Grains holding support levels
The weather market has started. Recent cold temperatures have potential to winterkill a good chunk of the soft red wheat growing area. Record low temps March 15-16 stretched from Florida to the Iowa-Missouri border. The old saying is winter wheat has nine lives, but 28 degrees for four hours could certainly affect emergence and stand counts.
The 10-15 day forecast shows improved chances for rainfall for the south central plains. The most recent U.S. Drought Monitor showed little change from the previous week with moderate to severe drought for most of the Oklahoma, northern Texas, western Kansas and eastern Colorado winter wheat growing regions. The dryness expanded into Arkansas and Missouri last week.
Technically the market was oversold and due for an upside bump after seven straight lower sessions. The weather situation certainly helped this oversold condition. The big battle is the Chicago May 100-day moving average of $4.3775. We've been trading below that level all week but if we can get a close above that look for more short covering.
Egypt issued a tender for April 15-25, and U.S. wheat was listed as an acceptable class. Jordan has tendered 100,000 metric tons from optional origins. Turkey removed Russia from its list of acceptable origins for wheat imports. The rise in Russian grain prices has helped make the U.S. more competitive into these markets. The U.S. dollar softness after the U.S. Federal Reserve's interest rate announcement on March 15 is also supportive.
Weekly export sales totaled 58 million bushels with 49.4 for the 2016-17 marketing year. This was well above the 18.6 million bushels needed this week to be on pace with USDA's March demand projection of 2.225 billion bushels. Weekly shipments of 62.2 million bushels were above the 45.6 million bushels needed in this week's report.
China purchased 500,000 metric tons of U.S. corn for May/June shipment. Evidently the Chinese state reserve corn is so moldy it's causing pigs to abort. On March 15, USDA announced a sale of 120,000 tons of corn to Mexico for the 2017-18 marketing year. South Korea purchased 199,000 metric tons of optional origin corn.
The $3.30 to $3.70 futures levels have provided a good demand base for U.S. corn.
Ethanol production for the week ending March 10 averaged 1.045 million barrels per day. This is up 2.25 percent versus last week and up 4.6 percent versus last year. Total ethanol production for the week was 7.315 million barrels. Stocks as of March 10 were 22.766 million barrels. This is down 0.39 percent versus last week and down 0.38 percent versus last year. Corn used in last week's production is estimated at 109.73 million bushels. Cumulative corn used for this year's ethanol production is 2.93 billion bushels. Corn use needs to average 97.494 million bushels per week to meet USDA's estimate of 5.35 billion bushels.
For the week ending March 16, May corn was up 1.75 cents at $3.66 and December corn was up 1 cent at $3.875.
Soybeans closed lower eight straight days before they finally found a day of small gains on March 16. Soybeans lost 50 cents during the eight day losing streak. Commercial buying came into play as we bounced off four-month lows at $9.92 support. The USDA announced two new export sales this week, the first new sales since Feb 14. For the week ending March 16, May soybeans were down 5 cents and November soybeans were 4.5 cents lower.
The National Oilseed Processors Association crush report came out March 15 and was not the friendly news the trade was hoping for. The February NOPA soybean crush was lower than expected and the February NOPA soybean oil stocks came in higher than expected. NOPA estimated February's soybean crush at 142.8 million bushels, down 2.3 percent from a year ago and below the average market expectations of 146.1 million bushels. Soybean oil stocks totaled 1.77 billion pounds at the end of February versus the average estimate of 1.728 blllion pounds.
The U.S. Federal Reserve raised interest rates another 0.25 percent on March 15 for the second time in three months amid rising confidence in the economy. This is a move the market has been anticipating for a couple months now and did not come as a surprise. The Fed is expected to raise the rate two more times this coming year, but the tone from Federal Reserve Chair Janet Yellen was not overly hawkish and may have eased the markets fear of a more aggressive approach in the near future.
Commodity Futures Trading Commission data showed noncommercials last week were still bullish but slowly cutting back on positions. As of March 7, noncommercials were net long 128,000 contracts, down from 132,000 the previous week. Ag Rural put Brazil's soybean harvest at 56 percent versus 47 percent average. Mato Grosso is 88 percent harvested. Farmer selling has slowed again in Brazil as a higher Real and lower board prices are discouraging sales.
For the week ending March 16, canola May futures in Winnipeg, Manitoba, were down $17 Canadian to $505.8 Canadian per metric ton. The Canadian dollar traded up slightly to 0.7499. This brings the U.S. price to $17.20 per hundredweight.
Cash bids in Velva, N.D., were $16.58 per hundredweight for March and $16.51 for April. Enderlin, N.D., bids were $17.70 for March-May. Hallock, Minn., bids were $17.22 for March and $17.39 for April. Fargo, N.D., bids were $17.70 for March-May.
Canola prices hit two-month lows as pressure in soybeans continues to weigh on this market. The Canada canola futures five-month low of $502 Canadian per metric ton is next support.
A smaller than expected monthly crush and a larger than expected U.S. soyoil stocks also put pressure on soyoil and canola prices.
Cash feed barley bids in Minneapolis were at $2.05, while malting barley received no quote. Berthold, N.D., bid is $2, and CHS Southwest bid is at $2.25 in New Salem, N.D.
Cash bids for milling quality durum are $6.25 in Berthold and at $6.25 in Dickinson, N.D.
Cash sunflower bids in Fargo were at $15 for April and May.
For the week ending March 16, soybean oil was 49 cents lower at $32.29 on the May contract.