Advertise in Print | Subscriptions
Published December 21, 2010, 10:14 AM

Argentina weather supports corn, soybeans

Wheat lost ground again this past week with most of the selling tied to position squaring ahead of the holiday season. Wheat did have some positive news as exports were good and wheat even saw some surprising sales.

By: Ray Grabanski,

Wheat

Wheat lost ground again this past week with most of the selling tied to position squaring ahead of the holiday season. Wheat did have some positive news as exports were good and wheat even saw some surprising sales.

Wheat opened the week higher with support spilling over from the other grains and from news that China was not going to make any short-term changes in its monetary policy. This Chinese announcement sent the U.S. dollar sharply lower and that helped to add support to wheat. Late in the session, the 2010 wheat contracts came under selling pressure from the lack of concern as USDA is starting to increase old crop supplies of wheat because of slow demand, which was evident in the morning’s export inspections report. But the 2011 contracts remained high as the focus continued to be production concerns.

The Dec. 13 session had wheat on the defense with selling tied to a stronger U.S. dollar and from reports that Australia’s wheat export pace will not slow down because of the production issues it is experiencing. Current estimates have Australia’s wheat exports to increase 21 percent to 16.6 million metric tons. On the positive side, there were a few wheat tenders overnight as Egypt bought 115,000 metric tons of U.S. wheat while Japan is looking for 71,563 metric tons of Australian wheat. Technical pressure kept wheat on the defense throughout the session and by the close, wheat was traded low enough where there was damage done to the charts.

The Dec. 15 session saw wheat start higher with most of the early support coming from exports. Overnight, Jordan was in tendering for 100,000 metric tons of wheat, but when the deal was done, it wound up purchasing closer to 150,000 metric tons of U.S. wheat. Egypt also was in buying wheat, taking 110,000 metric tons of U.S. wheat and 120,000 tons of French wheat. Additional selling pressure was a result of a stronger U.S. dollar. By the close, Kansas City and Minneapolis were lower while Chicago held on to minor gains as traders try to tighten the spread between classes of wheat.

Wheat opened the Dec. 16 session mixed but softened soon after the opening. Wheat found support from the morning’s export sales report, which showed a better-than-expected week of sales. But soon after the opening bell, the winter wheat exchanges started the drift. The selling pressure gained momentum throughout the rest of the session. Late-session pressure was a result of weather forecasts that are calling for dry conditions to move in the eastern regions of Australia. Additional pressure came from higher production estimates for Argentina’s wheat crop, which now is estimated to be closer to 13.5 million metric tons (4 percent increase). Spring wheat was the best performer of the day as traders started to re-enter the long spring wheat/short winter wheat spreads because of the need for quality wheat.

Corn

The corn market ended 13.25 cents higher for the week ending Dec. 16. Tight projected ending stocks continue to support corn. Additional support was because of dry weather in Argentina. On the other hand, both China and Mexico released stock numbers and both showed an increase. Exports sales also continue to be disappointing and shipments are below estimates. Potential supply problems can only carry the market so far, and now the corn needs to see demand pick up.

To start the week, corn futures opened higher, trading with green numbers for the day and closing near session highs. The overnight market was higher and that carried over to support the day session. Outside markets also were supportive, with the dollar down hard as China did not make any monetary changes over the weekend. The tax bill is supportive, as it includes a one-year extension of the 45-cent blender’s credit. The weather forecast is dry for Argentina, and that offers additional strength to the corn market.

Corn opened 2 cents lower Dec. 14 and traded with red numbers for the session. The outside markets had a negative tone and the dollar firmed up during the morning adding pressure on corn. There also was some profit taking after the previous day’s double-digit gains. The market felt pressure from rain in Argentina (the second-largest exporter of corn in the world) over the weekend (more is expected for the weekend). Mexico’s ag minister also released a statement that Mexican corn production will be 20 percent larger than 2009.

