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Published May 30, 2011, 04:00 AM

Weather concerns drive market

Wheat started the week with strong gains with support coming from weather concerns. Session gains were limited by a stronger U.S. dollar.

By: Ray Grabanski, Special to Agweek

Wheat

Wheat started the week with strong gains with support coming from weather concerns. Session gains were limited by a stronger U.S. dollar. Losses in Minneapolis were trimmed because of expectations for another week of poor planting conditions. The winter wheat exchanges were the weakest performers as recent rains were expected to help stabilize winter wheat conditions.

The May 24 session opened higher because of USDA’s friendly crop progress report. The report continued to show very little seeding progress of spring wheat in North Dakota and Montana. The winter wheat markets did not have the same strength as spring wheat as crop conditions were unchanged from last week because of last week’s rains, which stabilized conditions.

The buyers returned to the wheat market midweek as weather concerns again took center stage. Planting progress has remained of major concern in the Northern Plains as wet conditions have continued to dominate. U.S. spring wheat planting progress is estimated at 54 percent complete. Spring wheat 2011 acreage is estimated at 14.4 million. This leaves almost 7 million acres that still need to be seeded, with only one week left until the last planting date for insurance. North Dakota producers have 34 percent of their expected 7.1 million spring wheat planted as of May 22. This leaves North Dakota needing to plant 4.7 million acres within a week. It appears quite likely that the Northern Plains could see as much as 20 percent of spring wheat acres not get planted. Additional support spilled over from the EU wheat market which traded to new highs because of drought concerns in France and Germany.

The May 26 session started higher with gains spilling over from a strong trading session in Europe. The Northern Plains is expected to see some planting progress, but then rain was expected to move in the morning of May 27 and last for three days. Drought concerns in Germany and France have helped to push the EU wheat price with that strength spilling over to help support the U.S. market. Reuter’s survey is expecting spring wheat acreage to decrease 680,000 acres to 13.75 million. This news helped Minneapolis push to highs not seen in three years.

USDA reported last week’s wheat’s export inspections pace at 30.2 million bushels. This brings the year-to-date export shipments pace for wheat to 1.227 billion bushels compared with 836.8 million bushels for last year at this time. With only one week left in the marketing year, wheat shipments need to average 48 million bushels to make USDA’s projection of 1.275 billion bushels. Last week’s wheat export sale pace was estimated at a combined total of 15.9 million bushels with -1 million bushels (cancelation) being old crop and 16.9 million bushels being new crop. This brings the year-to-date export sales pace for wheat to 1.299 billion bushels compared with 832.8 million bushels for last year at this time. Wheat’s export sales pace has exceeded USDA’s projection of 1.275 billion bushels.

Corn

The corn market continues to find support from a wet forecast and slow planting progress. Weather is the dominant concern for the U.S. and Europe, and there is a mixed view on how it will impact the crop in the U.S. next week. A warm and dry pattern is expected to move into the Corn Belt next week, which is likely to boost early growth for the western Corn Belt and allow producers in the east to get back in the field. However it appears that it may remain wet in the North Country and mixed forecasts beyond 10 days for the U.S.

To start the week, corn opened higher and ended with 4-cent gains in the new crop months, but 7-cent losses in July. Strength in the dollar and crude oil down more than $3 put pressure on the front month July. European debt concerns supported the dollar. The market also was anticipating the crop progress report to show planting progress at 80 percent. The report stated that 79 percent is planted and of that 45 percent has emerged, both below average. The export inspection report was within estimates.

Corn opened lower May 24 and remained under pressure for the session. Spread trading was active, as traders were selling old crop and buying new crop, along with an unwinding of corn/soybean positions. China also is predicting a larger crop and that added some weakness. USDA’s planting progress stated Indiana was 49 percent planted, North Dakota 49 percent planted and only 11 percent planted in Ohio. These states have another 7.6 million acres to be planted according to USDA’s forecast for planted acreage and there are still another 19.2 million acres left to be planted nationwide as of May 22.

