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Published September 14, 2010, 07:38 AM

Corn trades to two-year highs

Wheat started the week with large losses Sept. 6 as profit taking and the lack of following through buying pressured the market.

By: Ray Grabanski,

Wheat

Wheat started the week with large losses Sept. 6 as profit taking and the lack of following through buying pressured the market. But by the time the day session opened, the evening losses were limited by spillover strength from a higher soybean market. But wheat could not hold onto its gains as reports of higher than expected production estimates started to come out of Russia. This, along with conflicting reports as to when Russia will open exports up again, pressured the wheat exchanges. Winter wheat seeding has started and so far early estimates have acres increasing 10 percent.

The Sept. 8 session also had wheat starting on the defense as there appeared to be nothing but negative news to influence the trade. Overnight, Egypt came in and bought 240,000 metric tons of wheat from France, that hurt the wheat exchanges, but a major blow came from Statistics Canada’s Stocks estimate. Statistics Canada estimate Canada wheat stocks at 7.82 million metric tons compared with trade estimates of 6.8 million metric tons, an increase of 19 percent from expectations. Losses were trimmed slightly at midsession when news that 109,000 metric tons of wheat was sold last night to an unknown destination.

Wheat opened the Sept. 9 session higher with support coming from export news. Reports have an unknown destination coming in and buying 220,000 metric tons of wheat overnight. The rumor in the pits is that it was Russia coming in and buying wheat from the U.S. Of course, nothing has been confirmed as to who the actually buyer was, but the rumor that it could be Russia sent the wheat market sharply higher. Additional support was a result of updated weather forecasts for the Northern Plains which has put frost in Canada’s forecast.

USDA made few changes to wheat’s September supply and demand numbers. The only adjustment made to the U.S. numbers was a 50 million-bushel increase in wheat exports. The increase in use followed through to cut wheat’s ending stocks by the same amount. This puts wheat’s ending stocks estimate at 902 million bushels and the stocks to use ration at 37 percent. The negativity of the report for wheat came in the world numbers as USDA did not make as big of cuts as what was expected by the trade. Traders were expecting large reductions in FSU 12 production as well as in the EU 27. But USDA did not make those cuts in this report, and that was viewed as negative.

Corn

The corn market ended the week up 25 cents in the December contract. Corn was supported by Sept. 10’s USDA supply and demand report. USDA lowered the projected yield to 162.5 bushels an acre, down from 165 bushels an acre one month ago. The lower yield also lowered production to 13.16 billion bushels compared with 13.365 billion bushels last month. The ending stocks came in at 1.116 billion bushels compared with 1.312 billion bushels last month, with stocks to usage ratio of 8.3 percent. This is the tightest ratio since 1994 to ’95 and the second tightest since 1973. Corn exports were revised higher by 50 million bushels to 2.1 billion bushels. The market did not move much Sept. 10 as a yield of 163 bushels an acre was built into the futures.

To start the week, the corn market opened lower but quickly firmed up end the day higher. The market surged to 23 month highs in the overnight session, creating profit taking at the opening. Corn was able to firm up, as the day moved along, with the strength in the soybean complex. Additional support is seen in that most private estimates are predicting a smaller crop and that USDA will lower their production estimates in the next report.

The corn opened lower Sept. 8 and traded both sides of unchanged, before ending the day down 4 cents. The market had very little movement as traders cautiously await the Sept. 10’s USDA supply and demand report. The market did have some small losses at the close with profit taking. USDA’s crop conditions report did show a 1 percent reduction in the good to excellent category, which the trade was expecting. It is interesting to note that the 69 percent good-to-excellent rating is the same rating that we had one year ago and we produced a record crop.

Corn opened lower Sept. 9 but quickly firmed after the open and slowly worked higher into the close, finishing up 8.75 cents. The market came back to trade with positive numbers as traders squared up positions before USDA’s supply and demand report. Most traders expect the report to be bullish for corn, as they expect USDA to cut the corn yield from 165 bushels an acre to below 163 bushels an acre.

