Markets: Grain conditions improveWheat traded back and forth last week, corn futures traded sideways after closing higher the previous two weeks and soybeans were down for the week.
By: Ray Grabanski , Progressive Ag
Wheat traded back and forth last week. Improving weather conditions and position-squaring ahead of the U.S. Department of Agriculture’s July Crop Production estimate were the main focus. Strength from the other grains added support. For the week ending July 9, September Minneapolis wheat lost 5 cents, September Chicago dropped 12.5 cents and September Kansas City wheat gave back 12.5 cents
The July 6 session started rocking, with selling tied to spillover pressure from the previous week and the lower corn and soybean complex. By midsession, wheat was able to recover, and once the market hit unchanged, buy stops were triggered. Production concerns, as harvest results continue to come in with fair yields (but subpar quality), continue to support the market. The soft red wheat region continues to be much wetter than needed, especially with harvest fast approaching.
The July 7 session took back everything gained July 6. Wheat had no news of its own, and followed the row crops lower. Noncommercial selling and strength in the U.S. dollar provided additional pressure, as the situation in Greece continues to unfold.
Dry conditions in Western Canada and northwest U.S. continue to be troublesome, particularly with wildfires in both regions.
July 8 was the deciding day for which direction the market would take. Wheat traded on the defense throughout the session, trading contrarian to the other grains. Wheat was the market that started the June rally, but since has given back a lot of those gains in July. Position-squaring ahead of the USDA report was evident, as most expected a negative report July 10. USDA had foreshadowed a portion of the report by showing higher-than-expected stocks in the quarterly grains stocks report. This will increase the 2014 ending stocks estimate. In addition, USDA will update the 2015 planted acreage estimate, which was larger than expected. That will also add to the ending stocks estimate.
Wheat was able to trade with gains early in the July 9 session because of support from a higher corn and soybeans complex. Another bearish export sales estimate made traders realize the best positions for wheat was short. Additional selling was tied to position-squaring ahead of the July 10 crop production report.
USDA estimated wheat’s export shipments pace at 13.6 million bushels. This brings year-to-date export shipments pace to 59.1 million bushels, compared with 85.7 billion bushels last year. The wheat export sales pace was estimated at 12.7 million bushels, bringing the yearly total to 227.5 million bushels, compared with 300.1 million bushels last year. USDA’s wheat export pace was estimated at 925 million bushels.
As of July 5, 76 percent of the nation’s spring wheat crop was headed, compared with 49 percent the previous week and 47 percent for the five-year average.
Spring wheat’s crop condition rating decreased 2 percent, bringing it to 70 percent good to excellent, 24 percent fair and 6 percent poor or very poor. Winter wheat harvest was estimated at 55 percent complete, compared with 38 percent the previous week and 59 percent for the five-year average. Winter wheat crop conditions decreased 1 percent, to 40 percent good to excellent, 37 percent fair and 23 percent poor to very poor.
The corn futures traded sideways last week, after closing higher the previous two weeks. Support came from excessive rain and smaller-than-expected numbers in the June 30 reports. Funds have also shifted their short position in the corn market to the long side. The upside was limited, with an improvement in crop ratings and a drier forecast. The weather is forecast to be warm, and moisture is ample to start pollination. As of the July 9 close, the December contract was up 2 cents for the week.
The corn futures were double-digits lower July 5, but did firm in the day session to end slightly lower. Early weakness came from pressure in the outside markets because of global economic concerns with Greece. The weather has been drier, with warm forecasts as pollination starts. Futures recovered from lows during the day, with the turnaround in wheat. July 7 was a repeat of July 6. Weakness came from an improvement in the crop condition rating, while traders were expecting them to drop 1 percent in the good to excellent category. Instead, the report showed a 1 percent increase.
Additional weakness came from the strength in the dollar and negative tone in outside markets.
Corn futures were slightly higher July 8, with light buying interest. Early support came from the lower dollar and the strength in the soybeans. Additional support came from the ethanol report, which showed corn use up, but stocks also were slightly higher. USDA said 450.2 million bushels of corn was used for ethanol in May, up from 409 million bushels in April. More rain spanned from Texas to Michigan and moved east, where it is still too wet. Forecasts, though, called for drier conditions.
Corn traded higher July 9, moving above the $4.40 level, and settling just under that. Ahead of the World Agricultural Supply and Demand Estimates report, traders were expecting a reduction in yield to 165.2 bushels per acre, from 166.8 bushels per acre in June.July 9 export sales were well above the amount needed to keep pace with USDA’s projection.
For the week ending July 5, corn was rated 69 percent good to excellent, 23 percent fair and 8 percent poor to very poor. Silking was 12 percent, versus 14 percent one year ago and 18 percent for the five-year average.
USDA’s export inspections report was bearish for corn at 33 million bushels, below the 45.1 million needed to meet USDA’s projection. Corn’s export sales pace was estimated at 21.1 million bushels. This brings corn’s export sales to 1.819 billion bushels, compared with 1.873 billion bushels last year. With eight weeks left in corn’s export marketing year, shipments need to average 47.2 million bushels, and sales need to average 730,000 bushels to reach USDA’s 1.825 billion-bushel estimate.
As of the July 9 close, November soybeans were 14.5 cents lower for the week.
Soybeans began the week lower, losing nearly 45 cents by the end of July 7 trading.
The economic situation in Greece put widespread pressure on commodities to start the week, as traders tried to reduce their riskier positions. Of course, weather was of more concern to soybean contracts. After the weekend brought drier weather, rain returned to Texas, Missouri and the eastern Midwest.
July 6 export inspections were decent, above the amount needed to keep pace with USDA’s projection.
The crop progress report was better than expected, with planting nearly caught up to the five-year average, except in Missouri, which is well behind.
July 8 overnight trade finished with modest losses, but the market quickly recovered after trade reopened with gains throughout the day. Wet weather has made it difficult to accurately project production this year. A resurvey of Kansas, Arkansas and Missouri will help, but that information will not be available until the Aug. 12 WASDE report. On July 8, USDA announced a sale of 240,000 metric tons of soybeans to unknown destinations. Soybeans moved higher July 9, with excessive moisture providing support.
July 9 export sales were modest, but continued to add to a total that has exceeded the current USDA estimate.
Soybeans’ export inspections pace was 7.3 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.767 billion bushels compared with 1.569 billion bushels last year at this time.
The soybean export sales pace was estimated at 1.5 million bushels, bringing export sales to 1.857 billion bushels, compared with 1.675 billion bushels last year. With eight weeks left in soybean’s export marketing year, shipments need to average 5.4 million bushels, and sales have exceeded USDA’s 1.810-billion-bushel estimate.
For the week ending July 5, soybeans were 96 percent planted compared with 94 percent the previous week and 100 percent for the five-year average. Emergence was 93 percent compared with 89 percent the previous week and the five-year average of 97 percent. Soybeans blooming was at 21 percent, compared with 8 percent the previous week and the five-year average of 21 percent. Soybean conditions were 63 percent good to excellent, 28 percent fair and 9 percent poor or very poor.
With no export inspections or sales reported, the year-to-date export sales pace for barley is 400,000 bushels, compared with 1.1 million bushels last year at this time.
For the week ending July 5, barley headed was at 84 percent, up from 62 percent the previous week and the five-year average of 47 percent. Barley conditions were 73 percent good to excellent, 21 percent fair and 6 percent poor or very poor. For the week ending July 9, cash feed barley bids in Minneapolis were $2.75, and there was no bid for malting barley.
With no export inspections or sales reported, the year-to-date export sales pace for durum is 10.3 million bushels compared with 6.1 million bushels.
For the week ending July 9. 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.
For the week ending July 9 the November canola contract gained 70 cents, to $532.10 (Canadian). Canola was lower through much of the session July 6, before a late rally to close mixed. The situation in Greece had put pressure on commodities as traders tried to reduce risky positions. Production concerns for Canadian canola helped support the late push. July 7 and 8 saw canola close lower, with spillover pressure from sharply lower CBOT soybeans and rain in Western Canada.
For the week ending July 9, cash canola bids in Velva, N.D., decreased 27 cents to $17.84 per hundredweight.
USDA estimated the export sales pace for soybean oil at 1.4 thousand metric tons. This brings the year to date export sales pace to 756.9 thousand metric tons, compared with 771.1 thousand metric tons last year.
For the week ending July 5, sunflowers were 98 percent planted, compared with 89 percent the previous week and the five-year average of 96 percent.
For the week ending July 9, August soybean oil futures were $1.11 lower to $32.37 per hundredweight. Cash sunflower bids in Fargo, N.D., were $22 per hundredweight.