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Published December 14, 2010, 08:56 AM

Gains continue in Minneapolis wheat

The wheat exchanges started the week right where they left off the previous week, opening with 12-cent gains and closing with gains of up to 15 cents

By: Ray Grabanski,

Wheat

The wheat exchanges started the week right where they left off the previous week, opening with 12-cent gains and closing with gains of up to 15 cents.

Wheat continued to defy the outside markets as the dollar rallied and the row crop markets came under pressure. Heavy rains in eastern Australia are delaying harvest, turning the crop from milling wheat into feed wheat.

The U.S. secured another sale of hard red winter wheat, selling 160,000 metric tons to unknown destinations as importing countries grow concerned about the supply of high-quality wheat. Concerns about the poor condition of the U.S. winter wheat crop going into dormancy also are supporting the market. The wheat market largely ignored a “ho-hum” export inspections report. March Minneapolis wheat closed above November highs to make new contract highs.

The wheat exchanges opened with strong gains Dec. 7 after trading to two-year highs overnight, but quickly backed off to close widely mixed. The Minneapolis market was able to hold small gains, while the Chicago exchange had sharp losses on active spread trading.

Another sale of hard red wheat was reported, with 193,417 metric tons bound for Japan. The demand for quality wheat is supportive for the Minneapolis and Kansas City markets, but the soft wheat Chicago market came under pressure from its overbought market condition and losses in the corn market.

Australian officials are projecting a record wheat crop of 26.8 million metric tons, up from the last estimate of 25.1 million metric tons, but export projections were lowered from 18.4 million metric tons down to 16 million metric tons as a result of quality issues.

Dec. 8, the wheat exchanges opened lower but quickly recovered to post gains of up to 12 cents by midday. The wheat exchanges had active spread trading with closing prices from 8 cents higher to a penny lower. Estimates now are putting the volume of Australian feed wheat crop at 16 million metric tons, which is 60 percent of the country’s crop, while the average is 2.5 million, or about 10 percent of the crop. Outside markets were negative with a continued recovery in the dollar, but wheat continues to chart its own direction.

The wheat exchanges started the day Dec. 9 with mixed trade, but rallied at the end of the day to finish with gains of 4 to 12 cents. The U.S. sold 250,000 metric tons of milling wheat to Iraq, adding to the list of countries forced to come to the U.S. to find milling quality hard red winter wheat. In the meantime, Egypt bought 240,000 metric tons of soft wheat from France, demonstrating the world competition faced by the Chicago market.

The wheat exchanges opened lower Dec. 10. The monthly USDA supply and demand report put projected U.S. ending stocks up 10 million bushels from November at 858 million bushels, which is higher than expected. This was a result of a reduction in domestic food use.

Corn

To start the week, the corn market opened 5 cents lower and traded with losses for the session. The lower overnight trade and the negative outside markets influenced the market. The corn market felt additional pressure from profit taking as the funds liquidated their long positions. The trade is concerned about lackluster corn exports. Traders also are nervous about demand for ethanol, which is made from corn, as it’s unknown whether lawmakers will extend multibillion-dollar tax credits for companies that blend ethanol into gasoline. Ethanol production is projected to eat up about 38 percent of the U.S. corn crop.

Dec. 7, corn futures opened 5 cents higher but quickly put in their high and turned out lower for the session. Corn felt pressure from the negative outside markets and the sharp break in the wheat market. Key downside reversals were made in gold, silver, copper and crude oil markets and those losses carried over to the corn trade. There continues to be conversation about the blender’s credit and what Congress will do. It appears that the current proposal will be 36 cents compared with the 45 cents that is in place, but still it needs to be passed into law. The corn market remains the follower with the lack of any fresh news.

The corn futures opened 3 cents lower on Dec. 8, but selling interest dried up and the market moved into positive territory and closed with double-digit gains. The support came from estimates being released in USDA crop production report. Expectations are that ending stocks will shrink, with the average estimate coming in at 803 million bushels, down from the 827 million bushels in USDA’s November report. Expectations are that the South American crop also will be smaller. The tighter ending stocks estimates supported the market.

