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Published March 08, 2010, 07:19 AM

Trading in the range

The wheat markets lost 10 to 20 cents on the week. The Chicago market had the larger losses because of speculative selling pressure while the Minneapolis market had less non-commercial volume.

By: Ray Grabanski,

Wheat

The wheat markets lost 10 to 20 cents on the week. The Chicago market had the larger losses because of speculative selling pressure while the Minneapolis market had less non-commercial volume.

The wheat markets started the week Monday by opening 6 to 10 cents lower and continued to move lower to close with losses of 10 to 15 cents. Wheat came under intense pressure from outside markets as the dollar had strong gains. The strong dollar will hurt exports. A recent tender from Iraq was awarded to Russia and Canada, though Canada is further from Iraq than the U.S. Deliveries against the March contract have been lighter than expected, which is somewhat supportive. Export inspections have caught up to USDA projections for the first time since July, but even with projections being met, there still will be large stocks of wheat in the U.S. and the world.

The wheat markets opened 1 to 2 cents higher but quickly moved lower because of pressure from the higher dollar. As the dollar turned lower, the wheat markets rallied to have small gains before closing mixed. The dollar index was 767 points off the session highs by the end of the day, which brought support back into the wheat markets. Winter wheat crop condition ratings are somewhat lower than last year, and rumors of intentions to destroy wheat acres to plant corn are starting to surface. Australia estimates its wheat crop to be 1 percent larger than last year, and Spain is estimating its wheat crop to be 7.3 percent larger.

The wheat markets opened 2 to 3 cents higher March 3 and moved steadily higher throughout the day to close with gains of 9 to 11 cents. The dollar index continued lower and was under 80 cents by the end of the day after trading up to 81.342 March 2. This brought strong noncommercial buying interest into the wheat markets, and wheat became the leader in the grain markets.

The wheat markets opened 6 to 8 cents lower and had losses of up to 16 cents before recovering slightly to close with losses of 7 to 13 cents. The dollar index rallied again. This brought heavy noncommercial selling interest into the wheat markets with little commercial activity. Traders were expecting another week of decent export sales; instead, they got downright lousy sales of 3.7 million bushels. Wheat has not broken out of its sideways trading range but looks to test support around $4.92 May in Chicago. Minneapolis futures fared better because most of the noncommercial speculative activity takes place in the Chicago market.

Corn

The corn market lost 6 cents on the week. The corn market has traded in a sideways pattern the past 3 weeks and has been led by the direction of the outside markets as corn lacks any fresh news of its own. The possibility of a wet spring, which could delay planting, has supported the corn market. On the other hand, we have to deal with the record crop that was produced in 2009. The next report of significance will be the USDA supply-demand and crop production reports March 10. These reports could make the market move.

To start the week, corn opened 1 cent higher but quickly moved lower and ended with 6- to 7-cent losses. The sharply higher dollar put pressure on the corn market, as did another week of export inspections falling behind USDA projections. Favorable weather in Argentina and overbought market conditions added pressure. Concerns about corn spoiling, high usage because of low test weight and delayed planting continue to provide light support to the corn market and will likely limit downside moves.

The corn market opened with small gains but quickly moved lower on continued non-commercial selling. The market had a late session surge because of strength in crude oil but closed mixed. Outside markets were supportive with strong gains in crude oil and lower trade in the dollar index. Favorable weather in Argentina and overbought market conditions provided pressure. Light farmer selling and steady commercial buying continued to provide light support.

The corn market opened 2 cents higher March 3 and continued to firm as the day went along, closing 5 cents higher. The overnight market was higher, which supported the open. The outside markets had a positive tone to give strength at midsession that carried over to the close. The crude oil market traded at more than $80 per barrel and the dollar was weak. Additional support comes from worries of spring planting delays because of excessive moisture throughout much of the country. Lack of any fresh news leaves corn trade in a narrow range.

The corn market opened 4 cents lower March 4 and traded in negative territory for the day to finish down 3.5 cents. The overnight markets were softer and the carried over to start the day. The outside markets had a negative tone, and that pressured the market for the session. There also was some profit taking that took place, in addition to the lack of commercial support, which added pressure. USDA’s export sales report was friendly, providing some underlying support.

The market opened 4 cents higher March 5 with short covering taking place, but then quickly sold off. At midsession, corn was down 5 cents as traders squared up positions before the weekend.

USDA’s export sales report estimated corn export sales pace for last week at 30 million bushels, which was above the 28.5 million bushels needed to meet USDA’s projection of 2 billion bushels. This was below the range of the pre-report estimates of 13.8 million to 21.7 million bushels and bearish for corn.

Soybeans

Soybeans lost 15 to 20 cents on the week, with most of those losses coming March 4 as commercial support fell apart.

The soybean market started the week March 1 with May down 5 cents but traded on both sides of unchanged within a 15-cent range before closing with gains of 1 to 2 cents. Outside markets were mixed with a sharp rally in the dollar index partially offset by strength in the stock markets. Crude oil was mostly steady but moved lower late in the day. Rain delayed harvest in the states of Parana and Mato Grosso. That kept strong export demand in place for U.S. soybeans in a time period when it was supposed to be disappearing.

The soybean market opened March 2 with May down 0.5 cents and traded on both sides of unchanged within a range of less than 10 cents before closing mixed. Nearby contracts had small gains, but the deferred contracts lost 3 to 4 cents. Outside markets were mixed early but turned supportive as the dollar turned lower and crude oil rallied past $1.50 per barrel. Soybeans have had support from strong export demand, and that demand has continued longer than expected because of slow harvest progress in Brazil. Speculation that a new jobs bill will contain the previously expired $1-per-gallon biodiesel tax credit supported soybean oil.

The soybean market started March 3 with May up 4.5 cents but had choppy trade within a range of less than 9 cents before closing with small gains. Outside markets were supportive with continued losses in the dollar and gains in crude oil. Even with strong outside support, soybeans were unable to trade through resistance. Harvest delays continue in parts of Brazil, with some locally heavy rains in Argentina as well, but traders still expect a record-breaking South American crop. May soybeans have become range bound with support around $9.60 and resistance around $9.70.

The soybean market opened March 4 with May down 10.5 cents and had 20-cent losses by midday. The market was mostly steady from there to close with losses of 17 to 22 cents. Pressure from the higher dollar and lower crude oil brought heavy noncommercial selling into the market, and there was little commercial buying to stop the downturn. The market traded through support early and triggered sell stops to move quickly lower. A drier forecast for Brazil eased harvest concerns there, and a new weekly low for export sales confirmed the fact that China is buying new crop beans from South America. May soybeans likely will test support around $9.30 with major support at the February low of $9.11.

Barley

USDA reported no export inspections for barley or barley export sales for last week. This brings the year-to-date export sales pace for barley to 4.3 million bushels compared with 10.5 million bushels for last year at this time. Cash feed barley bids in Minneapolis dropped 5 cents to $2.35. Malt barley bids remain off the board.

Durum

The weekly USDA export inspections report showed shipments of 248,000 bushels of durum for last week. USDA reported no durum export sales for last week. This brings the year-to-date export sales total for durum to 33.9 million bushels compared with 15.1 million bushels for last year at this time.

Canola

The canola market closed the week ending March 4 with $7 to $8 (Canadian) losses. The canola market started the session off the week trading higher, but that strength gave way to spillover pressure from directionless trade in the soybean market. Commercial demand has been mostly steady for canola, but the bearish world oilseed supply situation is threatening to break canola to the downside. Additional selling was tied to a stronger Canadian dollar. Weather forecasts are calling for rain to continue in South America during the next few days, but then drier weather is expected to move in and allow for harvest activity to pick up. This added selling pressure to the canola market. Losses were kept in line by domestic crush demand. The March 4 cash canola bids in Velva, N.D., were $16.36.

Sunflowers

The March 4 cash sunflower bid in Fargo, N.D., is now at $14.10.

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