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Published February 08, 2010, 12:00 AM

Financial market concerns take gains

The wheat markets for the week ending Feb. 4 were posting 1- to 2-cent gains. The week’s trading range was 20 to 25 cents. It appears that the recent downtrend has slowed as wheat prices approach the October lows.

By: Ray Grabanski,

Wheat

The wheat markets for the week ending Feb. 4 were posting 1- to 2-cent gains. The week’s trading range was 20 to 25 cents. It appears that the recent downtrend has slowed as wheat prices approach the October lows.

The wheat markets opened the week Feb. 1 with mixed trade but spillover support from a lower dollar index resulted in gains of 4 to 7 cents at midday. Wheat then followed the softening soybean market to end with gains of 1 to 2 cents. Export inspections were good for wheat again, but cumulative inspections still are trailing last year by almost 25 percent. The dollar index was lower after making minor new highs in the overnight session, and the stock markets were higher, which gave support to commodities. Wheat led the row crops higher because of the weaker dollar, but the speculative buying ran out before the end of the day. Short covering by spec traders was obviously the name of the game, shown by the fact that the Chicago market (primary wheat market for specs) led the hard wheat markets by several cents at midday.

The Feb. 2 wheat markets opened higher with March Chicago up 6 cents and continued buying interest resulted in gains of 10 to 12 cents at the end of the day. The dollar index moved lower again and crude oil was sharply higher. The support from outside markets was enough to spark noncommercial short covering and commercial buying as wheat had recently become oversold. The wheat market traded through some minor resistance, with more significant resistance to be found around $5.23 March Minneapolis Romania estimated its crop size to be up 35 percent from last year.

The wheat markets opened lower Feb. 3 with March Chicago down 2 cents and continued to move lower with 12- to 18-cent losses at the end of the day. The dollar index rallied to close near recent highs, which brought intense noncommercial selling pressure into the wheat market as speculators continued to add to their short positions. March Minneapolis wheat closed below recent lows and is less than 6 cents away from the October low of $4.93.

The wheat markets opened mixed Feb. 4 with March Minneapolis up 1 cent and continued to move higher with 10-cent gains at midday before the buying interest softened. The wheat markets closed with 3- to 6-cent gains across the three exchanges. The sharp rally in the dollar index continued with brand new highs, while $4 losses in crude oil and 200-point losses in the Dow Jone futures were a result of disappointing economic indicators. Remarkably, wheat was able to lead the grains to the upside despite the intense pressure from outside markets, especially the dollar. Exports were decent for wheat, but the sharply higher dollar will make it more difficult to continue that trend into the future. It appears that the oversold wheat market benefited from noncommercial short-covering and possibly attracted some buying interest from traders bailing out of the metals, stock markets, and energy markets. March Minneapolis wheat still has major support around $4.93 with resistance likely around the Feb. 2 high of $5.1675.

Corn

The corn market lost 3 cents on the week. There just is no new news to give the market any direction. The large crop USDA estimated has pressured this market the past three weeks. The dollar also has been stronger and crude oil has softened the past few weeks to limit upside moves. Exports have picked up to provide some underlying support. There also are some concerns over how the crop is storing, but this news has not affected the market to this point.

To start the week Feb. 1, the corn market opened slightly higher and traded there for the session to close 2 cents higher. The outside markets were supportive, and that did help the corn trade with positive numbers. The weekly inspection report was also somewhat friendly to add additional support. There also was some short covering that took place during the session. The corn market is now at four-month lows and has traded at these levels the past week. The 10-day moving average in corn is at $3.64 in March and we will have to break above this to create buying interest. The market is desperately looking for some fresh news.

The corn market opened 3 cents higher Feb. 2 and continued to trade with positive numbers, ending the day 5 cents higher. There really was not much news to move the market other than the outside markets were supportive, as crude oil was higher and the dollar was down. Also, the market has been under pressure the past two weeks and the shorts took some profits. We did close above the 10-day moving average in the March corn at $3.64.

