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Published July 06, 2015, 09:13 AM

Wheat strong despite bearish report

Wheat pushed higher last week despite a negative U.S. Department of Agriculture Planted Acreage report. The corn futures traded to highs last seen in December 2014 with a bullish USDA report. As of the July 1 close, November soybeans were 43.5 cents higher for the week.

By: Ray Grabanski,

Wheat

Wheat pushed higher last week despite a negative U.S. Department of Agriculture Planted Acreage report. For the short week ending July 1, September Minneapolis wheat gained 12.75 cents, September Chicago picked up 20.5 cents and Sept Kansas City gained 23.5 cents. For the month of June, September Minneapolis gained 95.75 cents, September Chicago gained $1.025 and September Kansas City gained $1.025.

The June 29 session started off higher, with most months pushing higher after another wet, soggy weekend. Weather issues — rain in the soft red and hard red winter wheat regions and drought in the white wheat region — has continued to cause concern and helped to keep the bulls in charge. June 30 was report day, and even though USDA’s reports were bearish, wheat rallied to end sharply higher. The quarterly grain stocks estimate came in at 753 million bushels, which was 35 million more than expected, and 163 million more than the June 2014 report. This likely will lead to a reduction of demand in wheat’s July supply and demand estimates.

The planted acreage report was also negative for wheat. Planted acreage for all wheat was at 56.08 million, 210,000 acres more than expected but 740,000 acres fewer than last year. Winter wheat acreage was estimated at 40.6 million, 200,000 less than expected and 1.8 million less than last year. Spring wheat acreage was estimated at 13.5 million, 300,000 more than expected and 500,000 more than last year. This kept wheat honest for a while after the release of the report, but once soybeans and corn (which both had a friendly report) rallied, wheat followed. Weather concerns added support late in the session, as too much rain continues to be an issue.

The July 1 session retuned, and reality settled back into the wheat exchange. All wheat exchanges posted sharp losses by the close as a result of technical selling and the realization that The USDA reports actually were bearish for wheat. The only item that help wheat on report day was the sharply higher corn and soybean complex. Demand for U.S. wheat remains lackluster at best. As indicated in the quarterly grain stocks report, old-crop stocks of wheat were higher than expected, and that will be more defined in July’s crop production estimate. It will likely be seen as a reduction in exports and feed demand.

As of June 28, 49 percent of the nation’s spring wheat crop was headed, compared with 23 percent the previous week and 29 percent for the five-year average.

Spring wheat’s crop condition rating increased 1 percent to 72 percent good to excellent, 23 percent fair and 5 percent poor or very poor. Winter wheat harvest was estimated at 38 percent complete, compared with 19 percent the previous week and 46 percent for the five-year average. Winter wheat crop conditions were unchanged at 41 percent good to excellent, 36 percent fair and 23 percent poor or very poor.

Corn

The corn futures traded to highs last seen in December 2014 with a bullish USDA report last week. Traders were expecting an increase in stocks and a larger acreage number, while the report was lower for both. Wet weather remains an issue for plant healt,h as we move into pollination. More rain is in the forecast. The crop conditions have also declined for the past two weeks.

The next report comes out July 10, when USDA will release its monthly production and supply and demand numbers. As of the July 1 close, the December contract was up 29.75 cents for the week.

The futures closed near unchanged June 29 as traders positioned ahead of the June 30 USDA report, with estimates for larger stock and acreage numbers. Underlying support came from widespread rain, with larger amounts in the already saturated east. Export inspections were solid, and traders expected to see a drop in crop conditions.

The much-awaited June 30 USDA report pushed corn sharply higher, as the acres and stocks were lower than expected, resulting in the highest close for 2015. Corn ending stocks as of June 1 came in at 4.447 billion bushels, up 15 percent from last year, but down from the 4.555- billion-bushel estimate. Corn planted acreage declined 2 percent from 2014 and is estimated at 88.9 million acres, which is lowest acreage number since 2010. The acreage number also declined slightly from USDA’s March 31 estimate of 89.2 million, and below the pre-report estimates of 89.292 million. Additional support came from a 3 percent drop in good to excellent crop conditions in the June 29 report, a declining number for the second week in a row because of wet conditions. Futures were lower for most of the session July 1, but firmed to close with small gains. Support came from the USDA report and wet weather. Corn remained firm July 2, with the weather forecast.

