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Published September 28, 2010, 09:23 AM

Soybeans take the lead

Wheat opened the week of Sept. 20 higher, with support coming from the strength of other grains. Additional support was because of the recent frost scare in Canada and from news that China might have been nipped by a slight frost. By midsession, technical selling pushed all three wheat exchanges lower.

By: Ray Grabanski,

Wheat

Wheat opened the week of Sept. 20 higher, with support coming from the strength of other grains. Additional support was because of the recent frost scare in Canada and from news that China might have been nipped by a slight frost. By midsession, technical selling pushed all three wheat exchanges lower.

The Sept. 21 session started lower and extended losses throughout the session. The lack of news pressured wheat. Wheat did try to recover around midsession, when all of the other grains were rallying, but wheat just could not hold its gains. Not even a sharply lower U.S. dollar could help wheat end with small losses. Light selling had to be tied to USDA’s crop progress report, which showed winter wheat seeding at 18 percent complete, compared with 21 percent for the five-year average.

By midweek, wheat found support and opened higher. Support came from sharp losses in the U.S. dollar and news of a large export sale. The dollar dropped hard Sept. 21, losing almost 1 cent, its lowest level since late January. The dollar is being pressured by reports that the Federal Reserve is trying to create inflation and stave off deflation. The sharply lower dollar has helped encourage exports as Egypt bought 220,000 metric tons of U.S. wheat.

Wheat opened the Sept. 23 session with sharp losses. Wheat slipped lower in the overnight session and those losses carried over to the daytime session. Wheat extended its losses around midsession because of updated weather forecasts from Russia. Forecasts call for rain in much of the major wheat growing regions of Russia, with strong chances for good rains in coming weeks.

USDA estimated the wheat export shipments pace at 29.9 million bushels, bringing year-to-date wheat export shipments pace to 326.5 million bushels compared with 251.1 million bushels this time last year. The sales pace for wheat exports was estimated at a combined 52.9 million bushels with 34.9 million bushels being old crop and 18 million bushels new crop. This data brings year-to-date export sales for wheat to 605.2 million bushels compared with 375.3 million bushels last year at this time. USDA estimates wheat’s export pace for the year at 1.25 billion bushels. With 36 weeks left in wheat’s export marketing year, shipments need to average 25.7 million bushels per week and sales need to average 17.9 million bushels to make the USDA-estimated pace.

Corn

To start the week of Sept. 20, corn opened higher but drifted from there, ending 5 cents lower. The open was supported by the higher overnight market and strength in outside markets, as it made two-year highs. Support was backed by reports of recent frost in China. The export sales report was bearish for the third week in a row, which added pressure.

Sept. 21, corn opened lower and ended near the session lows. The past two sessions have seen a slight decline in the corn market as profit-taking set in to pressure the market. Corn has been in an overbought market condition for some time, so to see a technical retracement would not be out of line. The corn market could not break. It had to trade in a back-and-forth fashion, as there were traders willing to buy corn on any little setback.

The Sept. 22 session had corn open with strong gains, supported by a day of sharp losses in the U.S. dollar and spillover support from strength in other grains. Light support came from news that Egypt bought 120,000 metric tons of U.S. corn. The strength in the soybean complex was enough to help corn firm up slightly on the close.

Sept. 23, corn opened 7 cents lower and traded with losses for the session, ending the day down more than 5 cents.

The lower overnight and negative outside markets weighed on the market early in the session. The lower trending ethanol market added weakness to the corn trade. Ethanol has dropped 20 cents recently. Assuming a 1-to-1 ratio for ethanol and corn, the 20-cent selloff in ethanol would be equivalent to a 58 cent selloff in corn. This high corn market is affecting exports, ethanol and feed demand, which is where the large crop is to be chewed up.

USDA’s export inspection report is seen as bearish for corn. There were 28.3 million bushels of corn reportedly shipped, which is below the 40.9 million bushels needed to meet USDA’s projection of 2.1 billion bushels. The projection was below the prereport estimates of 35 to 40 million bushels.

USDA’s export sales report estimates recent corn sales at 22.1 million bushels, 28.8 million bushels below USDA’s projection of 2.1 billion bushels and below the range of the prereport estimates of 25.6 to 29.5 million bushels. The estimate brings the year-to-date export sales pace for corn to 650.9 million bushels compared with 563.2 million bushels one year ago. Total shipments the week of Sept. 20 to 24 were at 39 million bushels and below the 40.1 million bushel estimate.

