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Published July 27, 2010, 08:35 AM

World concerns, weather affect markets

To start the week of July 19, wheat started lower with most of the months under selling pressure from profit taking and from selling from a weaker performance from the other grains.

By: Ray Grabanski,

Wheat

To start the week of July 19, wheat started lower with most of the months under selling pressure from profit taking and from selling from a weaker performance from the other grains. The wheat exchanges were able to cut session losses as production concerns still linger. Most of the issues helping to support the wheat exchanges are global, not domestic, so the day’s sell off was more in sympathy with the other grains than anything.

The July 20 session started lower, but by midsession the Minneapolis market was starting to firm slightly. By the close, Minneapolis had pushed high enough to end with small to moderate gains but the winter wheat contracts could not find the strength to pop higher. Early selling pressure was because of spillover pressure from the other grains as both corn and soybeans opened lower. Additional selling pressure was because of USDA’s Crop Condition report, which showed a near completed winter wheat harvest and a high rated spring wheat crop. Minneapolis was able to cut its losses going into the close as traders were unwinding long winter wheat/short spring wheat positions. Also helping the spring wheat market was continued concerns toward Canada’s crop.

The wheat market started the July 21 session stronger with most of the early strength spilling over from production concerns. The issues helping to support the wheat exchange are not domestic issues, they are foreign issues. Most of the production concerns are in Russia, Canada and Europe. The hope is that their issues will lead to increase exports of U.S. wheat. So far there has not been any sign of help to U.S. wheat.

The July 22 session started sharply higher with most of the strength spilling over from a stronger overnight session. The overnight session started lackluster at best and traded mixed up until the early morning hours. This is when the French wheat exchange rallied to end the session with almost 3 percent gains. This spilled over to help push the U.S. wheat exchanges higher into the close of the night session and helped to push the day session sharply higher. Reports that officials in Germany are reporting a potential 10 to 20 percent drop in yield, as compared with last year, helped to spur the rally. By midsession wheat started the fade its gains. It seems hard to think that with more than 1 billion bushels carryout and harvest taking place that wheat could rally this much. It just shows how sensitive the markets are to any sort of production issue, no matter where it is. Wheat did get some help from a sharply lower U.S. dollar.

Winter wheat harvest is reported at 71 percent complete compared with 63 percent the previous week and 74 percent for the five-year average. USDA is estimating hard red spring wheat heading at 87 percent complete compared with 72 percent the previous week and 91 percent for the five-year average.

Corn

To start the week, the corn market opened 8 to 9 cents lower and traded lower for the session, ending the day down 13.25 cents. The lower overnight market carried over to start the day, being influenced by the improving weather forecast. The weather for the next 10 to 14 days calls for it to be warm and wet, creating a greenhouse for these pollinating row crops. The weather beyond 15 days is for cooling temperatures. This news sent the buyers to the sidelines and profits were taken. The outside markets provided little direction and the export inspection report was neutral. Traders also were cautious about what the crop conditions report would say. The majority of the estimates were that the condition of the crop would remain the same or possibly decline by 1 percent. The report stated that 72 percent of the crop is in good to excellent condition. The crop did decline by 1 percent in the good category, moving that to the fair rating.

The July 20 session had the corn market open 5 to 6 cents lower and traded there for the day, ending down 7.5 cents. Follow through selling from July 19 carried over to start the day. The favorable weather forecast, along with the crop being in good condition, added additional weakness. The weather is a dominate factor in the market, with no threatening weather in the extended forecast. The outside markets provided little direction today. One has to take note of the condition of this crop: 13 of the 18 reporting states have a conditions rating running ahead the 10 year average; 65 percent of the crop is silking, compared with a five-year average of 47 percent; 72 percent of the crop is in the good to excellent category, which is 1 percent higher than one year ago (record setting yield), with a 10 year average of 65 percent. This crop is in very good shape.

The corn market opened 4 to 5 cents higher on July 21 and traded there for the day. The stronger overnight market carried over to start the day. The overnight support was from the strength in the stock market. The outside markets broke after the open, but the corn market was able to stay firm. The strength in the wheat complex added support through the session, as the corn market lacks any fresh news of its own. The weather continues to be talked about, but did not pressure the trade.

On July 22, the corn market opened 5 to 6 cents higher and faded from there, closing down 3.25 cents. The market opened higher, with the higher overnight trade and the positive outside markets. The crude oil and Dow Jones Industrial Average markets were very strong, along with a much weaker dollar. The export sales report was friendly for the market and added additional support. But when the wheat market broke, the corn went with. The nonthreatening weather forecast and the lack of any fresh news weighed on the market late in the day. We have been trading near resistance and it appears that there is not enough fuel in the engine to trade through it. We are at a time in the year where the crop is being made and with good weather it will be hard to push the market higher. Corn has been supported this week by the wheat market.

Soybeans

The soybean complex started the week lower. Most of the selling pressure was tied to the removing of the weather premium that traders have been slowly working into the market. Weather forecasts were calling for a high pressure ridge to move into the Corn Belt, but now forecasts are calling for the heat to be a little less threatening and the rain to be a little more plentiful. The soybean market trimmed session losses late in the session as thoughts that the crop progress report would show another week of declining conditions. The report actually showed conditions improve 2 percent (trader were expecting a 2 percent decline, so a net change of 4 percent of what was expected).

The July 20 session opened and traded with small losses early in the session. Early selling pressure was from USDA’s bearish Crop Progress report. Additional selling was tied to updated weather forecasts that have all but pulled the high pressure ridge out of the market. Fund buying stepped in late in the session to help push the soybeans to the plus side. The buying was encouraged by a late push seen in crude oil.

The soybean market started the July 21 session higher and traded with strong gains early in the session. Early support was because of carr- over buying. Traders continue to be very sensitive to the potential size of the 2010 soybean crop. Export and domestic demand for soybeans remains very robust and if a production issues arises, prices could see a substantial increase. But if production comes in larger than expected and demand remains as projected, prices would remain stagnate.

The July 22 session started higher with most of the early strength coming from a stronger overnight session. Light support was also because of carry-over strength from the wheat exchanges. Wheat continues to be the leader of the commodities as world wheat production concerns remain. Support had to also come from USDA’s very impressive export sales estimate for the previous week. USDA estimated the previous week’s export sales pace at more than 45 million bushels for the second week in a row. This proves that demand has remained very strong for U.S. soybeans. The soybean market did fade the opening though and by the close had given back all of its 10 to 12 cent gains. Late selling was tied to improving weather conditions. A sloppy corn market added to the late session pressure in the soybeans. Technically, the soybean market remains below resistance levels.

Barley

As of July 18, barley heading was estimated at 82 percent compared with 68 percent for the previous week and 88 percent for the five-year average.

Durum

As of July 18, 97 percent of North Dakota’s durum crop was jointing compared with 85 percent the previous week and 97 percent for the five-year average. Durum in the boot stage was estimated at 90 percent compared with 65 percent the previous week and 89 percent for the five-year average. Seventy-four percent of the states durum has headed compared with 37 percent the previous week and 74 percent for the five-year average.

Dry beans

Crop progress as of July 18 for North Dakota dry beans: Blooming is at 61 percent complete compared with 32 percent the previous week and 55 percent for the five-year average, pod setting is estimated at 10 percent compared with 1 percent the previous week and 17 percent for the five-year average.

Canola

As of July 18, North Dakota’s canola crop was 10 percent turned compared with 2 percent the previous week and 17 percent for the five-year average.

Sunflowers

Cash sunflower bids in Fargo, N.D., were at $14.30.

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