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Published October 19, 2010, 08:22 AM

Corn and soybeans post gains

Wheat started the week of Oct. 11 higher with strength spilling over from a sharply higher corn and soybeans market. But wheat was unable to hold onto its gains and turned out to be the weakest link of the grain trade. The wheat market has turned to be a follower of the other grains as its own fundamental picture is negative. The only positive items for wheat have been the lower U.S. dollar and rallying corn and soybean markets.

By: Ray Grabanski,

Wheat

Wheat started the week of Oct. 11 higher with strength spilling over from a sharply higher corn and soybeans market. But wheat was unable to hold onto its gains and turned out to be the weakest link of the grain trade. The wheat market has turned to be a follower of the other grains as its own fundamental picture is negative. The only positive items for wheat have been the lower U.S. dollar and rallying corn and soybean markets.

The Oct. 12 session also started higher. Early support was a result of carry-over strength from the other grains. Traders were slightly apprehensive to push wheat to much early in the session as many traders were waiting to see the result of the Egypt’s tender. Wheat rallied at midsession on confirmation that the U.S. was awarded a 220,000-metric-ton Egypt tender. This should have helped to push wheat higher into the close, but instead, wheat sold off, slipping down to new lows for the session.

The wheat exchanges started the Oct. 13 session with good strength as buying from the other grains supported wheat. Additional support came from news that Iraq was in overnight and bought 200,000 metric tons from the U.S., Australia, and Ukraine. In addition in a separate purchase, Iraq bought 100,000 metric tons of wheat from the U.S. overnight. But it did not take long for profit taking and carry-over selling from the sloppy corn market to pressure wheat.

Wheat opened Oct. 14 with modest gains with strength spilling over from the higher corn and soybean markets. Light support was a result of a lower U.S. dollar, as the dollar dropped to new lows for the year. Fundamentals remain negative to wheat as drills continue to roll in the Southern Plains and combines wrap up the wheat harvest in the Northern Plains. The wheat exchanges were pressured by a sloppy session in corn as well as from ideas that export sales will continue to show disappointing numbers.

Corn

The corn market ended the week of Oct. 11 up 40 cents. The market traded much higher early in the week, as it continued to trade last week’s bullish USDA report. The market did struggle the last three days of the week after reaching two-year highs. Questions started to surface about demand and how it will be affected with higher prices?

To start the week, corn opened up 41 cents and traded with decent gains for the session, ending the day up 27.5 cents. The market did trade limit up in the overnight session, with expanded limits, but did come off of those before the night was over. The market was fueled by follow through buying from noncommercial money, as the corn continues to run with the bullish USDA report from Oct. 8.

Corn opened 1 to 2 cents higher Oct. 12 and worked higher as the session moved along, closing 23.25 cents higher. The corn market took a breather at the start of the session, but it did not take long for it to get its legs back, as the past two sessions produced the biggest run in the corn market since 1988. The market is trading the bullish USDA report, as futures have climbed 17 percent since Oct. 7 and to two-year highs.

Corn opened the Oct. 13 session 6 cents higher, but didn’t stay there long before trading with red numbers and ending the day down 9.75 cents. Profit-taking entered the market early, after the $1 run that we have seen the past 10 days. The market needed a break after going a long way quickly, but the path of least resistance remains up. The trade talk is that the market is set to test $6 for the next target, and that is hard to disagree with as you look at the last bullish USDA report. The Environmental Protection Agency also planned to announce an increase in the ethanol blend from 10 to 15 percent for vehicles that were 2007 and newer, but this had little effect.

Corn opened 5 cents higher Oct. 14, but turned lower to end the day down 2 cents. The corn market was supported early by follow-through buying form the other grains as well as from a much lower dollar. Light support also was a result of reports that EU corn production is estimated to be down. But buying interest dried up as the corn market struggled for the second day in a row. Profit taking also pressured the market later in the session. South Korea may be slowing purchases because of the higher prices. Demand was the main focus of traders and how it may be affected with the higher prices. Exports, ethanol and feed demand will be watched closely. Remember the old saying: High prices cure high prices.

USDA’s export inspection report was seen as bearish for corn. There were 30.7 million bushels of corn reported shipped, below the 38.2 million bushels needed to meet USDA’s projection of 2 billion bushels. This was below the pre-report estimates of 32 million to 36 million bushels.

