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Published June 27, 2011, 04:22 AM

Markets retreat

Wheat opened the week lower, but Minneapolis cut its losses late to end with small gains. The winter wheat exchanges continued to be pressured by advancing harvest activity while the Minneapolis exchange was supported by continued acreage concerns. It is apparent that the planting season is over for the Northern Plains, but the question remains as to how much spring wheat was actually planted.

By: Ray Grabanski, Special to Agweek

Wheat

Wheat opened the week lower, but Minneapolis cut its losses late to end with small gains. The winter wheat exchanges continued to be pressured by advancing harvest activity while the Minneapolis exchange was supported by continued acreage concerns. It is apparent that the planting season is over for the Northern Plains, but the question remains as to how much spring wheat was actually planted.

June 21’s session had wheat trading with strength as technical buying stepped in to help wheat bounce off support lines. Light support was a result of spillover support from a weaker U.S. dollar. The dollar was under pressure from news of a $1 trillion bailout for the PIIGS. That brought stability to the markets in Europe which in turn pressured the U.S. dollar. Additional support was because of weather forecasts calling for rain for much of the Plain states.

By midweek, wheat was under extreme pressure. Early selling was tied to spillover pressure from a lower overnight session in Europe’s wheat contracts. Wheat in Paris has been under pressure since May as weather conditions have improved enough to boost crop production potential. Fund selling added pressure. Technically, damage was done to the charts as wheat traded to lows not seen for seven months.

The June session started off under extreme pressure. Early selling was tied to a complete breakdown in the markets as all commodities, except the U.S. dollar, were under hard selling pressure. Economic concerns in both the U.S. and Europe pressured wheat while additional selling was tied to Statistics Canada’s bearish acreage estimate. Toward the end of the session wheat was able to reduce session losses. Support was a result of bottom picking. Chicago was the best performer as traders took profits on short positions and unwound wheat spreads.

Statistics Canada’s March acreage report estimated Canada’s wheat planted acreage at 23.6 million acres, 1.2 million more that traders expected (22.4 million), 1.1 million acres lower than its March estimate (24.7 million) and 2.5 million higher than last year (21.1 million). Spring wheat acres were estimated at 17.5 million, 1 million higher than last year. Traders are questioning the accuracy of the report because of a wet spring.

Corn

Corn ended lower this week, with July loosing 15 cents and December down 20 cents. The corn market has been under pressure the past 2 weeks, with the July contract loosing $1.60 the last 10 trading sessions through Wednesday. The funds became large sellers of the market, with pressure coming from the outside markets and financial concerns in Greece.

To start the week, corn traded with very small gains. The market was under some pressure early in the session from widespread rainfall over the weekend and traders’ saying that “rain makes grain.” But, with up to 12 inches of rain falling in parts of Illinois over the weekend and heavy rains forecast for the Midwest with already-saturated ground, the corn market worked back to trade with green numbers.

Corn opened higher and remained firm for the session. The market found support from the higher overnight trade and rumors that China bought U.S. corn, but no confirmation as of yet. There was a confirmed sale of 300,000 tons of corn to Japan. There also are concerns about corn yield potential with excessive rain falling throughout the Midwest and lost acreage, as the Missouri River continues to swell.

Corn opened lower June 22 and eroded from there to close limit down in the front four contracts. Heavy fund liquidation and profit taking pressured the corn market. The weakness in the wheat complex spilled over to pressure corn. The latest forecast also has improved, with the six- to 10-day forecast calling for warmer temperatures and below-normal rainfall. But most of the pressure came from outside forces.

Corn opened 30 cents lower June 23, but firmed to close on both sides of unchanged. The funds remained active sellers on the open and the negative outside markets added to the pressure. The dollar was very strong, while the metals and crude oil were sharply lower. Export sales were below estimates and added additional weakness. But the corn market started to firm up by midday, as there was a slowdown in selling interest and short covering entered the trade.