The corn market opened 2 cents lower Feb. 3 and continued to slide from there, closing 12 cents lower at the session lows. The market took back all of the previous day’s gains and then some before closing. The outside markets had a negative tone, as the crude oil market traded lower and the dollar was stronger to pressure the market early. Informa also came out with its estimates of the South American corn crop. Brazil’s production was increased to 53.3 mmt and Argentina’s to 18.2 million metric tons. These numbers combined are 5.5 million metric tons more than last month’s USDA estimate.

The corn market opened 3 cents lower Feb. 4 and then firmed up as the session went along to close 1.5 cents higher. The close was impressive when one looks at how the outside markets performed, as crude oil was down by $4, gold down $50, the DJIA down 275 points and the dollar was up 6 points. The corn traded in a different direction with short covering and follow through selling going to the sidelines. EPA also announced that it will lift the cap on the current 15 billion gallon-a-year production limit on the renewable fuel standard. Under the new rule, 12.95 billion gallons will be added to 2010, with the majority of that coming from ethanol. This news supported the corn market. The export sales came in within the estimates.

Soybeans

Soybeans trading range for the week was between 25 and 30 cents, but by the end of Feb. 4, most of the soybean contracts were posting no change to 1-cent losses.

The soybean market started the week with the March contract up 2 cents and had 8 to 10 cent gains before the short covering rally fizzled out to end the day with 2- to 4-cent losses. Outside markets were supportive with losses in the dollar index, strong gains in crude oil, and another 100-point gain in the DJIA. Export inspections were very strong again this week with cumulative inspections running a whopping 40 percent ahead of last year. Even with outside support and strong exports, the soybean market was unable to sustain its rally as it continues its downward trend.

The soybean market started the Feb. 2 session with the March contract up 7 cents and had additional buying interest during the day to end with 12- to 17-cent gains. Outside markets were the primary market mover with gains of almost $3 in crude oil, higher stock markets, and a lower dollar. We made new soybean lows for 2010 during the overnight session before strong buying interest gave us a 25-cent range to the upside, closing near the highs for the day. The South American harvest is about 5 percent complete with yield reports higher than expected.

The soybean market started the Feb. 3 with the March contract down 1.5 cents. Liquidation by long specs resulted in 14- to 17-cent losses. The sharp rally in the dollar index put heavy pressure on the grain markets, and the mixed trade in other outside markets did little to help. Soybean trade was able to hold above Tuesday’s lows, while corn and wheat made new lows for 2010. Informa released new South American soybean production estimates 2.5 million metric tons higher than the latest USDA estimate.

The soybean market started the session with the March contract down 5 cents and bounced off psychological support at $9.00 to recover to mixed trade midday. A spurt of buying interest rallied the market into the close with 3- to 6-cent gains posted at the end of the day. The sharp rally in the dollar index continued with brand new highs, while $4 losses in crude oil and 200-point losses in the DJ futures were a result of disappointing economic indicators. Remarkably, the grain markets were able to brush off the intense pressure from outside markets and trade with gains for the day. Exports were decent for all the grains, but that alone cannot explain the day’s strength. It appears that the oversold grain markets ran out of sell orders and possibly attracted some buying interest from traders bailing out of the metals, stock markets, and energy markets. The soybean complex also found support after the EPA announced that it will be increasing the mandate for biodiesel production in 2010. March soybeans still have minor support around $9 before major support is found near the fall lows of $8.88. Resistance will be encountered around Feb. 2’s high of $9.30.

Barley

Cash feed barley bids dropped 5 cents in Minneapolis. Current cash feed barley bids are at $2.35. Malt barley bids remain off the board.

Durum

USDA estimated last week’s durum export shipments pace at 96,000 bushels. Last week’s export sales pace was estimated at 300,000 bushels. This brings the year-to-date export sales total for durum to 33 million bushels compared with 15.1 million bushels for last year at this time.

Canola

The Feb. 4 cash canola bid in Velva, N.D., was $15.62.

Sunflowers

Feb. 4 cash sunflower bids in Fargo, N.D., were at $13.45.

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