Improving weather forecasts trims gainsThe wheat exchanges started the week of June 21 higher with much of the early support spilling over from the higher corn and soybean. Additional strength was because of continued concerns about Canada’s weather as more rain fell during the weekend, further delaying any chance of getting the crop planted.
By: Ray Grabanski,
The wheat exchanges started the week of June 21 higher with much of the early support spilling over from the higher corn and soybean. Additional strength was because of continued concerns about Canada’s weather as more rain fell during the weekend, further delaying any chance of getting the crop planted. The buying was enough to push the wheat exchanges up to resistance but once the wheat hit those levels, computer generated trades brought the wheat exchanges down. Light selling pressure was because of weather forecasts that are calling for almost ideal harvest conditions to move into the southern plains.
The June 22 session started lower with most of the early selling tied to pressure from weather forecasts that are calling for hot and dry conditions to return to the southern plains. Wheat tried to rally late in the session, but it was hard for wheat to hold onto gains, especially with corn posting 3 to 5 cent losses. Most of the day’s activity was focused on position squaring ahead of Statistics Canada report, which is expected to show the breakdown of the planted crops in Canada. This will be the first official look at how many acres are in jeopardy of not being seeded for each of the major crops produced (oats, spring wheat, durum and canola).
The wheat exchanges started the session higher and traded with decent strength throughout the session. Early support came from continued concerns for the wet conditions in the northern plains. Statistics Canada’s acreage report was more of what could have been than what is. The report estimates the 2010 to ’11 planted wheat acreage at 22.7 million acres, compared with 23.2 million from March’s estimate and 24.5 million from last year. But officials were quick to point out that only 80 percent of Canada’s wheat is planted which means, as of now, only 18.2 million acres have been planted and many think not much more will get planted this year. This helped to support wheat early, but the losses in the corn and soybean just proved to be too much. Corn and soybeans were both under pressure from improving weather forecasts and that selling pressure spilled over to wheat. The result was a slow sell off as wheat slowly dropped from session higher on the opening bell to session lows by the close.
The wheat exchanges opened the June 24 session lower. The Minneapolis market has been the leader of the wheat exchanges but that was not the case as Minneapolis was under extreme pressure while the Chicago market rallied. Early support for all of the wheat exchanges was because of a friendly export sales report. But the Minneapolis exchange was not to hold onto its gains as it slipped hard from fund selling and profit taking. The Chicago market was able to hold onto its gains as traders try to give soft red wheat producer a reason to move the harvesting crop. Quality of the soft red crop has been poor and right now millers are out aggressively trying to get supplies. Kansas City, Mo., exchange was caught in the crossfire, ending with minor losses.
The corn market ended the week June 24 down 16 cents. Corn was pressured all week by an improving weather forecast. The outlook for the next few weeks is for dryer and warmer weather for much of the major producing regions of the United States. This should be considered to be bearish to the market. The majority of this early planted crop is in good shape and the weather will play a role in this market as we move into summer. Exports were good this week and for the past month. This needs to continue to support the corn market. The next report of significance will be the USDA planted acreage report that comes out June 30.
Corn opened up 5 cents on June 21 and rallied to 7 cents higher early in the session, making three-week highs. The higher overnight corn trade and the strength in the outside markets supported the open. Also, a possible change in the Chinese monetary policy, which increases hope for growth in imports, supported the higher start. But, the market started to break after the first hour and ended the day down 5.75 cents. Corn traded to resistance, at which time profit taking entered the market as buying interest dried up. USDA export inspection report was seen as bearish to the market. Also, spillover weakness from wheat pressured corn.
On June 22, corn opened softer and sold off within the first 15 minutes. The market traded with negative numbers for the day and closed down 3.5 cents. Follow-throughs selling from June 21 pressured the market early. The outside markets offered no support and corn was content to trade lower. The market lacked any fresh news to make give it direction. Rumors still are flying around about China buying more U.S. corn and that did help the market come off the lows, but this has not been confirmed. Also, China remains hot and dry, which many traders think will keep them in the market to buy more U.S. corn.
The corn market opened down 2 cents June 23 and ended down 5 cents. Noncommercial liquidation pressured the market, along with the lower crude oil market. The market also is looking at the weather forecast for direction and the current forcast is seen as bearish. The forecast is for dry weather and decent temperatures for most of the country, with the very hot weather being taken out. There are isolated problem areas, but most of the crop remains in very good shape. The old saying “rain makes grain” summarizes most of the Corn Belt weather recently.
The June 24 session had corn open down 1 cent and dropping hard to 4 cents lower, to trade at two-week lows. The market was able to firm up, but did end the day down 1.75 cents, which is the fourth consecutive day that the market has closed lower. The favorable weather forecast, with no major issues on the horizon, pressured corn all week. Corn was able to come off the lows of the day because of a bullish export sales report. It also was interesting to note in the report that China purchased four cargos of corn and not the two that were talked about, this bring their total to 13 for the year.
The soybean market struggled this week as traders took some weather premium out of the market because of improving weather forecasts.
The soybean market started the week sharply higher with most of the months starting with double digit gains. Early support was because of news that China was considering to tie their currency valuation to the U.S. dollar. This was very supportive to the U.S. markets and helped the grains rally. This news was enough to push the soybean complex to trade up against resistance, but selling pressure from a sloppy trading session in wheat spilled over to pull the soybean market off of its highs. Thoughts that the crop progress report would be supportive helped to keep soybeans from dropping lower as did weather forecasts calling for a heat dome to set up over much of the southern regions of the Corn Belt.
The June 22 session had the old crop soybean contracts trading higher for most of the session. New crop was under pressure for most of the session but losses were never very large. Old crop was support by continued strong demand. Export demand has been more than adequate to keep soybeans on track to make USDA export projections, and domestic crush demand has remained firm as well. The new crop months were pressure throughout the session from weather forecasts that are calling for hot, dry conditions to move into the Delta and parts of the Corn Belt. The Delta region might not like that forecast, but most of the Corn Belt should, as long as it does not linger for very long.
The soybean market opened the June 23 session lower and extended session losses. Early selling was tied to weather forecasts that are calling for the dry areas of the Delta to have increasing chances for rain while the soggy Corn Belt and northern plain states are expected to warm up and dry out. This is a bearish weather forecast as it is exactly the sequence of events that are needed to improve crop development and crop conditions. Statistics Canada’s report was a nonevent for soybeans as all it did was show the amount of acres intended to be planted to canola and not the actual acreage planted to canola.
The June 24 session started mixed with the old crop months opening with decent gains while the new crop months opened lower. The front months were supported by a friendly export sales estimate while the new crop months were pressured by improving weather conditions.
As of June 20, barley headed out was estimated at 6 percent compared with 0 percent for the previous week and 13 percent for the five-year average.
The North Dakota durum crop emergence is estimated at 97 percent compared with 85 percent for the previous week and 99 percent for the five-year average. Jointing is estimated at 32 percent compared with 13 percent in the previous week and 41 percent for the five-year average.
Planting progress for dry beans states are : North Dakota: emergence is at 90 percent compared with 68 percent for the previous week and 85 percent for the five-year average; and Minnesota: 99 percent planted compared with 93 percent for the previous week and 97 percent for the five-year average.
As of June 20, North Dakota’s canola crop was reporting rosette at 71 percent compared with 37 percent for the previous week and 54 percent for the five-year average.