Ethanol production for the week ending June 17 averaged 901,000 barrels per day, which was up 2.39 percent vs. last week and up 6.5 percent vs. last year. Corn used in last week’s production is estimated at 94.6 million bushels. This crop year’s corn used for ethanol production for this crop year is 3.87 billion bushels. Corn use needs to average 105 million bushels per week to meet USDA’s estimate of 5 billion bushels. Stocks were 19.5 million barrels, down 1.2 percent from last week.

USDA’s crop progress report stated that 97 percent of the corn has emerged, compared with 100 percent one year ago and 99 percent for the five-year average. Corn conditions came in at 70 percent good/excellent, compared with 75 percent one year ago.

Soybeans

Soybeans started the week sloppy with pressure coming from thoughts that soybean’s crop condition crop rating would show decent planting progress and improving crop conditions. Additional selling was tied to spillover pressure from a sloppy corn market. Late in the session soybeans firmed because of weather forecasts, which are calling for heavy rains over much of the major growing regions of the U.S.

The June 21 session had soybeans trading higher with support spilling over from a weaker U.S. dollar. The dollar was under pressure by news of a debt restructuring package for the PIIGS. Light support was a result of weather forecasts calling for a high-pressure ridge to develop in early July over the Corn Belt. Usually, the European and U.S. weather models do not agree, but this time, both models are showing the ridge.

The soybean market tried to trade higher June 22, but the selling in the wheat and corn markets just proved to be too much for the soybean traders to overcome. Soybeans opened mixed but slid lower soon after the opening bell. Fund selling also was noted. Even though the market struggled traders did not pressure the soybean market hard as most still are concerned about planting progress.

Soybeans opened the June 23 session lower with selling tied to spillover pressure from a sharply lower day of trading in all markets. The soybeans started on the defense as news of a cancellation of a 452,500-metric-ton export sales hit the trade. The cancellation was reassigned to the new crop year as a sale of 301,500 metric tons. Additional pressure was a result of another rough day in the outside markets. There was some positive news for soybeans as the census crush estimate came in at 128.0 million bushels, 500,000 bushels higher than expected. That news, along with bottom picking type buying, helped soybeans recover slightly going into the close.

Barley

USDA reported last week’s barley export shipments pace at 39,000 bushels. No barley export sales were reported last week.

Statistics Canada’s March report estimated this year’s planted barley acreage for Canada at 7.1 million acres compared with estimates of 7.6 million and 6.9 million for last year.

Cash barley bids in Minneapolis have feed barley bids at $4.90, while malting barley bids are $7.50.

Durum

USDA reported last week’s durum export shipments pace at 919,000 bushels. No durum export sales were reported for last week.

North Dakota on average produces about 67 percent of the nation’s durum.

June 23 cash bids for milling quality durum were at $15.25 in Berthold, N.D., while bids in Dickinson, N.D., were $15.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending June 23 with almost $11 (Canadian) losses. Canola traded with small losses early in the week with spillover support coming from a stronger U.S. soybean market. Late in the week, canola was under pressure from a bearish Statistics Canada acreage report, which estimated Canada’s canola acreage at a record.

Statistics Canada’s March report estimated Canada’s 2011 canola planted acreage at a record 19.8 million acres, 1.5 million acres higher than expected and 3 million more than last year.

June 23 cash canola old crop bids in Velva, N.D., were at $27.22, while new crop bids were $25.29

Dry beans

As of June 19, dry bean planting progress was North Dakota: 94 percent planted compared with 75 percent last week and 98 percent for the five-year average (450,000 acres intended); Minnesota: 96 percent planted compared with 84 percent last week and 99 percent for the five-year average (140,000 acres intended); Nebraska: 91 percent planted compared with 56 percent last week and 91 percent for the five-year average (125,000 acres intended); Idaho: 83 percent planted compared with 76 percent for last week and 94 percent for the five-year average (90,000 acres intended); and Michigan: 84 percent planted compared with 59 percent last week and 72 percent for the five-year average (180,000 acres intended).

Sunflowers

The June 23 cash old crop sunflower bids in Fargo, N.D., were at $36.25, while new crop bids were $27.10.

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