had wheat on both sides of the fence. Early support came from production concerns as the soft red wheat region of U.S. has been hit with too much rain. But wheat was not able to hold onto its gains as profit taking and technical selling was uncovered late in the session. Position-squaring ahead of the planted acreage report was seen.

Buying returned to the market June 25. Early in the session, wheat stumbled slightly on an export sales estimate that was less than stellar. But once the soybean and corn market rallied higher, wheat joined. Additional support came from weather forecasts, or the weather in general, as too much rain continues to be an issue for much of the growing regions of the U.S. The trade is also starting to be concerned about the dry conditions in the western U.S. and Canada.

USDA estimated wheat export shipments pace for the week ending June 19 at 10.7 million bushels. This brings wheat’s year-to-date export shipments pace to 30.4 million bushels, compared to 55.2 billion bushels last year. Last week’s wheat export sales pace was estimated at 16 million bushels. This brings wheat’s export sales pace for the year to 201.4 million bushels, compared with 266.8 million bushels last year. This is the third shipments and sales report for the 2015 marketing year. USDA’s wheat export pace is estimated at 925 million bushels.

As of June 21, 23 percent of the nation’s spring wheat crop was headed, compared with none the previous week and 15 percent for the five-year average.

Spring wheat’s crop condition rating increased 1 percent, to 71 percent good to excellent, 25 percent fair and 4 percent poor or very poor. The winter wheat harvest was estimated at 19 percent complete, compared with 11 percent the previous week and 31 percent for the five-year average. Winter wheat crop conditions dropped 2 percent, to 41 percent good to excellent, 37 percent fair and 22 percent poor or very poor.

Corn

Corn futures traded to eight-week highs, with too much rain and strength in the wheat and soybean markets. Stress from excessive rain continues to provide support.

As of the June 25 close, the May contract was up 23.25 cents for the week, while December gained 23.5 cents.

The corn futures closed at session highs on June 22 and 23, with short covering and spillover from the strength in the soybean and wheat markets. Traders also were looking ahead to the crop condition report, and expectations were that conditions would drop 1 percent in the good to excellent category. The report shows a 2 percent drop in good to excellent conditions and a 1 percent increase in fair and 1 percent increase in poor to very poor. There is also talk of excessive moisture, creating problems with nitrogen leaching and the ability to side dress.

The forecast called for rain in Missouri and eastward, also the areas that have the highest percentage of the poorest crop ratings. Iowa and Illinois are also receiving rain with flash flood watches.

June 24 was a slower day in the market and corn closed slightly lower. The futures took a break, with more talk about the upcoming USDA report and estimates that acreage could be higher. But buying interest came back into the market June 25 and closed at eight-week highs.

For the week ending June 21, the crop was rated 71 percent good to excellent, 23 percent fair and 6 percent poor to very poor.

USDA’s export inspections report was neutral for corn at 43.5 million bushels, slightly below the 45.1 million needed to meet USDA’s projection.

Corn export sales were estimated at 19.6 million bushels, above the needed amount of 6.3 million to stay on pace with USDA’s estimate of 1.825 billion bushels. The shipments came in at 44.3 million bushels, above the 44 million bushels that was needed to keep pace with USDA projections.

Soybeans

As of the June 25 close, July soybeans were 28.75 cents higher, while November soybeans were up 38 cents. At 10 a.m. June 26, July soybeans were up 14.5 cents and the November contract was up 14.5 cents.

Concerns about slow soybean planting continued to provide support, as soybeans closed with strong gains June 22. Moisture continues to keep planting slow, and will likely lead to reduced yields in some areas, particularly for those crops still unplanted. June 22, USDA announced a sale of 147,700 metric tons of soybean cake and meal to Mexico. Last week’s export inspections were light, but above the amount needed to keep pace with USDA’s projection.

Soybeans finished mixed June 23, with light losses in July, and small gains in new-crop November contracts. June 24 brought another round of small losses, this time for both nearby and deferred contracts. The June 22 crop progress report showed a 2 percent decrease in good to excellent soybean ratings. Planting and emergence was 5 percent, and 3 percent behind the five-year average, respectively. Planting in Kansas and Missouri continues to lag, with Missouri only 51 percent planted, compared with 88 percent for the five-year average. Rains continue to cause planting problems, with more rain in the forecast for Missouri and the eastern Midwest. It is expected that some acreage will be lost, but how much remains to be seen.

Ongoing rain continued to support soybeans June 25, as the market hit new highs for the move, before closing at its highest level in three months. The rain has slowed planting and led to lost acres, though it’s too soon to tell how many acres will go unplanted. The rain also poses problems for potential double-crop acres, and for beans that are planted in fields that have standing water. The market continued to position ahead of the June 23 acreage report. June 25 export sales were light, but the total remains ahead of USDA’s projection for the year.

USDA reported soybean export inspections pace for the week ending June 16 at 6.5 million. This brings the year-to-date export shipments pace for soybeans to 1.749 billion bushels, compared with 1.563 billion bushels last year at this time.

The export sales pace was estimated at 4.4 million bushels. This brings soybean’s export sales to 1.856 billion bushels, compared with 1.671 billion bushels last year. With 10 weeks left in soybean’s export marketing year, shipments need to average 6.1 million bushels, and sales have exceeded USDA’s 1.810-billion-bushel estimate.

For the week ending June 21, soybeans were 90 percent planted, compared with 87 percent the previous week and 95 percent for the five-year average.

Barley

For the week ending June 21, headed barley was at 38 percent, up from the five-year average of 14 percent. Barley conditions were 76 percent good to excellent, 21 percent fair and 3 percent poor to very poor.

For the week ending June 25, cash feed barley bids in Minneapolis were at $2.65, and there was no bid for malting barley.

Durum

USDA reported the durum export inspections for the week ending June 16at 768,996 bushels. Durum export sales were reported at 1.2 million bushels. This brings the year-to-date export sales pace for barley to 8.6 million bushels, compared with 5.4 million bushels last year at this time.

For the week ending June 25, cash bids for milling quality durum were at $8.75 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was $8.75 per bushel.

Canola

For the week ending June 25, the front-month July canola contract gained $12.50 to $516.20 (Canadian). Canola finished with strong gains June 22, with strength in the soybean complex and rapeseed market providing support.

Dry conditions in western Canada could be further stressed by a summer forecasted to be warmer than normal. Canola contracts hit new highs overnight before correcting lower during the day June 23, with pressure tied to weakness in the soy complex. Strength returned June 24, with the hot and dry forecast for western Canada, leading to another round of new contract highs. Gains continued June 25, with canola finishing at its highest level since September 2013. Strength in the soybean complex provided support through much of the week.

For the week ending June 25, cash canola bids in Velva, N.D., increased 2 cents to $18.19 per hundredweight.

Sunflowers

USDA estimated soybean oil export sales pace for the week ending June 16 at 9.5 trillion metric tons. This brings the year-to-date export sales pace for soybean oil to 750.2 trillion metric tons, compared with 738.9 trillion metric tons last year.

For the week ending June 21, sunflowers were 93 percent planted, up from 86 percent the previous week and the five-year average of 81 percent.

For the week ending June 25, July soybean oil futures were 81 cents higher, at $33.36. Cash sunflower bids in Fargo, N.D., were up $1.45 on the week at $23.45 per hundredweight.

Tags: