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Published October 12, 2010, 11:12 AM

USDA report bullish

Wheat started the week of Oct. 4 trading on the defensive side, with selling pressure tied to Egypt’s recent wheat purchase being sourced out of France and Canada.

Wheat

Wheat started the week of Oct. 4 trading on the defensive side, with selling pressure tied to Egypt’s recent wheat purchase being sourced out of France and Canada. Improving weather conditions added to selling pressure as warm dry conditions came over the entire U.S. The nice weather will aid in seeding progress of winter wheat and give producers in the Northern Plains a chance to wrap up harvest. Losses were limited by news that Statistics Canada lowered its 2010 potential wheat crop production estimate.

Oct. 5 saw a stronger session. Wheat was supported by a sharply lower dollar. Technical buying also was seen, which supported the wheat exchanges. Fundamentals have turned negative for wheat — at least, the production fundamentals have — because of favorable weather in most of the world’s wheat producing regions.

Wheat slipped lower Oct. 6 because of technical selling activity as traders took back some of the previous day’s gains, which were influenced by a sharply lower dollar. Additional selling was tied to news that Iraq claims it bought 50,000 metric tons of U.S. wheat, not the 250,000 metric tons, as was reported. Losses were limited by dry weather concerns in the winter wheat regions.

The Oct. 7 session saw wheat start higher, with most of the early support coming from the lower dollar and spillover strength from the other grains, especially corn. Light support was because of a strong export sales pace. Traders were encouraged that U.S. wheat demand could remain strong, especially after the Ukraine announced its plan to implement export caps through the end of the year. As the dollar firmed, wheat lost its gains, but the stronger corn market helped push wheat, and it ended with small gains.

USDA recently estimated the wheat export shipments pace at 24.2 million bushels. This brings the year-to-date export shipments pace for wheat to 379.1 million bushels compared with 298.1 million bushels this time last year. The wheat export sales pace recently was estimated at 29.7 million bushels. This brings the year-to-date export sales total for wheat to 658.1 million bushels compared with 423.3 million bushels last year at this time.

USDA estimates wheat’s export pace for the year at 1.25 billion bushels. With 34 weeks left in wheat’s export marketing year, shipments need to average 25.6 million bushels and sales need to average 17.4 million bushels to make the USDA-estimated pace.

As of Oct. 3, hard red spring wheat harvesting progress was estimated at 95 percent complete, compared with 89 percent the previous week and 99 percent for the five-year average. Winter wheat planting progress is estimated at 53 percent complete, compared with 33 percent the previous week and 54 percent for the five-year average. Winter wheat emergence is estimated at 22 percent, compared with 10 percent the previous week and 25 percent for the five-year average.

Corn

To start the week of Oct. 4, corn opened lower but firmed up to close 5 3/4 cents higher.. Good weather is forecast for the next 2 weeks, and a lot of crop will come off. The market was able to firm up, as some buying interest came back into the market.

Oct. 5, corn opened 7 cents higher and never looked back, ending the day up 19.5 cents. Follow through buying from Oct. 4 supported the corn market. The outside market also was supportive, especially the dollar, which is close to nine-month lows. The U.S. grain council estimated China’s 2010 production at 158 million metric tons, which is 8 million metric tons below USDA’s September numbers.

The corn market opened lower Oct. 6, and traded very close to unchanged for the session, ending the day down 2 1/2 cents. The lack of fresh news left the corn market to trade in a small range.

Oct. 7, corn opened 4 cents higher, then quickly. The market expects a solid decline in the U.S. corn crop, with estimated yields of 159.9 bushels per acre and 12.95 billion bushels of production, down from USDA’s September numbers of 162.5 bushels per acre and 13.16 billion bushels of production.

The market also is expecting an increase in demand, with estimated ending stocks of 1.15 billion bushels.

USDA’s export inspection report was seen as neutral or bearish for corn. There were 35.5 million bushels of corn reported, which was below the 45 million bushels needed to meet USDA’s projection of 2.1 billion bushels. This was at the low end of the prereport estimates of 34 million bushels to 41 million bushels.