The corn futures opened slightly higher Dec. 15 and then had enough buying interest to trade with 7-cent gains until midday. The market then worked lower as buying interest dried up and the dollar continued to strengthen. The market was supported early with the strength in the soybeans and the persistent dryness in Argentina. By midday, buyers went to the sidelines and corn went with. Profit taking also was seen.

The corn futures opened higher Dec. 16 but traded both sides of unchanged before ending with small gains. Trading was focused on the dry weather pattern that Argentina has been in and that it may threaten its crop production and global supplies may become tighter. The export sales report had little effect on the trade as it came out within estimates, but shipments still are lagging. News out of China was not positive, as they increased their corn production estimate to 172.5 million metric tons and up 5 percent from the last estimate and 2.7 percent above USDA’s.

Soybeans

The soybean market gained small gains for the week ending Dec. 16. As of the Dec. 16 close, the January soybean contract gained 16 cents while the March contract improved 17 cents. Strong export demand helped to support the market early, but a disappointing export sales report trimmed gains.

The soybean market started the week higher, maintaining strong gains throughout the session. Traders were expecting China to make adjustments to its monetary policy over the weekend, but China made an announcement it was not going to make adjustments at this time. Traders were concerned that China would continue to slow its economy and slow imports. This should mean soybean exports will remain the driving force for the market. Additional support was a result of weather forecasts calling for dry conditions in Argentina. Gains were trimmed by forecasts for rain in Brazil, but the trade overlooked that news and focused attentions on the Chinese news.

The Dec. 14 session started mixed but soon turned lower. Early support was a result of carry-over strength from Dec. 13’s strong performance and a steady overnight session. The gains were short lived as selling stepped in to push the market lower soon after the opening bell. Selling pressure spilled over from a lower wheat market, as wheat came under extreme pressure. Light selling also was a result of technical selling.

Soybeans opened the Dec. 15 session steady. Within a few minutes, soybeans rallied to double-digit gains. By midsession, the soybean market stalled out because of the lack of follow-through buying and experienced a slight pullback late in the session. By the close, most of the months were posting small gains. Early support was a result of strong demand for soybeans as export demand continues to outpace projections. Overnight, China was in and purchased another 110,000 metric tons of soybeans. Gains were trimmed late in the session with pressure coming spilling over from a rallying U.S. dollar.

The soybean market opened the Dec. 16 session steady to slightly lower with most of the early selling pressure coming from a disappointing export sales estimate. USDA estimated last week’s soybean sales pace at a very disappointing 3.1 million bushels. This was mainly because of cancellations from China. Additional selling was tied to weather forecasts that are calling for rains to move into parts of Argentina in the next few days and that the pattern will turn to more normal weather for the southern regions of Argentina. Progressive Ag is expecting the markets to sell off over the next few weeks because of holiday trading, but strength should return after the first of the year as the acres race heats up.

Barley

USDA estimated last week’s barley shipments at 28,000 bushels with 8,000 bushels going to China and 20,000 bushels going to Mexico. This brings the year-to-date export shipments total for barley to 4.4 million bushels compared with 2.57 million bushels for last year at this time. Cash feed barley bids in Minneapolis improved to $3.90, while malting barley bids were being offered at $5.15.

Durum

USDA estimated last week’s durum shipments pace at 808,000 bushels with all of the bushels going to Tunisia. Last week’s durum export sales report was estimated at 800,000 bushels. This brings the year-to-date export sales pace for durum to 27.7 million bushels compared with 32.4 million bushels for last year. Cash durum bids in Berthold, N.D., were at $7.75, while bids in Dickinson, N.D., were $7.25.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Dec. 16 $5 (Canadian) lower. The canola market opened the week with decent strength, supported from a stronger U.S. soybean complex as well as from good domestic crush demand. An overbought market condition caused the canola market to sell off late in the session. Additional selling was tied to an increase in farmer selling as well as from a stronger Canadian dollar. Dec. 16 cash bids for December delivery in Velva, N.D., were $23.19.

Sunflowers

The front month January soybean oil contract ended the Dec. 16 session at $54.07. The Dec. 16 cash NuSun bids in Fargo, N.D., for December delivery were $21.05.

Tags: