Advertise in Print | Subscriptions
Published May 24, 2010, 11:57 AM

Ideal weather limits market move

The wheat market started the week off trading lower but found strength to recover to end with minor losses. The wheat market took a large hit the previous week, losing between 30 to 40 cents, while the other grains were only slightly lower.

By: Ray Grabanski,

Wheat

The wheat market started the week off trading lower but found strength to recover to end with minor losses. The wheat market took a large hit the previous week, losing between 30 to 40 cents, while the other grains were only slightly lower. USDA’s export inspections report was not friendly for wheat and that brought in some additional selling pressure, as did another stronger session in the U.S. dollar. Technical buying and short covering helped wheat to bounce off of recent lows. Technically, wheat is ready to stage a slight recovery, but it will take a stronger session in the other grains to help push wheat higher.

Wheat opened the May 18 session with little fanfare and closed in the same fashion. The exchanges started the session steady to slightly higher as spillover strength from a stronger overnight session and from spillover buying from the other grains. Light support was a result of a weaker U.S. dollar as well. But once the dollar improved and actually turned to trade with small gains, the wheat market slipped to trade mostly steady. The wheat market has little to go on as supplies remain plentiful and demand remains poor. Wheat has had a tough time garnering any export interest as most of the buyers looking for wheat have been migrating to the European Union, especially with the drop in their currency and the increasing U.S. dollar. And so far, conditions have been as close to ideal for the 2010 crop as it could be (highly rated winter wheat crop and rapid planting progress for spring wheat).

The May 19 session had wheat starting mixed, but it appeared that most of the months wanted to trade higher. There just was no follow-through buying to help push wheat higher. Wheat seemed to be willing to take a back seat and play the follower for the second session in a row. Technical buying from short covering tried to help support wheat, but once the exchanges traded with gains, selling pressure pushed the market back to lower territory. On the flip side, no one really wants to sell wheat now either as most months are sitting at or near support lines. With no real bullish or bearish news of its own, wheat just seems content to drift this week. Kansas City was the market that had the best gains.

The wheat market opened the May 20 session lower and traded with minor losses throughout most of the session. The wheat exchange tried to push higher, but whenever the market gained a little ground, selling stepped back in to push the wheat lower. The biggest influencing factor in the wheat market came from the other grains as wheat continues to play a follower.

Corn

To start the week, the corn market opened down 2 cents and drifted lower into the close, ending down 7 cents. The overnight market was lower and that carried over to the day session. The outside markets also had a negative tone and they added additional pressure. Crude oil traded under $70 a barrel most of the session and the dollar was much stronger. Also, the euro has dropped to its lowest level in four years, as compared with the dollar, with Europe’s debt problems. The dry weather also added additional weakness. Estimates for the crop progress report also weighed on the trade.

The corn market opened 5 cents higher May 18 and basically stayed there. The outside markets were positive and that supported the open. What was impressive with corn was that crude oil was more than $2 higher and then broke lower, but the corn did not follow. The market also was supported with the crop progress report that came in below estimates. Also, a new weather forecast came out and stated that a high pressure ridge will enter the Corn Belt in the next week. This supported the market as the weather will be hot and dry with most of the crop in the ground.

The corn market opened 2 cents higher May 19, being influenced by the higher overnight market. Buying interest failed to materialize and corn ended the day down .5 cent with the July contract hitting a three-week low. The market traded higher in the overnight and to start the session, with the news that China purchased two cargoes of corn. This news was short-lived and the market came back to trade lower with the nonthreatening forecast. Also, early estimates for the June 30 report are that there will be 1 million to 2.5 million more acres of corn planted than what USDA estimated March 31. The thoughts of additional acres and early planted crops have a tendency to produce large yields limits any upside moves. On the other hand, chances of going through the summer without a weather scare will be slim. The corn market also is nervous with the uncertainty in the global economy.

