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Published October 05, 2010, 08:51 AM

Weather forecasts pressure markets

Wheat started the week of Sept. 27 with pressure coming from recent rain, which brought much-needed moisture to the winter wheat region. Additional pressure was because of improving weather forecasts.

By: Ray Grabanski,

Wheat

Wheat started the week of Sept. 27 with pressure coming from recent rain, which brought much-needed moisture to the winter wheat region. Additional pressure was because of improving weather forecasts. This will allow for the soggy fields in the Northern Plains to get harvested and for the drills in much of the country to get rolling again.

The Sept. 28 session traded lower with selling tied to news that the U.S. did not capture a significant amount of a recent tender from Egypt. The rumor that Russia is considering lifting the ban on wheat exports at the end of the year added pressure. Wheat closed below the $7 level, which brought in more selling pressure.

Wheat opened the Sept. 29 session at large losses with pressure coming from improving weather conditions in the U.S. and Russia. Russia’s weather forecasts call for rain for the next few weeks. Rain will replenish soil moisture conditions and help get winter wheat started. Toward the end of the session, wheat staged an impressive recovery, rallying from 10 cent losses to end the session steady. Late-session buying was spurred on by spill-over strength from corn.

The Sept. 30 session had wheat sharply lower with most of the early selling tied to USDA’s reports. USDA’s quarterly grain stocks report showed wheat stocks in line with trade estimates, but it did show more wheat in bins this year than last year.

This report was slightly offset by a lower production estimate. To add to the selling pressure, USDA’s export sales report was disappointing. A sharply lower corn market added pressure. By midsession soybeans firmed, and that helped corn and wheat rebound. By the close, wheat had cut its losses significantly, but the market still ended lower.

USDA had estimated the wheat export shipments pace at 24.3 million bushels, which brings wheat’s year-to-date export shipments pace to 354.1 million bushels compared with 275.8 million bushels for this time last year. The recent wheat export sales pace was estimated at 23.2 million bushels, bringing the year-to-date export sales total for wheat to 628.4 million bushels compared with 395.1 million bushels for last year. USDA is estimating wheat’s export pace for the year at 1.25 billion bushels. With 35 weeks left in wheat’s export marketing year, shipments need to average 25.6 million bushels and sales need to average 17.8 million bushels to make USDA estimated pace.

As of Sept. 26, hard red spring wheat harvesting progress is estimated at 89 percent complete and 98 percent for the five-year average. Winter wheat planting progress is estimated at 33 percent complete and 38 percent for the five-year average. Winter wheat emergence is estimated at 10 percent complete and 12 percent for the five-year average.

USDA’s reports held little surprise for the wheat market as both the small grains summary and quarterly grain stocks estimates were as expected. USDA estimated wheat stocks as of Sept. 1 at 2.459 billion bushels compared with the average trade estimate of 2.423 billion bushels and 2.209 billion bushels last year. All wheat production was estimated at 2.224 billion bushels compared with 2.261 billion bushels for the average trade estimate and 2.265 billion bushels for USDA’s August crop production report.

Corn

To start the week of Sept. 27, corn traded lower for the session. Pressure was felt from an improving weather forecast, with no rain and warmer temperatures predicted for the next several days in the U.S.

Sept. 28, corn ended at session lows, down 12 3/4 cents. Profit-taking hit the market as it is feeling pressure from the good weather and harvest progress. Reports say yields and test weights are better as combines move north.

Corn bounced back to end five cents higher Sept. 29 after opening 12 cents lower. Profit-taking and favorable weather forecasts, which should allow harvest to continue, pressured corn early.

Corn opened sharply lower Sept. 30 down 17 cents, because of a bearish USDA stocks report.

Futures drifted down before commercial buying entered the market. USDA estimated corn stocks at 1.71 billion bushels, which was 300 million bushels above estimates and the highest in four years. Reports had the stocks estimate higher, mainly because new crop was harvested before Sept. 1.

USDA’s export inspection report was seen as neutral for corn. There were 34 million bushels of corn reported shipped, below the 45 million bushels needed to meet USDA’s projection of 2.1 billion bushels. This was below the pre-report estimates of 32 million bushels to 36 million bushels.

USDA’s crop progress report states the condition of the crop is 66 percent good to excellent, 21 percent fair, 9 percent poor and 4 percent very poor. Corn maturity is at 85 percent Corn harvest is 27 percent complete.

Soybeans

Soybeans started the week of Sept. 27 higher, with support attributed to strong demand. Support was partly because weather forecasts call for dry weather in South America. Traders are concerned the recent dry weather could result in a reduction in potential South American production. Losses in the corn and wheat markets did spill over to limit the gains in soybeans.

The Sept. 28 session opened lower, with pressure coming from forecasts of improving weather in the U.S. for the next several days. Selling pushed the soybean complex into sell stops which, in turn, pushed soybeans lower. Soybeans have been able to stage a decent run over the past few months, rallying to year highs. Most of the support came from strong demand as well as concerns about South American production.

Soybean’s started the Sept. 29 session lower ahead of the Sept. 30 USDA quarterly stocks report and the end of the quarter.

The soybean market opened the Sept. 30 session lower with most of the early selling pressure because of upcoming USDA reports. The reports actually were neutral to bullish soybeans, but bearish to other grains. Once cooler heads prevailed the realization was that the numbers were not bad for soybeans. The quarterly grains stocks report was, at worst, neutral to soybeans, as the stocks estimate was right on with early estimates. The bullish surprise came in the export sales report, which showed another week of impressive exports. Soybeans ended up rallying above the key $11.00 support level.

As of Sept. 26, soybean dropping leaves were estimated at 77 percent compared with 60 percent and 72 percent for the five-year average. Harvesting progress is estimated at 17 percent complete and 13 percent for the five-year average. Soybean’s crop condition rating remained unchanged at 63 percent good to excellent, 24 percent fair, and 13 percent poor or very poor.

USDA’s quarterly grain stocks report held little surprise for soybeans, as the estimate was close to expectations. USDA estimates soybean stocks as of Sept. 1 at 151 million bushels compared with the average trade estimate of 150 million bushels and 138 million bushels for last year at this time.

Barley

USDA’s quarterly gains stocks report estimates barley’s Sept. 1 stocks at 225 million bushels, a decline of 6 percent from last year’s estimate of 239 million bushels. Barley’s 2010 production is estimated at 182 million bushels compared with 227 million bushels last year.

Cash feed barley bids in Minneapolis dropped 20 cents the week of Sept. 27 to $3.00. Malting barley bids in Minneapolis remained at $4.25.

Durum

USDA’s quarterly grains stocks report estimates durum’s Sept. 1 stocks at 105.8 million bushels, higher than the 101.8 million bushels reported last year. Durum’s 2010 production was estimated at 111.4 million bushels compared with 109 million bushels last year.

Cass County, N.D. durum loan deficiency payments dropped 75 cents and now is 22 cents for producers who are not signed up for ACRE. Progressive Ag recommends taking the loan deficiency payment as you harvest.

Canola

Velva, N.D., cash canola bids decreased 33 cents to $18.82.

Sunflowers

USDA’s quarterly grains stocks report estimates sunflower’s Sept. 1 stocks at 358.6 million pounds compared with 491.4 million pounds last year.

Fargo, N.D., cash sunflower bids increased 10 cents to $17.70.

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