USDA’s export sales report estimated last week’s corn export sales pace at 45.8 million bushels, which is 26.8 million bushels above what was needed to meet USDA projection of 2 billion bushels. This was below the range of the pre-report estimates of 59 million to 70.9 million bushels and bearish for corn. This brings the year-to-date export sales pace for corn to 746.9 million bushels compared with 656.8 million bushels one year ago. Total shipments this week were at 31.8 million bushels and below the 38.1 million bushels that was needed the week of Oct. 11.

Soybeans

The soybean market forged ahead the week of Oct. 11 as it tried to reach the $12 resistance level. As of the Oct. 14 close, the November soybean contract was just shy of that level. Strong demand and concerns that demand will continue to expand helped to support the market. For the week ending Oct. 14, November soybeans gained 53.5 cents.

Soybean’s opened the week sharply higher with most of the early support spilling over from Oct. 8’s limit-up session. Additional buying was tied to margin call management as traders liquidated short position. A sharply higher corn market added strength. Toward the end of the session, the soybean market started to falter because of profit taking and technical selling. Additional selling was a result of thoughts that the week’s USDA crop progress report would show a rapidly advancing harvest.

The Oct. 12 session started with small to modest gains, but seemed to run in to selling pressure soon after the opening. But as the selling pressure dried up, the funds returned to the soybean complex buying with a vengeance. Strong demand continues to be the main driver of the soybean market. Production and rapidly advancing harvest progress continues to be the bear for the soybeans, but traders seem to be ignoring U.S. production estimates.

The soybean market opened Oct. 13 with strong gains. Within the first 15 minutes of the session, soybeans traded to their highs, posting almost 18-cent gains, coming close to the $12 level. Early support was a result of news that China was in overnight buying 297,500 metric tons of U.S. soybeans. But as soon as these levels were hit, selling stepped in to push the soybean market lower. Spillover selling from a sloppy corn and wheat exchange added to the selling pressure. A sharply higher soybean oil market tried to support the soybean market late in the session, but the selling from the lower corn and wheat markets proved to be too much to overcome.

Strong demand and the thought that demand will continue to improve supported the soybean market Oct. 14. Early in the session, National Oilseed Processors Association reported September’s crush estimate at 124.9 million bushels compared with expectations of 116.0 million bushels. Adding support came from reports that China bought another 280,000 metric tons. A sharply lower U.S. dollar market added strength as the dollar traded to new lows for the year. In all, traders are looking for demand for soybeans to continue to remain strong and to outpace supply.

USDA estimated last week’s soybean export shipments pace at 37.9 million bushels. This brings the year-to-date export shipments pace for soybeans to 107.1 million bushels compared with 66.1 million bushels for last year at this time. Last week’s soybean export sales pace was estimated at 40.8 million bushels. This brings the year-to-date export sales total for soybeans to 857.3 million bushels compared with 781.6 million bushels for this same time last year. USDA is estimating soybean exports at 1.485 billion bushels. With 46 weeks left in the soybeans marketing year, soybean shipments will have to average 29.9 million bushels and sales will have to average 13.6 million bushels to make USDA’s projection.

Durum

USDA estimated the durum export shipments pace at 712,000 bushels the week of Oct. 4, with the major destinations being Italy. Last week’s durum export sales pace was estimated at 200,000 bushels. This brings the year-to-date export sales pace for durum to 21.7 million bushels compared with 27.8 million bushels for last year at this time.

The Oct. 14 cash durum bids were unchanged at $6.75 in Berthold, N.D., at $6.40 in Dickinson, N.D. The Cass County, N.D., durum loan deficiency payent rate is at 54 cents.

Canola

Canola futures on the Winnipeg, Manitoba, futures closed almost $10 (Canadian) higher for the week ending Oct. 14. The week was shortened by a day because of the market being closed Oct. 11 for Thanksgiving Day in Canada. Canola started the week higher playing catch-up with the rest of the world vegetable oil products. Gains were limited by ideal weather conditions that is allowing for harvest activity to advance.

Cash canola bids Oct. 14 in Velva, N.D., were at $20.47.

Sunflowers

Cash sunflower bids Oct. 14 in Fargo, N.D., were $19.15.

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