Advertise in Print | Subscriptions
Published September 21, 2010, 08:21 AM

Exports pick up the pace

Wheat started the week with double-digit gains. Early support was a result of a lower U.S. dollar, which should encourage exports. Light support came from last week’s strong export shipments pace. Exports are what the wheat exchange needs to help keep it firm, and that is just what a USDA report gave the market: strong shipments. News that most of Russia remains dry and Canada could experience a frost this week adds support.

By: Ray Grabanski,

Wheat

Wheat started the week with double-digit gains. Early support was a result of a lower U.S. dollar, which should encourage exports. Light support came from last week’s strong export shipments pace. Exports are what the wheat exchange needs to help keep it firm, and that is just what a USDA report gave the market: strong shipments. News that most of Russia remains dry and Canada could experience a frost this week adds support.

The Sept. 14 session had wheat open lower with much of the early selling tied to news that ABARE raised Australia’s wheat export forecast by 26 percent. This will result in lower potential sales for the U.S. from the displaced Russian wheat business. The agency also increased the Australia’s potential crop size by 14 percent from its June estimate and 16 percent higher than last year’s crop. Additional selling was tied to weather forecasts calling for good rains for much of the Southern Plain states. This will help to recharge the soil conditions. Losses were kept in check by spillover support from a higher corn market.

Wheat opened Sept. 15’s session lower. Early selling was tied to news that Egypt bought 295,000 metric tons of wheat overnight and all the U.S. could must out of the tender was 55,000 metric tons. The rest of the sale went to Canada and France. This was disappointing especially after seeing decent sales over the past few weeks.

The Sept. 16 session had wheat open lower and trade with losses throughout the session. Pressure was a result of a disappointing export sales report. The wheat market really does not have any news of its own and is/has been relying on the corn market for strength. The past few sessions, the corn market has been stagnant and appears to be getting tired, and this also has resulted in a flat directionless trade in the wheat exchanges.

USDA estimated last week’s wheat export shipments pace at 30 million bushels. This brings the year-to-date export shipments pace for wheat to 293.7 million bushels compared with 224.2 million bushels for this time last year. Last week’s wheat export sales pace was estimated at a combined total of 23.9 million bushels with 17.8 million bushels being old crop and 6.1 million bushels being new crop. This brings the year-to-date export sales total for wheat to 570.3 million bushels compared with 356.7 million bushels for last year at this time. USDA is estimating wheat’s export pace for the year at 1.25 billion bushels. With 37 weeks left in wheat’s export marketing year, shipments need to average 24.5 million bushels per week and sales need to average 18.4 million bushels to make USDA estimated pace.

Corn

To start the week, corn opened higher, ending the day up 5.25 cents. The overnight market was very quiet until the close when it had some buying interest, which spilled over to the day session. The outside markets also were supportive, with a stronger crude oil market and a weaker dollar. Support was because of projected tight ending stocks and yield concerns. The reports are that the crop is getting better as the combines move farther north, but right now, there is little bearish news to slow down this train.

Tuesday’s session had corn open lower, but firm to end higher. The lower overnight session pressured the open. But the market worked higher to close at 24-month highs. The variable yields that are being reported are supporting the market. There are some disappointing yields that are being reported, and many traders think that the USDA number will have to be lowered in the next report. With the lack of bearish news, the money is continuing to flow into the corn market.

Corn opened the Sept. 15 session higher, but traded very close to unchanged for the session. The $5 level is psychological resistance, and there was not enough buying interest to get there. The market was thinly traded as compared to the last two days, with the noncommercial buying being offset by hedge pressure. The outside markets also were negative, and that limited the upside. India did make an announcement that it will export more corn, but had that little effect on the market.

On the Sept. 16 session, corn opened lower and traded both sides of unchanged. The market has been feeling some hedge pressure and profit taking as it nears the $5 mark. The $5 price is a psychological level that is hard to get over. Exports were disappointing at 23 MB and that limited the upside. USDA did announce a sale of corn to China.

USDA’s export inspection report was seen as neutral for corn. There were 36.3 million bushels of corn reported shipped. This was at the low end of the pre-report estimates of 35 million to 44 million bushels.

