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Published January 12, 2009, 12:00 AM

Wheat, soybeans higher; corn steady

As expected, the wheat market opened the week lower after a lower overnight trade. Wheat continued to trade on the negative side for most of the day because of a negative export inspection report and higher dollar. The U.S. Department of Agriculture’s export inspection report was bearish for the wheat market as only 10.6 million bushels were reported as being shipped last week. This is below the 14.8 million bushels needed to keep pace with USDA’s annual projection of 1 billion bushels.

By: Ray Grabanski,

As expected, the wheat market opened the week lower after a lower overnight trade. Wheat continued to trade on the negative side for most of the day because of a negative export inspection report and higher dollar. The U.S. Department of Agriculture’s export inspection report was bearish for the wheat market as only 10.6 million bushels were reported as being shipped last week. This is below the 14.8 million bushels needed to keep pace with USDA’s annual projection of 1 billion bushels. A higher U.S. dollar provided additional pressure on the wheat market. However, a trend of late session rallies seems to be developing as wheat rallied into the close for a third straight session to finish nears the highs of the day. This late-session rally was fueled by fund buying and a stronger soybean market, but held in check by a higher U.S. dollar.

The overnight session gains Jan. 5 were expected to push the wheat market slightly higher on the open Jan. 6. However, wheat quickly set lows for the day before taking off to the upside. Wheat followed a sharply higher soybean market and by midday had taken the reigns and was leading the corn and soybean markets. Large gains in the wheat market can be attributed to some renewed fund buying in a lightly traded market. In a market as thin as wheat has been, action from the funds can move it in a hurry, despite weak fundamentals and a higher U.S. dollar. From a technical perspective, the wheat market is testing upward resistance.

The wheat market opened the session Jan. 7 with larger-than-expected losses. After the lower open, wheat rallied to nearly unchanged at midday, but collapsed toward the end of the session and closed at the lows of the day. Commercial selling and lack of any positive fundamental news provided the pressure on the wheat market. This recent rally in the wheat market has been based on technical buying and without any positive fundamental news the wheat struggled to find any support to slow selling pressure. News of continued dry weather in South America has been downplayed because of the slow export numbers of a U.S. wheat crop, which is overpriced relative to that of competing exporters.

The wheat market opened lower Jan. 8 as expected, but seemed to attract buyers early in the session. This drove the market up to highs near midday. After posting small gains near midday, wheat lost some of its support and drifted lower into the close to finish nearly unchanged. A combination of a lower dollar and technical buying after the previous day’s sharply lower close helped wheat recover early losses. Additional support came from the higher soybean market, but as the soybeans came under pressure toward the end of the session, the wheat market followed suit and lost most of its gains by the end of the day. The rally from a lower opening came despite bearish export sales numbers as wheat continues to lag behind the necessary pace to meet USDA’s projection of 1 billion bushels for the marketing year.

USDA estimated last week’s wheat export sales at 1.5 million bushels, the lowest of the marketing year and is a 90 percent decrease from last week and 86 percent from the previous four-week average. This brings the year-to-day export sales for wheat to 802.2 million bushels compared with 1.0824 billion bushels the previous marketing year. Last week’s wheat export shipments pace was estimated at 10.6 million bushels compared with 4.3 million bushels for the previous week and 19.2 million bushels for the previous year. This brings the year-to-date export shipments total for wheat to 666.9 million bushels, which compares with 804.2 million bushels for last year at this time.

Corn

The corn market opened lower Jan. 5 with March down 5.5 cents because of pressure from other commodities and a higher dollar. The market traded in positive territory briefly in the midday before closing down 1 to 1.5 cents. The weekly export inspections report showed another week of exports falling behind USDA projections with inspections of 23.36 million bushels vs. the 36.3 million bushels needed to keep pace. In addition to the slow exports, the sharply higher dollar also weighed on this market.

The corn market opened higher Jan. 6 with March up 3.25 cents. Additional buying interest stepped in and the market added gains throughout the session, closing up 15 to 16 cents higher. Mixed trade in crude oil and a higher dollar did not seem to have much influence on this market as index funds and trend following funds continued to be buyers. Dry weather is expected to continue in South America and farmer selling remains light in the U.S.