Corn opened higher May 25 and traded with green numbers for the session. The market found support from the higher overnight trade and the positive outside markets. There also is talk about tight stocks and any hiccup in planted acreage or yield will make them even tighter. Ethanol production for the week ending May 20 averaged 902,000 barrels per day, which is up 0.22 percent from the previous week and up 6.49 percent from last year. Corn used in last week’s production is estimated at 94.7 million bushels. Corn use needs to average 102.3 million bushels per week to meet this crop year’s USDA estimate of 5 billion bushels. Stocks as of May 20 were 20.797 million barrels, and this is up 1.89 percent vs. last week and up 5.46 percent vs. last year.

Corn opened higher May 26 and traded with green numbers for the session, ending the day up 3.25 cents and the December contract making a new high. The market found support early from weather concerns, as heavy rains fell in the eastern Corn Belt. Traders also are worried with acreage and yield losses as we move into June. There also is talk with the world weather, as Europe and parts of China are facing their worst drought in 50 years. The corn market also had spillover support from the wheat complex. The export sales report was neutral.

Soybeans

The soybean market traded in different directions this week. The old crop contracts traded on the defense with most of the pressure coming from a slowdown in demand. The new crop months were supported by delayed planting concerns as producers concentrate on planting wheat and corn. For the week ending May 26, July soybeans were 4.5 cents higher, while November was 22 cents stronger.

To start the week, soybeans opened and traded lower. Just as was the case in most of the grains, soybeans opened the overnight session with gains but soon faded those gains once the U.S. dollar rallied. Additional pressure was a result of a lower U.S. crude oil market.

The May 24 session had soybeans open higher. The market did trade on both sides of unchanged, but by the close, most of the soybeans months pushed higher. Trader concerns that delayed planting concerns also will affect the soybeans helped to support the market. So far, soybean planting progress is just slightly below the five-year average. July was pressured by the rolling of positions.

The soybean market opened May 25’s session higher and traded with minor gains throughout the session. Early support was a result of carry-over strength from the wheat and corn markets. Minor support came from continued concerns that planting delays because of wet conditions also could affect the number of acres that get planted to soybeans. Overall, the soybean market should get extra acreage because of the switching of corn and wheat acres. If realized, that will pressure the soybean market, but for now, soybeans need to stay completive with corn.

The May 26 session saw soybeans playing a follower to the corn and wheat markets. Weather has delayed the planting of wheat and corn, and traders are starting to be concerned about slowing planting progress for soybeans in the Corn Belt states. A little hiccup for the soybean came when the Census Crush report was released. The report continues to show a slowdown in soybean demand as crush was again lower than year ago estimates. For the month of April, 127.98 million bushels of soybeans were crushed compared with 136.55 million bushels last year.

Barley

USDA reported last week’s barley export shipments pace at 92,000 bushels. USDA reported no barley export sales for last week. As of May 22, planting progress was at 57 percent compared with 43 percent last week and 89 percent for the five-year average. Emergence was at 27 percent compared with 17 percent last week and 60 percent for the five-year average. North Dakota is reporting planted progress at 21 percent complete compared to 6 percent last week and 85 percent for the five-year average. Minnesota has 76 percent planted compared with 22 percent last week and 86 percent for the five-year average. The May 26 cash barley bids in Minneapolis were at $5.15 for feed barley, while malting barley was at $6.75.

Durum

The May 26 cash bids for milling quality durum were at $12 in Berthold, N.D., while bids in Dickinson, N.D., were at $10.70.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending May 26 with $15 (Canadian) in gains. Planting delays in the Northern Plains was the main supporting factor for the canola market. . The May 26 cash canola old crop bids in Velva, N.D., were at $27.68, while new crop bids were $26.31.

Sunflowers

The May 26 cash old crop sunflower bids in Fargo, N.D., were $35.90, while new crop bids were $27.10.

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