Soybeans

The soybean market traded with small gains the beginning of the week, lost most of the week’s gains Sept. 16, only to recover and trade with strong gains on the Sept. 17 opening. The strength Sept. 17 was because of confirmation of frost overnight in Canada (which has resulted in about 30 percent of Canada’s production to now be feed quality). For the week ending Sept. 17, November soybeans were posting about 25 cent gains.

Soybeans opened the week higher but gave back most of their gains as the session advanced. Early support came from strength from the higher wheat and corn markets. Fundamentally, news for soybeans is bearish especially with USDA’s September crop production report showing a larger crop potential than expected, which has been verified by harvest results showing good yields. The one thing soybeans has going for it is demand.

The Sept. 14 session started higher with spillover strength coming from a higher corn and cotton market. Traders are starting to show concerns that soybeans will lose acres to the rallying corn and cotton markets. Additional support was because of a 1 percent decline in soybeans crop condition rating. Gains were kept in check by the thought that this year’s soybean production will continue to increase.

The soybean market opened the Sept. 15 session higher and really near looked back. Support was because of forecasts calling for parts of Brazil to be drier than normal. The South American soybean planting season is right around the corner and traders fear that the dry conditions will persist and production for Brazil could suffer. Additional support came from weather forecasts that call for continued rains for much of the Corn Belt. This could slightly delay harvest activity, and that added to trader’s excitement. The third item of support, and probably most viable, came from weather forecasts for Canada that is calling for a killing frost this weekend.

The Sept. 16 session had soybean’s open lower with early pressure coming from a disappointing export sales estimate. The sales pace was enough to keep up with a USDA-projected export sales pace, but traders were expecting last week’s sales to be higher than they actually were. Additional pressure was tied profit taking as the funds were sellers. The Corn Belt missed the rains that were in recent forecasts and that added light selling, as now it appears harvest progress will continue virtually uninterrupted. Losses were limited by a late-session buying spurt in the corn market.

USDA estimated last week’s soybean export shipments pace at 6.9 million bushels. This brings the pace for 2009 to ’10 year-to-date soybean exports to 10.3 million bushels compared with 18.2 million bushels last year at this time. The recent soybean export sales pace was estimated at 24.6 million bushels. This brings year-to-date export sales for soybeans to 678.1 million bushels compared with 647.8 million bushels for this same time last year. USDA estimates soybean exports at 1.485 billion bushels.

Barley

USDA estimated recent export sales pace for barley at 500,000 bushels with most of the sales going to an unknown destination. This brings barley’s export sales pace to 3.3 million bushels compared with 2 million bushels for last year at this time.

Cash feed barley bids in Minneapolis improved 5 cents to $2.95. Malting barley bids are at $4.

As of Sept. 12, barley harvest progress was estimated at 84 percent compared to 78 percent the previous week and 92 percent for the five-year average.

Durum

USDA estimated last week’s durum export shipments pace at 1.39 million bushels with the major destinations being Algeria, Italy, and Tunisia. USDA estimated last week’s durum export sales pace at 1.7 million. This brings the year to date export sales pace for durum to 21.8 million bushels compared with 18.1 million bushels last year at this time.

As of Sept. 12, 64 percent of North Dakota’s durum crop was harvested compared with 49 percent last week and 78 percent for the five year average.

Canola

Canola futures on Winnipeg, Manitoba, futures closed almost $11.00 (Canadian) higher for the week ending Sept. 16. The canola market was supported by harvest delays. Wet weather continues to hamper harvest activity, and that has some traders concerned about whether all of the crops in Canada will get harvested. Additional support was because of weather forecasts that are calling for a hard killing frost for parts of Canada. If this killing frost occurs, it would result in a lot of acres of crop being severely damaged.

Cash canola bids in Velva, N.D., increased 14 cents to $18.70.

As of Sept. 12, 68 percent of North Dakota’s canola crop was harvested compared with 57 percent the previous week and 76 percent for the five-year average.

Sunflowers

Cash sunflower bids in Fargo, N.D., increased 35 cents to $16.30.

Tags: