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Published November 02, 2010, 09:17 AM

Wheat posts large gains

Wheat started the week of Oct. 25 sharply higher. All commodities opened higher right out of the gate. Early strength spilled over from a sharply lower US dollar. But wheat’s strength was short-lived, as selling stepped in almost immediately, forcing wheat lower by midsession.

By: Ray Grabanski,

Wheat

Wheat started the week of Oct. 25 sharply higher.

All commodities opened higher right out of the gate. Early strength spilled over from a sharply lower US dollar. But wheat’s strength was short-lived, as selling stepped in almost immediately, forcing wheat lower by midsession.

Buying did step in toward the end of the session, pushing wheat to close with small gains.

The Oct. 26 session had wheat open higher. Support came from the previous day’s crop progress report. USDA’s first look at the winter wheat fall crop condition rating estimated the crop condition 15 percent lower than last year in the good to excellent category, one of the lowest fall ratings for wheat since 1991. The low rating was because of a very warm, dry October.

Traders are sensitive to crop production issues because of the recent wheat production shortfalls in the Black Sea region and the lower U.S. corn yield.

Wheat opened the Oct. 27 session lower, with early selling tied to carryover pressure from a softer overnight session.

But wheat was able to recover and trade with decent gains by midsession. By the close, wheat was posting strong gains, ending higher for the fourth session in row.

Support came from dry weather in the major winter wheat producing regions of the U.S.

Rain has fallen in much of the winter wheat growing region, but some dry regions remain, especially in western Kansas and Colorado.

The Oct. 28 session opened sharply higher with most of the months posting over 15 cent gains.

Wheat started the overnight session flat, but rallied throughout the night to end with strong gains.

Those gains supported the day session, as did continued concerns of dry conditions in the western regions of Kansas and Colorado and the soft red winter wheat region.

Technically, wheat has not performed as well as corn and soybeans. Both crops are at two- year highs, so traders are attempting to bring wheat in line with the other grains.

As of Oct. 24, winter wheat planting progress is estimated at 88 percent complete, compared with 80 percent the previous week and 84 percent for the five-year average.

Winter wheat emergence is estimated at 64 percent.

The first fall winter wheat crop condition rating came in at 47 percent good or excellent, 39 percent fair and 14 percent poor or very poor. This compares with last year’s rating of 62 percent good or excellent, 33 percent fair, and 5 percent poor or very poor.

Corn

To start the week of Oct. 25, corn opened higher, but the strong open was short-lived, as the market came back to trade slightly higher into the close.

The higher overnight market and strong outside markets supported corn. Rain throughout the Midwest added support, as it will slow harvest progress. Export shipments remain disappointing, and that limited the upside.

Oct. 26, corn opened lower but firmed as the session moved along. The lower overnight session and negative outside markets pressured corn early.

Lackluster export demand and no fresh news limited the upside, but corn was able to firm up later in the session because of spillover strength from wheat.

Corn also has been getting support from end users who have been willing to buy on breaks, as supplies are expected to be the tightest in 15 years.

Corn opened lower Oct. 27 and firmed up as the session moved along, ending the day higher.

The lower overnight session and negative outside markets pressured corn at the start of the session. Profit-taking was seen in the overnight session and opening of the day session. But wheat firmed up quickly after the open, and corn followed.

Rumors continue to surface about China buying U.S. corn, but that has not been confirmed. Corn has traded in a sideways pattern for the past 10 days.

Oct. 28, corn opened higher, trading with positive numbers for the entire session. The strength in the outside markets, especially the sharp break in the dollar, supported corn.

Corn is trading at resistance and has been unable to move through that barrier this past week.

USDA’s export sales report was seen as neutral while shipments continue to run behind what is needed to meet projection.

An executive from China’s largest state-owned grain trader, Cofco Ltd., says it has not bought any U.S. corn in this marketing year but that may consider purchases after the spring of 2011.

