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Published June 06, 2011, 03:13 AM

Russia exporting wheat and weather

Wheat started the short trading week lower and extended session losses. Early selling was tied to weekend reports from Russia stating its intent to lift the export ban on wheat. The news pushed wheat lower and into sell stops, which only accelerated session losses. Rain over the weekend in parts of Europe added to the session’s pressure. Losses limited by slow planting progress of spring wheat in the Northern Plains, but in the end, the pressure from the market hitting sell stops proved to be too much to overcome.

By: Ray Grabanski, Special to Agweek

Wheat

Wheat started the short trading week lower and extended session losses. Early selling was tied to weekend reports from Russia stating its intent to lift the export ban on wheat. The news pushed wheat lower and into sell stops, which only accelerated session losses. Rain over the weekend in parts of Europe added to the session’s pressure. Losses limited by slow planting progress of spring wheat in the Northern Plains, but in the end, the pressure from the market hitting sell stops proved to be too much to overcome.

The June 1 session wheat again started on the defense with most of the pressure in the winter wheat contracts continuing to come from news that Russia will be re-entering the export market. Minneapolis continues to be the best wheat performer as planting delays continue to be the main focus of traders’ attentions. There is a small window of opportunity to plant wheat around midweek, but once the next rains system hits, it could signal the end of spring wheat’s planting season.

The wheat exchanges opened June 2’s session with modest gains and pushed slightly to post solid gains into the close. Early support was a result of technical strength as most of the wheat exchanges traded down to support lines this week after the news that Russia was going to be re entering the export market. Weather issues returned to the forefront as weather continues to delay planting in the Northern Plains while drought continues to decrease the potential size of the Southern Plains crop. France and Greece have seen some rains, but not enough to help reverse production issues from drought. Informa released ita recent estimate for the 2011 winter wheat crop. Their recent estimate is at 1.421 billion bushels compared to its May estimate of 1.441 billion bushels and USDA’s 1.424 billion-bushel estimate.

USDA reported last week’s wheat’s export inspections pace at 26.2 million bushels. This brings the year-to-date export shipments pace for wheat to 1.253 billion bushels compared to 849.4 million bushels for last year at this time. This was the final week in wheat’s export marketing year. Wheat shipments fell 22 million bushels short of USDA’s projection of 1.275 billion bushels. Last week’s wheat export sale pace was estimated at a combined total of 11.3 million bushels with -1.1 million bushels (cancelation) being old crop and 12.4 million bushels being new crop. This brings the year-to-date export sales pace for wheat to 1.297 billion bushels compared with 830.8 million bushels for last year at this time. Wheat’s export sales pace has exceeded (by 22 million bushels) USDA’s projection of 1.275 billion bushels.

Corn

Corn started the short trading week opening lower, but firming to trade both sides of unchanged until late in the session, when a sell-off forced corn to double-digit losses. Concerns with planted acreage losses due to heavy rains offered support early. Also, hot and dry weather in the southeast and Delta states, were seen as supporting factors. But, the weakness in the wheat complex weighed on corn. Adding pressure was forecasts calling for dry weather in the eastern Corn Belt, which will allow planters to return to the field.

Corn opened lower June 1 but moved higher into the close. Early pressure spilled over from a lower wheat complex. But the market did firm up by midday on the lack of planting progress. May 31’s planting progress report showed Ohio was just 19 percent planted as compared with its five-year average of 93 percent and Indiana is 59 percent planted compared with its five-year average of 87 percent. This leaves 12.9 million acres to be planted in June and near 2.7 million acres in Ohio and 2.9 million acres in Indiana. A private firm released a U.S. corn planted acreage estimate of just 87.233 million acres, and that added support.

