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Published November 30, 2010, 10:11 AM

Production concerns help wheat recover

Wheat started the week trading in back-and-forth fashion but favored the plus side throughout the session.

By: Ray Grabanski,

Wheat

Wheat started the week trading in back-and-forth fashion but favored the plus side throughout the session. Wheat opened higher, but lost most of the gains early, only to proceed to trade back and forth.

Support came from buying and recent news that Ireland accepted the bailout plan from the European Union, which pressured the U.S. dollar. But the dollar was able to firm early in the session, which added pressure to U.S. grains. Late in the session, wheat was able to recover its gains as support came from dry conditions in much of the winter wheat region of the U.S. The soft red winter wheat and hard red winter wheat regions of the U.S. have remained extremely dry since late summer and this has resulted in one of the poorest ratings for this year’s winter wheat crop since 1991. Time still is on wheat’s side, as a lot of ground can be made up over winter and into spring. USDA confirmed a 120,000-metric-ton wheat export sale to Egypt.

Nov. 23. wheat opened lower with selling tied to the turn of events from the overnight session. The selling continued in the day session, but wheat tried to recover with the other grains, as both corn and soybeans pushed higher. Gains were limited by a 1 percent increase in the winter wheat crop condition rating. Late-session selling was spurred on by a stronger U.S. dollar, which was up over one cent and approaching the 80-cent range.

Wheat started the Nov. 24 session higher with support spilling over from strength from the other grains. Not long after the opened bell, all three of the wheat exchanges started to soften because of a stronger U.S. dollar and technical pressure. The winter wheat exchanges held on to gains because of continued concerns about dry conditions. The soft red winter wheat and hard red winter wheat regions of the U.S. have not received any significant rains for over a month. This has resulted in the regions to becoming very dry and the winter wheat crop to be rated at one of the lowest levels in 20 years. By the close, wheat recovered and traded with modest gains because of a late surge in the corn and soybeans markets.

USDA estimated last week’s wheat export shipments pace at 13.8 million bushels. This brings the year-to-date export shipments pace for wheat to 521.6 million bushels, compared with 412.9 million bushels this time last year. Last week’s wheat export sales pace was estimated at 27.4 million bushels, bringing the year-to-date export sales total for wheat to 828.1 million bushels compared with 528.6 million bushels last year at this time.

USDA is estimating the 2010 to ’11 wheat exports pace at 1.25 billion bushels. With 27 weeks left in wheat’s export marketing year, shipments need to average 26.9 million bushels and sales need to average 15.6 million bushels to make USDA-estimated pace.

As of Nov. 21, winter wheat emergence was estimated at 91 percent compared with 87 percent the previous week and 89 percent for the five-year average. The winter wheat crop condition rating improved 1 percent to 47 percent good to excellent, 37 percent fair and 16 percent poor or very poor. This compares with last year’s rating of 64 percent good to excellent, 30 percent fair and 6 percent poor or very poor.

Corn

To start the week, corn opened higher with the higher overnight market. But, the market quickly moved into negative territory after the open and remained there for the session. Corn struggled as it lacks fresh news. The news that was present was not positive, and as the outside markets turned negative, so did corn. Export inspections were disappointing and that added additional weakness. Argentina is expected to plant more corn acres this year and currently has 72 percent of its acres in the ground.

Nov. 23, corn opened lower, but firmed during the session to close with double-digit gains. The market was pressured early from the negative outside markets, as the dollar made 2-month highs. Also, the tension between North Korea and South Korea intensified overnight, which made traders nervous and brought on a liquidation of commodities. China also announced that it will liquidate more reserves of grain to stabilize prices. But, the market bounced 20 cents off of the session lows and ended near the session’s highs.

Corn opened 8 cents higher Nov. 24 and traded there for the session. Follow-through buying from the previous day and the positive outside markets supported the open. End user buying and optimism about Chinese demand supported the market during the session. China continues to purchase large lots of soybeans and traders are optimistic that it is only a matter of time until they will be buying corn.