USDA’s crop progress report states the condition of the corn crop is 66 percent good to excellent, 21 percent fair, 9 percent poor and 4 percent very poor. Corn maturity is at 93 percent, compared with 54 percent a year ago and a five-year average of 79 percent. Corn harvest is 37 percent complete, compared with 9 percent a year ago.

USDA’s export sales report estimates corn sales at 23.9 million bushels, 2.8 million bushels below the USDA projection of 2.1 billion bushels. This estimation was below the range of the prereport estimates of 29.5 to 33.5 million bushels, and bearish for corn. The year–to-date export sales pace for corn is 711.2 million bushels, compared with 631.9 million bushels a year ago. Total shipments the week of Oct. 4 were at 3.5 million bushels.

Soybeans

Soybean’s opened the week of Oct. 4 lower, but firmed throughout the early half of the session. By midsession, the soybean market cut its losses, but still had small losses. The recovery in the corn market continued to help the soybean market from collapsing into the close, but it was not enough to keep soybeans firm. The soybean market was pressured throughout the session from ideal weather conditions.

The Oct. 5 session had soybeans opening higher, with most of the early support spilling over from a stronger overnight session. Overnight news had Japan cutting interest rates in an attempt to weaken the yen. This resulted in other foreign currency rallying sharply, which caused the dollar to collapse. The lower dollar added support to grains, sending major grains sharply higher. Additional support came from technical buying as traders try to correct an oversold market condition.

Soybeans traded on both side of the fence Oct. 6, as pressure came from improving weather forecasts, which continue to favor rapid harvest progress. Early support was because of spillover buying from a stronger overnight session and an early round of technical buying.

The buying spurt dried up around midsession, and that helped bring selling into the market during the second half of the session.

The Oct. 7 session started higher and held onto gains for the early half of the session. Early support was because of a friendly export sales estimate, from USDA, which shows extremely strong sales.

Only five weeks into soybeans’ export marketing year, sales are at 55 percent of USDA’s projections for the year. Once small trader buying faded at midsession, so did strength in the soybean market. Some selling was tied to larger production estimates for Brazil.

As of Oct. 3, soybeans dropping leaves were estimated at 88 percent. Harvest progress is estimated at 37 percent complete, compared with 28 percent for the five-year average. Soybean’s crop condition rating improved to 64 percent good to excellent, 24 percent fair, and 12 percent poor to very poor.

Barley

USDA estimates the barley export shipments pace at 40,000 bushels, with all of the bushels going to Canada. This brings the year-to-date export shipments pace to 2.2 million bushels compared with 1.3 million bushels last year at this time. The export sales pace for barley is estimated at 100,000 bushels, with the barley going to Tunisia and Taiwan. This brings barley’s export sales pace to 4.4 million bushels, compared with 3.1 million bushels last year at this time.

Durum

USDA made minor changes in durum’s numbers, increasing supply by five million bushels and increasing use by five million bushels. Imports dropped by 2 million bushels, which resulted in a two million-bushel drop in stocks not estimated at 37 million bushels.

The year-to-date export sales pace for durum is 21.5 million bushels, compared with 25.5 million bushels last year at this time.

Oct. 7 cash durum bids in Berthold, N.D., increased 25 cents to $6.75, while Dickinson, N.D., durum bids dropped 25 cents to $6.15.

Cass County, N.D., durum loan deficiency payment increased 24 cents the week of Oct. 4 to 47 cents for producers who are not signed up for ACRE.

Canola

USDA estimates U.S. canola production at 2.5 billion pounds, compared with 1.47 billion pounds last year. Harvested acreage is estimated at 1.4 million, with yields estimated at 1,786 pounds per acre.

Sunflowers

As of Oct. 3, 3 percent of the nation’s sunflower crop was harvested. North Dakota’s sunflower crop had bracts turning yellow at 96 percent complete. Bracts turning brown are estimated at 65 percent complete. North Dakota’s sunflower crop condition rating declined 4 percent to 69 percent good to excellent, 23 percent fair and 8 percent poor to very poor.

USDA’s October crop production report estimates sunflower production at 2.9 billion pounds, compared with 3.03 billion pounds last year. Harvested acreage is estimated at 1.87 million with yields at 1552 pounds.

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