For the week ending June 28, the crop was rated 68 percent good to excellent, 24 percent fair and 8 percent poor or very poor. Silking was 4 percent, the same as a year ago, and 8 percent for the five-year average.

Soybeans

As of the July 1 close, November soybeans were 43.5 cents higher for the week. Early July 1, November soybeans were down 1.25 cents.

Grain stocks were expected to come in at 679 million bushels, while planted acreage was expected to be 85.33 million acres. Wet weather has slowed planting in the middle of the country. USDA’s export inspections were decent, coming in above the amount needed to keep pace with USDA’s estimate. The June 29 crop progress report was expected to show planting and emergence still behind the five-year average, while crop ratings were expected to show a slight decline.

The soybean market was lightly mixed ahead of the June 30 USDA report. Wet weather continues to slow planting, though the end might be in sight, with the forecast looking warmer and drier. The June 29 crop progress report showed planting, emergence and blooming all lagging behind the five-year average while the crop rating dropped 2 percent, from 65 percent good to excellent to 63 percent good to excellent. The market quickly moved higher after the release of the report, and showed sharp gains, ultimately closing at the highest level in seven months in the November contract. The planting numbers came in near expectations at 85.14 million acres, a new record high. The more interesting number for the market appeared to be the quarterly stocks estimate of 625 million bushels, below the 679 million bushels expected and another sign that demand remains strong. Statistics Canada released planting numbers June 30, as well, pegging soybeans at 5.4 million acres, down 2.5 percent from last year’s record high.

Soybeans moved lower July 1, giving back a portion of June 30’s strong gains. Selling July 1 came, in part, as a response to better conditions in the forecast and world soybean supplies that remain plentiful. Despite the forecast improving, rain continues to fall in Missouri with more expected across the Corn Belt in the forecast. Commercial demand continues to provide support to the market.

For the week ending June 28, soybeans were 94 percent planted, compared with 90 percent the previous week and 97 percent for the five-year average.

Emergence was at 89 percent, compared with 84 percent the previous week and 94 percent the five-year average of 94 percent. Soybeans blooming was at 8 percent, compared with the five-year average of 9 percent. Soybean condition ratings were at 63 percent good to excellent, 28 percent fair and 9 percent poor to very poor.

Barley

USDA’s barley export inspections were at 31,462 bushels. There were no export sales reported for barley.

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

For the week ending July 2, cash feed barley bids in Minneapolis were $2.65 per bushel, and there was no bid for malt barley.

Durum

USDA’s durum export inspections were at 768,996 bushels. The previous week’s 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 July 2 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 per bushel.

Canola

For the week ending July 2, the front month July canola contract gained $12.50 to $516.20 (Canadian). Canola finished with strong gains June 29 with strength in the Chicago Board of Trade soybean complex and rapeseed market, which provided support.

Dry conditions in Western Canada could be further stressed by a summer forecast to be warmer than normal. Canola contracts hit new highs overnight before correcting lower during the day June 30, with pressure tied to weakness in the board of trade soy complex. Strength returned July 1 with the hot and dry forecast for Western Canada leading to another round of new contract highs. The gains continued July 2 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 July 2, cash canola bids in Velva, N.D., increased 2 cents to $18.19 per hundredweight.

Sunflowers

USDA estimated the soybean oil sales pace for the week ending June 26 at 9.5 trillion metric tons. This brings the year-to-date export sales pace for soybean oil to 750.2 thousand metric tons compared with 738.9 thousand 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 July 1, July soybean oil futures were 81 cents higher to $33.36. Cash sunflower bids in Fargo, N.D., were up $1.45 on the week at $23.45 per hundredweight.

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