USDA’s export inspection report was seen as bearish for corn. There were 24.4 million bushels of corn reported shipped, below the 38.2 million bushels needed to meet USDA’s projection of 1.95 billion bushels. This was below the pre-report estimates of 27 million bushels to 30 million bushels.

The export report estimated last week’s corn export sales pace at 32.4 million bushels, which is above the 26.5 million bushels needed to meet the USDA projection of 1.95 billion bushels. This was at the high end of the range of the pre-report estimates of 21.7 million bushels to 29.5 million bushels and neutral to friendly for corn. This brings the year–to-date export sales pace for corn to 870.4 million bushels, compared with 784 million bushels a year ago.

Soybeans

Soybeans opened the week with small gains, slipping slightly, but rallying to end with strong gains. Support was because of technical buying as many traders tried to correct an oversold market condition. The soybean market has been under pressure for the past two weeks losing nearly $1.50, so to see some sort of recovery was not out of line. Additional support was because of weather concerns in Argentina. Position-squaring ahead of a short trading week also was noted, as traders tried to get on the right side of the market ahead of Thanksgiving.

Nov. 23, soybeans opened lower but quickly turned to higher ground. Early pressure was because of concerns of a military altercation between North Korea and South Korea. Grains were trading higher overnight before the news, but slipped lower after the altercation occurred. Light selling also was tied to a rallying U.S. dollar. Cooler heads prevailed as buyers returned to the market later on. The buying was supported by news that China and the U.S. had inked a deal for the U.S. to sell at least 5.5 million metric tons of soybeans to China over the next year.

The soybean market opened the Nov. 24 session higher and traded with strong gains. Strong export demand for soybeans helped push the market higher. China recently purchased 780,000 metric tons of soybeans. Dry conditions in Argentina added support. Gains were kept in check by a disappointing census crush estimate. Estimates had crush at 158.6 million bushels, but the actual crush was 157.2 million bushels.

USDA estimated last week’s soybean export shipments pace at 42.8 million bushels. This brings the year-to-date export shipments pace for soybeans to 499.4 million bushels, compared with 442.6 million bushels last year at this time.

The soybean export sales pace was estimated at combined total of 34.9 million bushels with 24.8 million bushels being old crop and 10.1 million bushels being new crop. This brings the year-to-date export sales total for soybeans to 1.155 billion bushels, compared with 991.24 million bushels this time last year. USDA is estimating soybean exports at 1.57 billion bushels. With 42 weeks left in soybeans marketing year, shipments will have to average 25.5 million bushels and sales will have to average 9.9 million bushels to make USDA’s projection.

Barley

USDA reported no barley shipments or sales for the week. Cash feed barley bids in Minneapolis dropped 10 cents to $3.50. Malting barley bids in Minneapolis remained at $4.70.

Durum

USDA estimated last week’s durum shipments at 412,000 bushels. Last week’s durum export sales pace was estimated at 1.9 million bushels. This brings the year-to-date export sales pace for durum to 26.5 million bushels, compared with 31.6 million bushels last year at this time.

Nov. 24 cash durum bids in Berthold, N.D., were unchanged at $7 and Dickinson, N.D., durum bids also were unchanged at $6.80. Cass County N.D.’s durum loan deficiency payment rate remained to 0 cents.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Nov. 25 with almost $11 (Canadian) gains. Canola started the week with decent strength because of follow-through strength from the U.S. soybean complex. Technical buying also was noted as traders tried to correct oversold market conditions and position themselves ahead of a short U.S. trading week. Additional support spilled over from a higher U.S. crude oil market.

Nov. 24 cash canola bids in Velva, N.D. were at $22.79.

Sunflowers

As of Nov. 21, 96 percent of the nation’s sunflower crop was harvested, compared with 89 percent the previous week and 90 percent for the five-year average.

USDA estimated last week’s soybean oil export pace at negative 0.7 trillion metric tons (cancelations). This brings the year-to-date export pace for soybean oil to 712.5 trillion metric tons compared with 685 trillion metric tons last year.

Nov. 24 cash sunflower bids in Fargo, N.D., were $19.85.

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