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Published July 20, 2010, 08:15 AM

Another week of impressive gains

The wheat exchanges started the week of July 12 mixed with most of the early selling pressured tied to the lack of news. The wheat exchanges have been able to stage a very impressive rally the past few weeks with most of the buying coming from the funds as they work some weather premium back into the wheat. News of concerning weather in the Black Sea region and in Europe added to the strength.

By: Ray Grabanski,

Wheat

The wheat exchanges started the week of July 12 mixed with most of the early selling pressured tied to the lack of news. The wheat exchanges have been able to stage a very impressive rally the past few weeks with most of the buying coming from the funds as they work some weather premium back into the wheat. News of concerning weather in the Black Sea region and in Europe added to the strength.

For the July 13 session, wheat started lower with light pressure coming from weakness in the other grains. The wheat market was able to recover and trade with sharp gains at midsession with strength coming from a report out of Russia from the Russian Grain Union. The report stated that parts of Russia are experiencing the worst drought seen in the country for more than 130 years and that a potential 9 million hectares are affected, which is equal to about one fifth of the total acreage planted.

The July 14 session started steady to slightly higher with most of the early support spilling over from the other grains. But it did not take wheat long to find its own news to rally off of. The wheat market gains started to accelerate once Russian and Germany revised their production estimate. Both countries are experiencing extreme droughts and both countries lowered their 2010 production estimates. Adding light support was a weaker U.S. dollar. Wheat did break above resistance levels, so now; the technical picture is looking friendly enough to cause the funds to continue to cover short potions.

The July 15 session had wheat open sharply higher with most of the early session strength continuing to come from production concerns in Europe, Canada, and the Black Sea region. Additional support was because of a sharply lower U.S. dollar market. The U.S. dollar has dropped significantly the past week, but USDA’s export sales report did not show any benefit from the dollar decline, exports still were poor.

Winter wheat harvest is reported at 63 percent complete compared with 54 percent in the previous week and 65 percent for the five-year average. USDA is estimating hard red spring wheat heading at 72 percent complete compared with 52 percent in the previous week and 78 percent for the five-year average.

Corn

The corn market ended the week up 7 cents. The wheat market and weather forecast supported the corn market this week. The 8 to 14 day forecast is calling for dry, hot weather to move into the central part of the U.S. at the end of July and into August. The weather forecast will play a role in this market next week. Profit taking and hedge pressure came into the market to end the week.

Corn started the week with small losses, ending down 4 cents. The lower overnight corn market and the negative tone in the outside markets pressured the market. Corn mainly was focused on the weather forecast and the conditions report. The 6 to 10 day forecast is for average rainfall and no stressful temperatures; this limited any upside move.

On July 13, corn opened lower, but firmed up after the open. The positive outside markets and the extended weather forecast helped to firm up the corn market. The weather beyond 10 days is calling for it to be hot and dry, possibly affecting pollination. The market slipped into the close. The main influence, for the weakness in the market, was the July 12 crop conditions report. Estimates were for conditions to be lowered for the third week in a row, but instead, the opposite happened.

Corn opened higher July 14 and gained strength as the day moved along. The higher overnight market and the positive outside markets supported the open. As the day moved along, wheat traded with double digit gains and spilled over to support corn. The market is looking at the extended forecast for the end of July and into August, which is calling for hot, dry weather, although some weather models now are taking the extremely hot temperatures out.

The July 15 session had corn opening higher and then rallying higher. The market did back off of the highs but still ended the day up 8.25 cents. The corn market hit six-month highs with strength coming from wheat and the weather forecast. The wheat closed 30 cents higher and that helped to support corn. In addition, the weather forecast is for hot, dry weather at the end of the month and into August. If this weather pattern materializes it could hurt some of the pollinating corn. But, by that time, most of the corn should be pollinated and we have had adequate moisture to this point.

Soybeans

The soybean market found strength this week from weather forecasts that are calling for a higher pressure ridge to move into the Corn Belt sometime toward the end of July to early August. This pushed the soybeans higher as for the week. August soybeans gained 25.75 cents, while November soybeans jumped 34.75 cents.

The soybean market started the week mixed with the old crop contracts starting higher while new crop struggled. The old crop months were supported by supply concerns. Export demand and domestic crush demand has remained strong and traders are looking for stocks to continue to be pulled down. The new crop months were pressured by short term weather forecasts calling for decent weather to be moving into the Corn Belt region.

The July 13 session started the session higher. Support was because of a decline of 1 percent in soybeans crop condition. By midsession the old crop contracts started to fade and traded with minor losses while the new crop remained in positive territory. The old crop contracts came under pressure from technical selling and from the unwinding of long old crop/short new crop spreads. This also helped to support the new crop contracts. Adding most of the support for the new crop soybean contracts was production concerns, which is being spurred on by weather forecasts calling for a high-pressure ridge to develop within the next two weeks.

The soybean market opened July 14 session higher with most of the strength continuing to come from concerns toward tight old crop supplies and from concerns that the recent weather forecasts could result in a cut in the potential yield of this year soybean crop. The soybean market was able to rally to two-month highs before pulling back slightly going into the close.

The soybean market opened July 15 session with sharp gains and with weather concerns continuing to help support the market. Additional support came from a bullish export sales pace which showed the 2009 export sales pace for soybeans to exceed USDA’s projected pace. In addition USDA reported a few large old crop purchases with 256,000 million tons going to an unknown destination while 112,000 metric tons went to China. This has been the news (high pressure ridge and strong demand) that has helped to support the soybean market. The strength has been enough to push the soybean market up above technical resistance levels.

As of July 11, soybean blooming was estimated at 40 percent compared with 23 percent in the previous week and 37 percent for the five-year average. Podding is estimated at 8 percent compared with 0 in the previous week and 7 percent for the five-year average. Soybean’s crop condition rating dropped 1 percent.

Barley

USDA estimated last week’s barley’s export shipments pace at 8,000 bushels with all of the bushels heading to Mexico. This brings the year to date export shipments pace for barley to 148,000 bushels compared with 764,000 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 800,000 bushels compared to 1.5 million bushels for last week at this time.

As of July 11, barley heading was estimated at 50 percent compared with 44 percent in the previous week and 73 percent for the five-year average. Barley’s crop condition rating was unchanged from last week.

Durum

As of July 11, 85 percent of North Dakota’s durum crop was jointing compared with 73 percent in the previous week and 90 percent for the five-year average. Durum in the boot stage was estimated at 65 percent compared with 42 percent in the previous week and 74 percent for the five-year average. Thirty-seven percent of the states durum has headed compared with 20 percent in the previous week and 52 percent for the five-year average.

The July 13 North Dakota cash durum prices in the country were in a range from $3.50 to $3.80 with most of the bids at $3.60. Cass County, N.D. durum was estimated at $2.82.

Canola

Canola futures on the Winnipeg, Manitoba, futures closed the week ending July 15 with almost $21 Canadian gains. The canola market traded higher the entire week with most of the strength coming from production concerns not only in Canada but also in Europe. Russia and Europe have been experiencing drought conditions and this has significantly hurt the wheat crop in the region and now it is starting to show up in the canola and rapeseed crop. Light support came from a weaker Canadian dollar and stronger U.S. soybean complex.

As of July 11, North Dakota canola crop was estimating blooming at 96 percent complete compared with 76 percent in the previous week and 84 percent for the five-year average.

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