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Published August 31, 2010, 07:53 AM

Strong demand cuts weekly losses

All three of the wheat exchanges opened the week of Aug. 23 higher to sharply higher with support continuing to come from thoughts that Russia will have to import wheat.

By: Ray Grabanski,

Wheat

All three of the wheat exchanges opened the week of Aug. 23 higher to sharply higher with support continuing to come from thoughts that Russia will have to import wheat. Russia’s wheat harvest now is more than 50 percent complete and reports have production running about 30 percent less than last year. The Russian Government says there are no intentions to import grain this year.

The Aug. 24 session had wheat opening lower. Early selling was tied to technical selling as traders started to cover earlier placed short positions. Additional selling was tied to weather forecasts that continue to have rain in the forecast for Russia. The northern regions of Russia have been experiencing and will continue to experience good rains in the next week. Areas in the central and southern regions are forecast to receive less rain.

The Aug. 25 session had the exchanges starting on the defense. Most of the pressure was because of news that Egypt did not buy U.S. wheat. For the second week in a row, Egypt came in and bought its wheat tenders from France and Canada. The trade has been expecting U.S. wheat exports to increase mainly because of the drought in Russia.

Wheat started with decent gains Aug. 26 and gained ground as the session proceeded. Early support came from a better-than-expected export sales estimate. Additional support was because of technical strength as wheat traded down to support levels. Additional support was because of International Grain Council’s report which showed another reduction in world wheat production. IGC’s current estimate for wheat production is at 644 million metric tons, down 7 million metric tons from July’s estimate and 5 percent lower than last year’s projections.

Winter wheat harvest is reported at 95 percent complete compared with 91 percent last week and 98 percent for the five-year average. USDA is estimating hard red spring wheat harvesting progress at 53 percent complete compared with 34 percent last week and 60 percent for the five-year average. As of Aug 22, USDA is estimating the spring wheat conditions at 82 percent good to excellent, 15 percent fair and 3 percent poor, unchanged from the past three weeks.

Corn

To start the week, the corn market opened up but ended the day down 4 cents. The higher open was supported by the positive overnight market and the strength in the wheat trade. That wore off quickly as the market is struggling at the high end of its range, along with prospects of a large crop and an early harvest.

The corn market opened down 10 cents Aug. 24 and traded with losses for the session, ending down 12 cents. The selling pressure in the market came from the crop condition report, which most traders were anticipating a decline in corn’s condition. The opposite happened and the condition of the crop was raised 1 percent in the good to excellent category, with the 1 percent coming from the fair category. The outside markets also had a negative tone, with sharp losses in crude oil and the stock market, which added additional pressure.

The corn market opened down 1 cent Aug. 25 and traded very close to unchanged for the session, ending the day down .5 cent. It was a very quiet trade as the market traded very close to unchanged, with no new news to make the market move one way or another. The lower wheat market did add some pressure to the corn early in the day. It also is interesting to note that crude oil now is trading at two-month lows. Also, some Chinese sources think that their corn crop might be pretty good and it has been awhile since they have bought any U.S. corn.

On Aug. 26, the corn market opened 5 cents higher and continued to find strength for the session, ending the day up 11.75 cents. The corn market tested support Aug. 25 and posted a solid rally in the overnight session. The positive outside markets also were supportive. Corn export sales were good again this week at 63.9 million bushels and that added strength. Reports of corn being harvested in the Delta region are surfacing and yields are coming in smaller than anticipated with lower test weights.

USDA’s Export Inspection Report was seen as neutral for corn.

USDA’s crop progress report stated that the condition of the crop is 70 percent good to excellent, 20 percent fair, 7 percent poor and 3 percent very poor. Corn in the dough stage is 88 percent, with 55 percent one year ago and a five-year average of 74 percent. Corn in the dent stage was 54 percent, with 17 percent one year ago and a five-year average of 37 percent. Corn maturity is at 8 percent, with 3 percent one year ago and a five-year average of 6 percent.

Soybeans

Soybeans started the week lower with pressure coming from carry-over selling from last week’s poor performance. The soybean market dropped more than 40 cents in the previous week because of reports that pod counts were coming in better than expected and higher than last year. Technically, soybeans are testing support levels, and so far, these levels are holding.

The Aug. 24 session had soybeans lower. The market did try to trade with the plus side, but the best soybeans traded to was 3 to 4 cent losses. Early selling pressure was tied to a lower wheat and corn market. In addition, the crop condition rating report came out as expected, showing a 2 percent decline in the nation’s crop. Weather forecasts have been steadily improving now as the forecast is calling for cooler temps and dry conditions.

The Aug. 25 session had soybeans open higher with support spilling over from technical buying as traders tried to push the soybean market off of support lines. But the gains were short lived as once the wheat exchanges sold off, selling pressure spilled over to the soybeans. The soybeans were able to recover at the close but the best soybeans could muster was a steady close.

The soybean market started the Aug. 26 session higher with support coming from strength from another strong export sales report. USDA estimated the export sales pace for soybeans at more than 36 million bushels. Export demand remains very strong and that has helped to keep the soybean complex above the $10 November support levels. Adding buying strength was concerns toward production. Traders have pressured the soybean complex off of reports of higher-than-expected pod counts, but traders are not willing to take the soybean market below $10.

As of Aug 22, podding is estimated at 91 percent compared with 84 percent last week and 90 percent for the five-year average. Soybean’s crop condition rating dropped 2 percent to 64 percent good to excellent, 23 percent fair and 13 percent poor to very poor.

Barley

As of Aug 22, barley harvest progress was estimated at 52 percent compared with 29 percent for last week and 62 percent for the five-year average. Barley’s crop condition rating declined 1 percent to 84 percent good to excellent, 13 percent fair and 3 percent poor.

Durum

As of Aug 22, 88 percent of North Dakota’s durum crop was turning compared with 59 percent last week and 92 percent for the five-year average. Nineteen percent of the states crop has been harvested compared with 3 percent last week and 38 percent for the five-year average. Durum’s crop condition rating was unchanged at 86 percent good to excellent and 12 percent fair and 2 percent poor to very poor.

Cass County, N.D., durum loan deficiency payments is at $1.86 for producers who are not signed up for SURE.

Canola

Cash canola bids in Velva, N.D., increased 36 cents for the week to end at $17.97.

As of Aug 22, North Dakota’s canola crop was 97 percent turned compared with 92 percent last week and 93 percent for the five-year average. North Dakota’s canola crop condition rating dropped 2 percent to 78 percent good to excellent, 17 percent fair and 5 percent poor. Minnesota producers are reporting 69 percent of the state’s canola as being harvested compared with 21 percent last week and 36 percent for the five-year average. Minnesota’s canola crop rating increased 1 percent to 55 percent good to excellent, 21 percent fair and 24 percent poor to very poor.

Sunflowers

As of Aug 22, North Dakota’s sunflower crop was 99 percent in bloom compared with 89 percent for last week and 96 percent for the five-year average. North Dakota’s sunflower crop condition rating improved 4 percent to 80 percent good to excellent, 15 percent fair and 5 percent poor to very poor.

Cash sunflower bids in Fargo, N.D., improved

20 cents this week to $15.30 for both old and new

crop.

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