Dec. 9, the corn futures opened 2 cents lower and traded close to unchanged in a quiet session. There was not much buying or selling interest Dec. 9 after the previous day’s big run and ahead of the Dec. 10 USDA report. Export sales were within estimates, but shipments continue to be disappointing.

Looking at USDA’s export inspection report, there were 25.2 million bushels of corn reported, below the 38.6 million bushels needed to meet USDA’s projection of 1.95 billion bushels. This was at the low end of pre-report estimates of 25 million bushels to 30 million bushels.

Soybeans

The soybean market started the week with mixed trade but quickly fell from there to close with 12-cent losses. January beans closed above $13 Dec. 10, but Dec. 6 trade brought noncommercial selling pressure tied to a recovery in the U.S. dollar.

Rain fell in South America recently, which also dampened buying enthusiasm in the soybean pit. Export inspections were above what was needed to keep pace with USDA projections, but well below recent weeks, indicating that the strong soybean export program may be starting to slow down.

Dec. 7, the soybean market opened the session with 12-cent gains after a strong overnight session but quickly fell from there to post a mixed close. Outside markets put pressure on the grain markets with a recovery in the dollar and losses in crude oil. China is projecting record soybean imports for the fourth quarter of 2010, but rumors of potential interest rate hikes there put a damper on the market. The dry conditions in Argentina likely will serve to support this market until a reliable crop size estimate is completed.

The soybean market opened the day Dec. 8 with losses of more than 12 cents after a weak overnight session, but rallied back during the day to finish with gains of 10 cents to 12 cents.

Outside markets mostly were negative, with a continued recovery in the dollar and losses in crude oil, but the row crop markets were able to trade higher in anticipation of bullish supply and demand news. Traders were expecting cuts to ending stocks in Dec. 10’s monthly supply and demand report. The strong demand picture continues to underpin the soybean market, while concerns about antiinflationary measures in China loom over the future.

Dec. 9, the soybean market opened the session with 4-cent losses and had small gains in the early part of the day before slipping to post losses of up to 15 cents. Outside markets mostly were negative, with a higher dollar and directionless trade in energy markets. Soybeans came under pressure from projections of improving weather conditions in South America and position squaring ahead of the supply and demand report.

The soybean market opened lower Dec. 10 as the USDA report was in line with expectations. USDA cut ending stocks by 20 million bushels to 165 million bushels, which was within the range of estimates. Export projections were raised by 20 million bushels to bring the total expected exports for the year to a record 1.59 billion bushels.

Barley

USDA reported export inspections of 8,000 bushels of barley bound for China last week. This brings the total to 4.4 million this marketing year, vs. 2.6 million bushels at this time last year. USDA reported no export sales for barley this past week. Cash feed barley bids in Minneapolis lost 5 cents on the week to end at $3.75. Malting barley bids in Minneapolis gained 10 cents at $5.

Durum

USDA reported export inspections of 441,000 bushels of durum, down from 693,000 last week. USDA cut durum export projections by 5 million bushels, resulting in a 4.9 percent increase in ending stocks at 48 million bushels. Cash bids held mostly steady for the week to be in the $7.00 to $7.25 range for milling durum.

Canola

Canola futures on the Winnipeg exchange had strong gains for the week to trade over $565 per ton Dec. 10 in the January contract. The January contract gained more than $11 per ton during the week. Export business for vegetable oils has been strong, which continues to support the canola market on its march toward testing the $570 level in the nearby contract.

The monthly USDA report made no changes to U.S. soybean oil stocks. Cash canola bids in Velva, N.D., had little net change on the week, with the Dec. 9 bid at $23.55 for December delivery.

Sunflowers

The weekly USDA report showed a strong soybean oil export pace at 51.3 trillion metric tons. This brings the year–to-date export pace for soybean oil to 795.9 trillion metric tons compared with 716.5 trillion metric tons at this time last year. Soybean oil futures had gains of almost a penny for the week to be at 54.22 cents per pound. Cash sunflower bids in Fargo, N.D., gained 15 cents on the week at $20.45.

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