USDA’s export inspection report was seen as bearish for corn.

There were 19.8 million bushels of corn reported shipped the week of Oct. 18, below the 38.4 million bushels needed to meet USDA’s projection of 2 billion bushels.

USDA’s crop progress report estimated corn harvest at 83 percent complete, compared with 20 percent a year ago and a five-year average of 49 percent.

Soybeans

Soybeans opened the week sharply higher as support spilled over from a sharply higher overnight session.

Both sessions were supported by a sharply lower U.S. dollar, which was pressured by disappointing results from the recent G 20 meetings.

Traders were expecting some sort of monetary policy from the meetings, and with nothing being accomplished, the U.S. dollar came under pressure, which supported grains.

Reports had China buying another 232,000 metric tons of U.S. soybeans overnight.

The Oct. 26 session opened with small losses. Most of the selling was tied to pressure from The Oct. 25 crop progress report, which showed another strong week of harvest activity.

Light selling was tied to a stronger U.S. dollar. Late in the session, soybeans were able to recover and trade with modest gains. Support spilled over from a sharply higher U.S. wheat market. Soybean demand remains strong, and that added to the late session push.

Soybeans opened the Oct. 27 session lower, trading as much as 15 to 17 cents lower. The soybean market traded to new highs overnight, resulting in profit-taking during the day session.

In addition, beneficial rains fell in parts of South America, and that added pressure. A negative factor came from a stronger U.S. dollar and poor performing outside markets, in general. By midsession, soybeans recovered to trade with small gains. Support spilled over from wheat.

The Oct. 28 session opened stronger, with most contracts posting double-digit gains. Support was from a sharply higher U.S. wheat complex.

Soybean export demand has been unreal this year, which is evident with sales estimated at over 1 billion bushels. We are only 7 weeks into the marketing year.

By midsession, some 2011 contracts were foreshadowing the day’s outcome as they slipped into negative territory. Late session pressure was because of improving weather in South America.

Additional selling was tied to the rolling of front month contracts because of the first notice day for November. Soybeans recovered to end mixed because of spillover strength from wheat.

USDA estimated the soybean export shipments pace at 68.3 million bushels. This brings the year-to-date export shipments pace for soybeans to 251.7 million bushels, compared with 158.7 million bushels last year at this time.

USDA estimates soybean exports at 1.485 billion bushels. With 46 weeks left in the soybeans marketing year, shipments will have to average 28 million bushels and sales will have to average 10.4 million bushels to make USDA’s projection.

As of Oct 24, soybean harvesting progress was estimated at 91 percent complete, compared with 83 percent the previous week and 72 percent for the five-year average. Traders were expecting harvest progress to be 90 percent or 95 percent.

Barley

Cash feed barley bids in Minneapolis increased 10 cents the week of Oct. 25 to $3.60. Malting barley bids increased 20 cents to $4.70.

Durum

Oct. 28 cash durum bids in Berthold, N.D., were $6.75 while Dickinson, N.D., durum bids were $6.55. The durum loan deficiency payment rate in Cass County N.D. was 40 cents.

Canola

Canola futures on the Winnipeg futures ended the week of Oct. 25 over $15 (Canadian) higher. The canola market started the week of Oct. 25 sharply higher and rallied to two-year highs. Most of the support was because of spillover support from a stronger U.S. soybean complex, which rallied on the weakness in the U.S. dollar.

The lack of farmer selling and strong export demand added to the strength.

Oct, 28 cash canola bids in Velva, N.D. were at $22.36.

Sunflower

As of Oct 24, 47 percent of the nation’s sunflower crop has been harvested.

USDA estimated the soybean oil export sales pace at 5.5 trillion metric tons. This brings the year-to-date export sales pace for soybean oil to 679.7 trillion metric tons, compared with 640.6 trillion metric tons last year at this time.

Oct. 28 cash sunflower bids in Fargo, N.D., were at $19.65.

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