The corn market opened lower Jan. 7 with March down 6.5 cents. Additional selling pressure came from outside markets and corn closed down 10 to 11 cents. Profit taking and a sharp increase in cash grain sales put pressure on the market, while a drop in South American production estimates was mildly supportive. Outside markets were sharply lower, and corn actually fared well compared with other markets.

The corn market opened lower Jan. 8 with March down 8 cents on spillover selling from the previous day. Corn was able to trade up to small gains in the middle of the day before selling pressure returned to bring closing prices down 9 to 10 cents lower. Trade was telling of a corn market that is vulnerable to its bearish underlying fundamentals when the buy orders stop coming in.

The corn market opened higher Jan. 9 with March up 3.75 cents on strong buying interest from many sectors of the market. By midday, corn was 10 to 12 cents higher. Despite pressure from energy markets and the dollar, corn was able to rally on support from the soybean market and continued dry weather in Argentina.

USDA estimated last week’s corn export sales pace at 11 million bushels. This brings the year-to-date export sales pace to 838.3 million bushels compared with 1.59 billion bushels for last year at this time. USDA is projecting corn exports at 1.8 billion bushels for this year. We needed corn sales of 27.2 million bushels to keep pace for sales of 1.8 billion bushels.

Soybeans

Soybeans opened lower Jan. 5 with March down 1 cent. The market quickly found buying interest and was able to break away from the negative corn and wheat markets, closing up 8 to 13 cents higher. Soybeans were supported by a strong crude oil market but pressured by the stronger dollar. Sharp gains in the Malaysian palm oil market and another week of strong exports were the primary supportive factors. The weekly export inspections were strong once again at 28.72 million bushels vs. the 15.1 million bushels needed to keep pace with projections.

Soybeans opened higher Jan. 6 with March up 12 cents. The market found more buying interest during the day and closed with gains of 23 to 30 cents. Mixed trade in crude oil and a higher dollar did not seem to have much influence on this market as index funds and trend following funds continued to be buyers. Dry weather was expected to continue in South America and farmer selling remained light in the U.S.

Soybeans opened lower Jan. 7 with March down 16.75 cents. The market found additional selling pressure during the day and closed with losses of 24 to 29 cents. Profit taking after sharp gains the day before put pressure on the market, while a drop in South American production estimates was mildly supportive. Soybeans still have positive underlying fundamentals and bullish spreads. Outside markets were sharply lower, and soybeans actually fared well compared with other markets. Crude oil was down more than 11 percent.

Soybeans opened lower Jan. 8 with March down 6.5 cents on spillover selling from the Jan. 7 losses. The selling quickly vanished and soybeans traded with decent gains for most of the day before selling pressure near the end resulted in closing prices down 1 to 5 cents. While outside markets put pressure on soybeans, another week of strong exports kept soybeans as the leader in the grain markets.

Soybeans opened sharply higher Jan. 9 with March up 23.25 cents on strong buying interest from many sectors of the market. By midday, soybeans were 22 to 40 cents higher. While outside market pressures were negative with lower crude oil and a higher dollar, buying interest was tremendous as a result of forecasts that were calling for continued dry weather in Argentina. Traders were expecting a bullish USDA report Jan. 12, and this was driving fund buying and position squaring.

USDA estimated last week’s soybean export sales at 20.2 million bushels, well above the 8.2 million bushels needed to keep pace with USDA projections. This brings the year-to-date export sales total for soybeans to 767.2 million bushels compared with 769.6 million bushels for last year at this time.

Barley

USDA reported no barley shipments for last week. This brings the year-to-date export shipments total for barley to 10.5 million bushels compared with 24.8 million bushels for last year at this time. Last week’s barley exports were estimated at 700 metric tons with Japan buying 400 metric tons while Taiwan picked up 300 metric tons. Cash barley bids in Minneapolis continue to improve. Feed barley bids in Minneapolis increased 20 cents to now be at $3. Malting barley bids improved 25 cents to $5.25.

Canola

The Winnipeg, Manitoba, canola futures market will leave the week with minor changes from last week. The market has been volatile to say the least, posting sharp gains Jan. 5 and 6. Most of those gains were given back Jan. 7. Support for the week a result of strength in the U.S. soybean and energy complex. Additional support came from news of Pakistan and China each bought a cargo of canola from Canada (China actually took two cargos). Jan. 7’s selling pressure was influenced from increased farmer selling as the canola market has rallied $71 in the last month to reach profitable levels again.