Soybeans

The soybean market started the week off with strong gains then slipped lower for the rest of the short trading week. Early support in the week was a result of technical buying while late in the week pressure was a result of profit taking and position squaring ahead of USDA’s the September crop production report. For the week ending Sept. 9, November soybeans gained 11 cents.

Soybean’s started the week with modest gains and added to those gains throughout the session. By the close, most of the months were testing resistance levels. Early support came from export sales reports of 90,500 metric tons of soybean oil old (40,000 metric tons to China, 29,500 metric tons to unknown and 21,000 metric tons to Peru). The report was enough to push the soybean futures market above the recent trading range high. This is where buy stops pushed the soybean market to resistance levels.

The Sept. 8 session had the soybean market trading on both sides of the fence. Early support was a result of China buying 115,000 metric tons of soybeans. Pressure moved into the soybean contracts by midsession when wheat extended its losses and corn started to lose it gains. The selling spilled over to the soybeans forcing them to slip to the negative side as well. Additional late session selling was tied to position squaring ahead of the crop production report.

The soybean market struggled Sept. 9 as most of market activity was centered on position squaring ahead of the crop production report. Early estimates for the report has the soybean yield at 43.8 bushels (0.2 bushels below USDA’s August estimate) while production is estimated at 3.404 billion bushels slightly less than USDA’s August estimate of 3.433 billion bushels. Soybean’s losses were limited by spillover support from a stronger wheat market.

The Sept. 10 USDA September crop production report was bearish to the soybeans as USDA increased the potential 2010 crop year yield 0.7 bushels per to 44.7 bushels per acre. This increased the production estimate by 50 million bushels. This was slightly offset by a 10 million-bushel decrease in the 2009 to ’10 old crop ending stocks estimate (USDA increased old crop exports 25 million bushels, but decreased residual 15 million bushels). The 40 million-bushel increase in supply was entirely offset by a 50 million-bushel increase in 2010 exports, leaving the ending stocks estimate for 2010 at 350 million bushels, 10 million bushels lower than August’s estimate.

Barley

USDA estimated last week’s barley export shipments at 8,000 bushels. This brings the year-to-date export shipments pace for barley to 24,000 bushels compared with 1.28 million bushels for last year at this time. No barley export sales were reported for last week.

USDA made not changes to barley’s supply and demand estimates.

As of Sept. 5, barley harvest progress was estimated at 78 percent compared with 71 percent for last week and 86 percent for the five-year average.

Durum

USDA estimated last week’s durum export sales pace at 100,000 bushels. This brings durum’s export sales pace to 20.1 million bushels compared with 17.1 million bushels for last year at this time.

USDA made no changes to durum’s supply and demand numbers in its September crop production report.

As of Sept. 5, 49 percent of North Dakota’s durum crop was harvested compared with 43 percent last week and 69 percent for the five-year average. Durum’s crop condition rating declined 22 percent to 62 percent good/excellent and 31 percent fair and 7 percent poor. The sharp decline in durum’s crop rating was due to the recent cool wet weather which has slowed harvest activity and caused durum lose quality.

The Cass County, N.D., durum LPD was at $1.71 for producers who are not signed up for ACRE. Progressive Ag recommended taking the LDP. Pro Ag was expecting to see durum’s LDP increase because of weather concerns lowering the quality of the unharvested durum. But durum’s LDP is based on number 1 durum, which is not being subjected to severe discounts being seen on lower quality durum.

Canola

Canola futures on the Winnipeg, Manitoba, futures market dropped close to $20 (Canadian) for the week ending Sept. 9. The canola market started the week higher with strength coming from cool wet weather conditions in Canada, which has hampered harvest activity. But the gains disappeared late in the week because of pressure from the Statistics Canada Stock report. Statistics Canada’s Augusts stocks report estimated canola stocks at close to record levels. The report estimate canola stocks at 2.123 million metric tons compared with trade estimates of 1.5 million metric tons, 42 percent more than expected. The cash canola bids in Velva, N.D., for were at $18.39 Sept. 9.

Sunflowers

The Sept. 9 cash sunflower bids in Fargo, N.D., were at $15.95 for both old and new crop.

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