Advertise in Print | Subscriptions
Published March 14, 2011, 04:39 AM

Spec liquidation pressures markets

The wheat markets opened the week with light losses but tumbled lower throughout the day to finish with losses of 20 to 31 cents. All of the grain markets had losses as noncommercial long liquidation hit the markets, but wheat suffered the steepest losses.

By: Ray Grabanski,

Wheat

The wheat markets opened the week with light losses but tumbled lower throughout the day to finish with losses of 20 to 31 cents. All of the grain markets had losses as noncommercial long liquidation hit the markets, but wheat suffered the steepest losses. Export inspections continue to fall behind pace, even as new export sales are announced on an almost daily basis. March 7 was no exception with a 200,000-mertic-ton sale to Iraq. However, we are running out of time to make those shipments with just three months left in the marketing year for wheat. There also was some pressure from moisture forecast for Kansas, Nebraska, Colorado and eastern Oklahoma, while the rest of Oklahoma and Texas look to remain dry. There is word that wheat acres are already being destroyed there to plant cotton.

The wheat markets opened with 5- to 10-cent losses March 8 but slipped lower during the day to finish with losses of 18 to 24 cents. Moisture was falling in Kansas and northern Oklahoma, which will help the wheat crop there in a big way as it starts the spring growing season. The dollar index has bounced off its recent lows and looks to have found some support at those levels, which also is pressuring the export dependent wheat market.

The wheat markets opened with gains March 9 but tumbled lower during the day before finishing with losses of 16 to 21 cents. Funds have been pulling money out of the grain markets because of concerns about higher energy costs creating a global economic turndown. There also has been a tendency to pull out of the market ahead of the March 10 monthly USDA report. Heavy snow fell in Kansas and northern Oklahoma, which will help the wheat crop there.

The wheat markets opened March 10 with 15- to 20-cent losses and were consistently lower all day to finish with losses of 15 to 26 cents. This marked the fourth day of double-digit losses this week as noncommercial traders continue to pull money out of the grain markets. The monthly supply and demand report from USDA increased projected U.S. ending stocks of wheat by 25 million bushels to be at 843 million bushels. This was a result of a 25 million-bushel cut in exports. While export sales have picked up in recent weeks, shipments continue to fall behind with less than three months left in the marketing year for wheat. USDA also raised global ending stocks for wheat by 4.1 million metric tons at 181.9 million metric tons, up from 177.8 million metric tons in February. It has been reported that more than 100,000 tons of Canadian feed wheat are being shipped into the southeastern U.S. to be used as chicken feed because of the small premium wheat currently is holding over corn.

Corn

To start the week, corn contracts opened 1 cent lower and were under pressure for the session, ending the day down 10.5 cents. The market traded lower with growing concerns that fund traders are moving out of the agricultural markets and into the energy and metal markets. A general concern for the global economy going into possible protests in Saudi Arabia planned for March 11 seemed to be the primary force to pressure the U.S. stock market and spilled over to the grain markets. The University of Missouri Food and Agricultural Policy Research Institute estimates also weighed on corn. FAPRI issued its 2011 baseline projections, showing a 162.6-bushels-an-acre yield for 2011 to ’12 on 91 million planted acres, with beginning stocks of 745 million bushels and 2011 to ’2 ending stocks at 1.247 billion bushels. They also expect a dramatic drop in ethanol production in 2011 to ’12 because of the expiration of the blender’s credit.

Corn futures opened 6 cents lower and were under pressure for the session, ending the day down 12 cents. The market opened lower as the funds liquidated positions and sell stops were hit on the way down. The firmer dollar and the weakness in the crude oil market pressured the corn market. After posting a contract high March 4, July corn closed lower for the third session in a row and 34 cents off of its Friday high.

The corn futures opened with 3- to 4-cent gains March 9, but came under pressure from steep losses in the other grain markets to have losses of more than 10 cents in the middle of the day. The corn market was able to fight back to finish with 4-cent losses in old crop and fractional gains in new crop as money continues to move from old crop into new crop contracts. There was some money leaving the table ahead of the monthly USDA report, although the report was expected to show tightening U.S. and global stocks of corn. It was reported that Mexico bought 150,000 tons of corn this morning and South Korea bought 110,000 tons.

Corn futures opened 15 cents lower March 10 and were under pressure for the session, ending the day down 18.75 cents. The lack of any surprises in the monthly USDA report and the general weakness in all ag commodities pressured the corn market at the open. Also, news that Canadian feed wheat is moving into the U.S. (100,000 metric tons for broiler feed in the southeastern U.S.) and a disappointing export sales report weighed on the market for the session. USDA left the March numbers unchanged from February, with ending stocks at 675 million bushels and a stocks-to-use ratio of 5 percent at a 15-year low. World ending stocks were raised slightly to 123.14 million metric tons, up from 122.51 million metric tons and just above trade expectations.

Soybeans

Soybeans started the week with light losses but quickly slid lower as heavy noncommercial selling pressure entered the grain markets. Soybeans finished with losses of up to 19 cents. Instability in North Africa had traders exiting the grain markets in favor of energies and precious metals. There is a general concern among the fund traders that higher energy prices will slow the global economy and affect demand for commodities. The South American picture looks less friendly to the soybean market this week with moisture forecast for western Argentina and an end to the port strike in that country. Export inspections came in under expectations due to a shifting of demand towards the Southern Hemisphere.

Soybeans opened the March 8 session with 11-cent losses and had losses of up to 20 cents before finishing with 9 to 13 cent losses. The noncommercial long liquidation continued as traders are taking profits ahead of the March USDA report. Soybeans opened the March 9 session with light losses but were ground lower again during the session to close with losses of 26 to 33 cents. This marks the third straight day of double-digit losses as noncommercial traders have been taking profits and exiting the market amidst uncertainty in the global economy. Traders were liquidating long positions ahead of the March 10 USDA report. Average estimates are looking for little change in the tight U.S. ending stocks, while world stocks are expected to grow due to a large South American crop.

Soybeans opened the March 10 session with 20-cent losses and had even steeper losses briefly before rallying to have gains of more than 10 cents by the middle of the day. Pressure from the sharply lower corn market caused the soybean market gains to be trimmed to less than 7 cents. The monthly USDA report made no adjustment to the U.S. ending stocks, leaving them at a very tight 140 million bushels. Global ending stocks had a very small increase to be at 58.33 million metric tons, below last year’s 60.17 million metric tons. A 1.5 million-metric-ton increase in the Brazil crop size was mostly offset by increased usage. The report didn’t give much direction to the soybean market, but the market was able to trade higher after having three sharply lower days in a row.

Barley

USDA reported export sales of 2,000 tons of barley to Morocco, with shipments of 12,000 tons also going to Morocco. Cash bids in Minneapolis had 5- to 10-cent losses on the week with feed barley at $4.70 and malting at $5.95.

Durum

USDA report export inspections of 121,000 bushels of durum this week. Cash bids for milling quality durum were at $9 March 10.

Canola

Canola futures on the Winnipeg, Manitoba, exchange had steep losses of $30 to $40 (Canadian) a ton for the week. Noncommercial long liquidation pressured all of the grain and oilseed markets this week, and canola was no exception. The recent run-up in energy costs has traders concerned about a global economic slowdown, which would affect demand for oilseed products in a negative way. The monthly USDA report showed increased global stocks of soybeans, giving the oilseed markets some pressure. The canola market does still have some bullish fundamentals but is unable to hold its own amidst pressure from outside market forces. Cash bids had losses of $1.30 for the week. Cash bids March 10 in Velva, N.D., were at $24.88 for old crop and $23.44 for new crop.

Sunflowers

Soybean oil futures finished with steep losses for the week as fund liquidation hit the vegetable oil markets. May soyoil futures lost more than 2.5 cents for the week to be at 56.93 cents a pound March 10 Thursday. Cash bids for NuSun sunflower actually gained 20 cents on the week with the March 10 bid at $29.80 in Fargo, N.D.

Dry beans

Edible bean bids were steady to slightly higher during the past week with USDA reporting North Dakota/Minnesota bids at $25 to $26 for pintos, $30 to $32 for navies and $30 to $32 for blacks. New crop bids are looking more competitive as buyers try to determine how many acres will be planted.

Tags: