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Markets: USDA reports friendly to grains

Wheat

Wheat traded with gains for most of the Labor Day-shortened trading week. Positioning ahead of the U.S. Department of Agriculture’s Sept. 11 crop production estimate was the main feature for the week. For the short week ending Sept. 10, December Minneapolis wheat gained 5.5 cents, December Chicago picked up 10.25 cents and December Kansas City gained 2.75 cents.

In its September crop production report, USDA’s only adjustment in the 2015 wheat supply and demand numbers was a reduction in wheat exports of 25 million bushels. Exports now are estimated at 900 million bushels. The reduction followed through to increase ending stocks, now estimated at 875 million bushels, compared with the average trade estimate of 865 million bushels.

Technical buying started the week on a good step, pushing wheat higher at the opening bell. All three wheat exchanges have traded down to levels not seen in almost five years. This helped bring traders off the sidelines, as traders think wheat has hit short-term lows. Wheat appears to be comfortable lingering right now, as the market looks for direction. Position-squaring ahead of the crop production estimate was seen. Traders are expecting a slight increase in wheat’s ending stocks estimate with the annual Small Grains Summary report, due at the end of September. It’s unlikely USDA will upstage that report.

Wheat could not muster strength Sept. 9 as the market continued to search for direction. The market tried to push higher early in the session with most of the buying focused on bottom-picking. Wheat has been under pressure for most of the summer, and has seen little strength. Seasonally, wheat should have seen a little bit of a push, but with the world having abundant supplies, it doesn’t seem as if wheat wants to do anything.

Wheat traded with gains, with most of the support coming from a lower U.S. dollar. The lower dollar will hopefully help encourage export demand, which has been the missing link in the wheat market this past year. Additional support came from position-squaring ahead of the crop production report, which should not affect wheat because of the upcoming Small Grains Summary. Wheat needs a correction, but it might take a while to see if USDA’s report is bearish to corn and soybeans.

Corn

The corn market closed with green numbers for the first three days of the trading week. Short-covering and light commercial buying supported the market, as traders expected to see a friendly USDA crop production report Sept. 11.

The report supported futures on Sept. 11. As of the Sept. 10 close, December corn was up 11.25 cents for the week. The corn market closed with five-cent gains on Sept. 8 after posting a new contract low the previous day. Support came from the strength in the outside markets being driven by the Chinese stock market. USDA also announced a fresh export sale of 120,000 metric tons to Mexico. Corn was close to unchanged on Sept. 9.

Buying interest remained limited, with a crop progress report in which traders expected to see a decline in conditions. But just the opposite happened, as conditions remained unchanged at 68 percent good to excellent, well above the five-year average of 57 percent. Export inspections also came in at 16.5 million bushels, with a marketing year total of 1.771 billion bushels, which will be 79 million bushels short of making USDA’s estimate for the year.

Corn closed with 5-cent gains on Sept. 10, with supportive outside markets, a positive ethanol report and traders expecting a friendly USDA report. Trade estimates are for a lower yield and production estimate from USDA.

Corn futures were slightly lower ahead of the monthly USDA report Sept. 11, but firmed after its release. USDA’s corn production estimate came in slightly below the pre-report estimate of 13.585 billion bushels, down from 13.686 billion bushels last month. Ending stocks came in at 1.592 billion bushels, down from 1.713 billion bushels last month. If these numbers are realized, this would still be the second-highest yield and third-largest crop on record.

Ethanol production for the week ending Sept. 4 averaged 958,000 barrels per day, up 1.05 percent from the previous week. Total ethanol production for the week was 6.706 million barrels. Corn used in production is estimated at 57.48 million bushels and needs to average 57.535 million bushels per week to meet this crop year’s USDA estimate of 5.25 billion bushels. Stocks were 18.642 million barrels, down 1.89 percent, compared with the previous week and up 3.45 percent, compared with last year.

Soybeans

Soybeans traded with gains in almost every session last week. Position-squaring ahead of the USDA crop production report was the main supporting factor. For the week ending Sept. 10, November soybeans gained 7.5 cents.

USDA’s September crop production report was bearish to soybeans, as numbers came in higher than expected. Old crop numbers were the friendliest, as 2014 stocks declined 30 million bushels from a 25-million-bushel increase in crush and a 10 million-bushel increase in exports. This followed through to be the 2015 estimate and was the major change in the 2015 estimate. For the 2015 estimate, USDA increase yield 0.2 bushels and crush by 10-million bushels. The changes resulted in 2015 stocks being reduced to 450 million bushels, 20 million bushels lower than August, but 35 million bushels higher than the trade expected.

The short trading week started on the right foot for soybeans, with most months trading with strong gains throughout the session. A friendly USDA export inspections estimate started the soybean market off on the right foot. For the 2014 crop year, soybean shipments were estimated at 1.832 billion bushels, 7 million bushels more than USDA’s projection. In addition, USDA reported 4.4 million bushels of soybeans sold to an unknown destination. Soybean demand has been strong the past few weeks, but traders are concerned China will not continue to be an aggressive buyer because of economic issues.

Soybeans traded on the defense Sept. 9, with most of the selling tied to a bearish USDA crop progress report on Sept. 8. The report continues to show strong crop ratings. Many traders are expecting to see USDA reduce the soybean yield in the upcoming report, but with conditions remaining largely unchanged for the past few months, it just does not seem likely USDA will reduce the soybean yield in its September crop production estimate. Light pressure came from rumors of potential credit issues with some recent purchases from China. If Chinese demand slows, it could result in a tremendous fall out in the soybean complex.

The Sept. 10 session had soybeans trading with small gains with most of the early buying tied to position-squaring ahead of the Sept. 11 USDA report. The average trade estimate is hinting of a slight reduction in the soybean yield. It seems unlikely USDA will cut the yield, especially with the crop ratings remaining strong.

Barley

For the week ending Sept. 4, USDA estimated barley export inspections pace at 634,760 bushels, all of going to Morocco. No barley export sales were reported.

As of Sept. 6, barley harvest was at 95 percent complete, compared with 93 percent the previous week and 82 percent for the five-year average.

Sept. 10 cash feed barley bids in Minneapolis ended at $2.30 per bushel, while malting bids had no quote.

Durum

For the week ending Sept. 4, USDA reported durum export inspections pace at 973,251 bushels, with Italy the major destination (881,834 bushels). For the week ending Sept. 3, durum export sales were reported at 1.1 million bushels.

As of Sept 4, North Dakota’s durum harvest was 79 percent complete compared with 63 percent the previous week, and 49 percent for the five-year average.

Sept. 10 cash bids for milling quality durum were at $6.50 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was at $6.75 per bushel.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Sept. 10 with $12.40 (Canadian) gains. Canola traded with gains in every session. Technical buying combined with spillover support from a stronger U.S. soybean complex to help push canola higher. Light support came from rain, which is delaying harvest.

As of Sept. 6, North Dakota’s canola harvest was 66 percent complete, compared with 55 percent the previous week and 59 percent for the five-year average.

Sept. 10 cash canola bids in Velva, N.D., were at $14.06 per hundredweight.

Sunflowers

For the week ending Sept. 4, USDA estimated the export sales pace for soybean oil at 6.6 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 889.8 thousand metric tons, compared with 814.9 thousand metric tons last year.

As of Sept. 6, 5 percent of North Dakota’s sunflower crop had bracts turning brown. North Dakota’s sunflower crop condition rating was unchanged at 71 percent good to excellent, 21 percent fair and 8 percent poor.

Sept. 10 cash sunflower bids in Fargo, N.D., were at $16.75 per hundredweight.

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