The June 2 session had corn open higher and trade with green numbers for the day and to close at new contract highs in the new crop months. The market found support from a wet forecast returning to the eastern Corn Belt in coming days. The market also is finding support as private firms start to release their acreage estimates. Some private analysts now are indicating that U.S. corn planted acres could be almost 5 million acres smaller than the initial USDA March estimate. The 5 million-acre adjustment would remove about 700 million bushels from balance sheets that already is one of the tightest on record. Ethanol production for the week ending May 27 averaged 909,000 barrels per day, up 0.78 percent vs. last week and up 7.32 percent vs. last year. Corn used in last week’s production is estimated at 95.445 million bushels. Corn use needs to average 102.77 million bushels per week to meet this crop year’s USDA estimate of 5 billion bushels. Stocks were 20.227 million barrels, down 2.74 percent vs. last week.

Soybeans

The soybean market took the lead this week trading with small losses to start the week but then trading the next two sessions with double digit gains. Support came from trader concerns that not all of the soybean acres will get planted. For the short trading week ending June 2, July soybean gained 27.25 cents while November improved by 24.25 cents.

To start the short trading week, soybeans opened with small gains but slipped to end with small losses. Early strength came from spillover buying from a stronger U.S. crude oil market as well as from concerns toward global production of rapeseed. Drought has started to affect Germany’s rapeseed production potential, and cold, wet conditions have dampened the outlook for canola production in the U.S. and Canada. But the soybean market was not able to hold early gains as selling spilled over from the weaker corn and wheat markets.

June 1’s session had soybeans trading with small to modest gains throughout the session only to rally toward the close to post solid gains. This time, support spilled over from a strong corn market, but light support was a result of planting concerns. It seems odd that traders would be concerned about not being able to get the soybean crop planted when the Corn Belt is nearing its final planting date for corn. Soybeans are getting most of their support from a shortage of canola acreage (becase of wet conditions in the Northern Plains and drought in EU), which has the potential to lead to an increase in soybean and soybean oil demand.

The June 2 session saw soybeans trade with modest gains throughout the session. Support again came from a stronger corn market as well as from delayed planting concerns. Traders are concerned that producers will not switch acreage over to soybeans but instead take prevent plant insurance on the acreage that was intended for wheat and corn. Additional strength was because of worries that the Northern Plains canola crop will not get planted and users will look at switching their canola needs over to soybeans. A lower U.S. dollar added minor strength. Linn Group is estimating the 2011 soybean planted acreage at 74.89 million compared with its May estimate of 75.09 million and USDA’s March estimate of 76.6 million.

USDA reported last week’s soybean export inspections pace at 10.3 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.391 billion bushels compared with 1.34 million bushels for last year at this time. Last week’s soybean export sales pace was estimated at a combined total of 5.7 million bushels with 3 million bushels being old crop and 2.7 million bushels being new crop. This brings the year-to-date export sales pace for soybeans to 1.527 billion bushels compared with 1.412 billion bushels for last year at this time. With only 14 weeks left in the marketing year, soybean shipments need to average 11.4 million bushels and sales need to average 1.6 million bushels to make USDA’s projection of 1.55 billion bushels.

Barley

USDA reported last week’s barley export shipments pace at 24,000 bushels. There was no barley export sales reported for last week.

Durum

USDA estimated last week’s export shipments pace at 1.065 million bushels. Last week’s durum export sales pace was estimated at 400.000 bushels. As of May 29, 17 percent of North Dakota’s crop had been planted, compared with 6 percent last week and 86 percent for the five-year average. Emergence is estimated at 4 percent compared to 1 percent last week and 61 percent for the five-year average. June 2 cash bids for milling quality durum were at $12 in Berthold, N.D., while bids in Dickinson, N.D., were $12.15.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed about $10 (Canadian) higher. Canola traded higher throughout the week with most of the support coming from delayed planting concerns. Most were looking for a small planting window to occur this week, but instead, the weather forecast is calling for chances of rain for the next few days. This will slow planting down in the Northern Plains. The June 2 cash canola old crop bids in Velva, N.D., were at $28.12, while new crop bids were $27.07.

Sunflowers

As of May 29, 11 percent of the nation’s sunflower crop had been planted compared with 3 percent last week and 40 percent for the five-year average. North Dakota’s sunflower planting progress was estimated at 8 percent, compared with 3 percent last week and 54 percent for the five-year average. The June 2 cash old crop sunflower bids in Fargo, N.D., were at $36 while new crop bids were at $27.25.

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