Soybeans

Soybeans opened and traded sharply higher with most of the early support coming from the recent freezing conditions in Canada and reports that parts of China might have frozen recently. The crop that could experience the biggest brunt of the frost is canola, and that helped keep the support in the soybean market. Continued concerns of dry areas in Brazil added to soybeans early strength.

The Sept. 21 session opened lower but firmed up soon after the opening bell. The soybean market tried to rally throughout the session, but never really put together any solid buying interest. By the close, the soybean market lost most of its gains and fell to end the session with small losses. There was no friendly news in the soybean market, so the market seemed to be vulnerable to fund-selling.

By midweek, soybeans returned to the plus side. Support came from a second straight session of sharp losses in the U.S. dollar. Adding to the buying frenzy was a sharply higher gold market, which traded to another new all-time high. The buying frenzy was driven mainly by reports from a recent meeting in which the Federal Reserve showed interest in creating inflation to stave off recent deflation. The Fed also hinted at the potential of another stimulus package. Overnight, China was in the market, buying 392,000 metric tons of soybeans.

The Sept. 23 session had soybeans higher with support coming from another week of strong export sales. With the rate exports are moving, it would not be surprising if USDA increased soybean’s projected export sales pace in its next supply and demand report. But, the increase likely will be offset by an increase in yield. Additional support for soybeans was because of the unwinding of long corn and short soybean spread trades. Corn is now carrying a large incentive over soybeans. Traders think this trend needs to be brought back in line with the normal range of 2.1 to 2.4.

USDA estimates soybean export shipments pace at 12.1 million bushels, bringing the 2009-’10 year-to-date export shipments pace for soybeans to 22.7 million bushels compared with 19.3 million bushels last year at this time. The recent soybean export sales pace was estimated at 39.8 million bushels, bringing year-to-date export sales total for soybeans to 717.9 million bushels compared with 690.1 million bushels this time last year. USDA estimates soybean exports at 1.485 billion bushels.

As of Sept. 19, soybeans dropping leaves were estimated at 60 percent compared with 38 percent the previous week and 52 percent for the five-year average. Harvest progress is estimated at 8 percent complete compared with none the previous week and 6 percent for the five-year average. The soybean’s crop condition rating remained unchanged at 63 percent g to excellent, 24 percent fair, and 13 percent poor to very poor.

Barley

USDA estimates the barley export shipment pace at 136,000 bushels, with all bushels going to Mexico. The estimate brings year-to-date export shipments pace to 549,000 bushels compared with 1.3 million bushels last year at this time. The export sales pace for barley was estimated at 900,000 bushels with most of the barley going to Tunisia. The estimate brings barley’s export sales pace to 4.2 million bushels compared with 2.1 million bushels last year at this time.

Cash feed barley bids in Minneapolis improved the week of Sept. 20 from 25 cents to $3.20. Malted barley bids in Minneapolis improved 50 cents to $4.50.

As of Sept. 19, barley harvest progress was estimated at 88 percent compared with 84 percent last week and 95 percent for the five-year average.

Durum

USDA estimates the durum export shipments pace at 2.5 million bushels with major destinations being Algeria, Belgium, and the Netherlands. Last week’s durum export sales pace was estimated at a negative 1.5 MB due to a cancellation from Italy. This brings the year to date export sales pace for durum to 20.3 million bushels compared with 19.5 million bushels for last year at this time.

Cass County. N.D. durum LPD dropped 42 cents this week and is now at $0.97 for producers who are not signed up for ACRE. Progressive Ag recommends taking the LDP as you harvest.

Cash durum bids for choice milling quality durum are at $8.75.

As of Sept. 19, 71 percent of North Dakota durum crop was harvested compared to 64 percent the previous week and 88 percent for the five year average.

Canola

Cash canola bids in Velva, N.D., dropped 26 cents the week of Sept. 20 to $18.64.

As of Sept. 19, 79 percent of North Dakota’s canola crop was harvested compared to 68 percent the week of Sept. 12 and 87 percent for the five year average.

Sunflowers

As of Sept. 19, North Dakota’s sunflower crop had bracts turning yellow at 77 percent complete compared with 57 percent the previous week and 80 percent for the five year average. Bracts turning brown were estimated at 29 percent complete compared with 11 percent the previous week and 37 percent for the five-year average. North Dakota’s sunflower crop condition rating improved 4 percent to 76 percent good to excellent, 16 percent fair, and 8 percent poor or very poor.

Cash sunflower bids in Fargo, N.D., increased 55 cents to $17.10.

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