Corn opened 5 cents lower May 21 and traded with losses for most of the session, but at the close, we saw the market push higher to end with 3.5-cent gains. The market opened lower with the bearish outside markets, as crude oil was down hard and the dollar was much higher. As we moved through the morning, there was noncommercial selling to keep the corn market trading with red numbers. Some news that did limit the losses early was the export sales report, which had good numbers. Again, we traded lower until the close, when the soybean market moved higher and the corn followed.

Soybeans

The soybean market started the week off on the defense, trading with decent losses throughout the session. By the close, most of the contracts were sitting just off of session lows and at strong support levels. The soybean market was under pressure from spillover selling from a stronger U.S. dollar, which continues to see the benefits of the European financial situation. Additional pressure came from a slowdown in demand for U.S. soybeans as well as from what traders were expecting to see as good planting progress in the crop progress report. Weather forecasts have turned to be more bearish as a warmer drier weather is expected to move into the regions.

The May 18 session started higher with most of the buying strength coming over from a higher overnight session. But the soybean complex could not hold the strength and slipped off of its highs by midsession. The selling gained momentum during the second half of the session as early-session buyers turned to be late session sellers. This pushed the soybean complex lower on the close. Early strength was a result of friendlier-than-expected crop progress report. The report estimated soybean planting progress at a disappointing 38 percent complete. Trade estimates had progress closer to 45 percent.

The soybean market started the May 19 session higher with much of the early support spilling over from the higher overnight session. Additional support came from technical buying. The soybean complex has been under pressure lately, and with most of the contract months sitting at or near support lines, it would stand to reason to see a little dead cat bounce. The old crop months had the most strength as rumors that export buyers are starting to switch old crop soybean purchases from South American origin to North American origin. This helped to support the old crop soybean contracts. The new crop contracts were pressured by weather forecasts, which are calling for close to ideal planting and growing conditions.

The May 21 session started lower and traded with double-digit losses throughout most of the session. Early selling pressure was because of favorable growing conditions as well as from another session when the dollar traded higher. But there seemed to be more friendly news than bearish news, it just took until the close for the friendly news to have an impact on the market. USDA’s export sales report was friendly to the soybean complex as it continues to show strong demand for U.S. soybeans. Technical buying on the close also helped to support the soybean complex to stage its late-session recovery. Support lines are continuing to hold, and it seems it will take new news to force soybeans through the strong support lines.

Barley

USDA reported no barley shipments for last week. This brings the year-to-date export sales pace for barley to 3.3 million bushels compared with 11.3 million bushels for last year at this time. There was no barley export sales reported for last week. This brings the year-to-date export sales pace for barley to 4.3 million bushels compared with 11 million bushels for last year at this time. USDA is projecting the 2009 barley export sales pace at 5 million bushels. There was two weeks left in the marketing year.

Cash feed barley bids in Minneapolis dropped 5 cents to now be at $2.20. Malting barley bids were left unchanged at $3.15.

Canola

Canola futures on the Winnipeg, Manitoba, futures closed 70 cents to $1 (Canadian) lower for the week ending May 20. Most of the selling pressure was a result of improving weather condition in the Northern Plains. Weather forecasts have improved greatly and the recent drier warm spell should allow planters to get rolling. Additional selling was a result of spillover selling from a lower U.S. soybean complex, which was lower on favorable weather forecasts. Losses were kept in check because of strong domestic crush demand. Crushers have been stepping up their canola purchases mainly because of the recent decline in the Canadian dollar. Farmer selling also has slowed as producers have turned their attentions to getting the crop into the ground.

The May 20 cash canola bids in Velva, N.D., for old crop canola were $16.53, while new crop bids were $15.56.

Sunflowers

As of May 16, 2 percent of North Dakota’s sunflower crop was planted compared with 1 percent last week and 12 percent for the five-year average. Minnesota producers are estimating sunflower planting progress at 32 percent complete compared with 26 percent last week and 24 percent for the five-year average.

The cash sunflower bids for May 20 in Fargo, N.D., were at $13.50.

Tags: