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Published July 12, 2011, 04:55 AM

Chinese demand drives corn

The wheat market opened the July 5 session higher and traded with strong gains throughout the session. Early support was a result of technical buying as well as from spillover support from a stronger session for wheat in Europe.

By: Ray Grabanski, Special to Agweek

Wheat

The wheat market opened the July 5 session higher and traded with strong gains throughout the session. Early support was a result of technical buying as well as from spillover support from a stronger session for wheat in Europe. Wheat traded had down to support the week before because of selling from USDA’s bearish reports, but it appeared that traders were a little more in the buying mood, pushing wheat higher throughout the session.

The wheat exchanges started the session lower July 6 with early selling spilling over from a lower overnight session. The overnight session was under pressure from improving crop conditions, which USDA confirmed in its report July 4. Adding light selling pressure was confirmation that harvest also was advancing at a rapid pace. The third pressure point for wheat, and probably the one that hurt the most, was confirmation of Russia being back in the export game. Russia sold 150,000 metric tons of wheat to Jordan overnight, Russia’s first export sale of wheat since placing an export ban last year. U.S. fundamentals are friendly to wheat, but wheat is a world market and easily is influenced by world news and with confirmation that Russia is back exporting wheat likely will keep pressure on wheat, especially if the U.S. dollar remains firm.

The wheat market traded mixed throughout the session July 7as Chicago traded with strength while Minneapolis and Kansas City slipped. The Chicago exchange was supported by spillover buying strength from a stronger corn and soybean market while harvest pressure and improving weather conditions in the Northern Plains pressured the hard wheat contracts. The unwinding of short Chicago/long Minneapolis also added support to Chicago and pressure to Minneapolis. By the close, the Kansas City and Minneapolis markets were able to cut their losses while Chicago gave back some of its gains.

USDA reported last week’s wheat’s export inspections pace at 26.1 million bushels. This brings the year-to-date export shipments pace for wheat to 103.9 million bushels compared with 73.1 million bushels for last year at this time.

Last week’s wheat export sale pace was estimated at 15.6 million bushels, above the 15.2 million bushels needed to keep pace with USDA projections. This brings the year-to-date export sales pace for wheat to 320.5 million bushels compared with 249.3 million bushels for last year at this time. Shipments of 26.7 million bushels were above the 20 million bushels needed this week.

Soybeans

The soybean market opened the July 5 session higher with early support spilling over from the higher wheat and corn market. Soybeans were not able to hold onto their gains though once USDA released a bearish export inspections estimate. Soybean shipments have been disappointing for the past few months and with confirmation of weaker soybean demand in last week’s Quarterly Grains Stocks estimates, traders are starting to become a little more aware of the weekly export estimates. Spillover strength from the corn and wheat helped to push soybeans into positive territory going into the close.

The soybean market opened the session lower July 6 with most of the early pressure spilling over from a lower overnight session. Additional selling was tied to spillover pressure from the lower corn and wheat complex. Weather forecasts are starting to turn more favorable for crop development, which is bearish to the market. Temperatures are forecast to be in the 80s for much of the major growing regions of the U.S. with timely rains, which will virtually create a greenhouse effect. The soybean market was able to trim session losses late in the session as sellers turned to be buyers. Late-session strength was a result of concerns that not all of the intended soybean acres will get planted in the double crop areas of the Delta because of flooding.

The soybean market opened the July 7 session higher and traded with strong gains throughout the session. Early support was a result of weather forecasts that are calling for a high-pressure ridge to move into the major growing regions of the U.S. toward the end of July. Light support spilled over from a stronger corn market was well as from a lower U.S. dollar. Warm wet conditions have prevented a lot of producers in the Delta and southern regions of the Corn Belt from getting wheat harvested and soybeans planted.

USDA reported last week’s soybean export inspections pace at 4.5 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.423 billion bushels compared with 1.370 billion bushels for last year at this time. With only nine weeks left in the marketing year, soybean shipments need to average 13 million bushels to make USDA’s projection of 1.54 billion bushels.

Last week’s soybean export sales pace was estimated at a combined total of 15.9 million bushels with 11.2 million bushels being old crop and 4.7 million bushels being new crop. This brings the year-to-date export sales pace for soybeans to 1.536 billion bushels compared to 1.453 billion bushels for last year at this time. With only nine weeks left in the marketing year, soybean sales need to average 1.6 million bushels to make USDA’s projection of 1.54 billion bushels.

Corn

To start the week, corn opened 13 cents higher July 5 and remained strong for the session, with the July gaining 39.75 cents and December up 15.75 cents. The market opened with strength from the higher overnight trade. Additional support came from non-commercial buying and slow producer selling. There also were rumors that China bought U.S. corn over the weekend, but no confirmation of any sales. The crop conditions report was released in the afternoon, and trade estimates were that the good/excellent category would show a 2 percent improvement. The conditions came out at 69 percent good/excellent and up 1 percent from last week.

The corn futures opened 5 cents lower July 6, but traded on both sides of unchanged for the session, before closing 4 cents lower in December. The corn market was pressured early as China raised their interest rates for the third time this year and causing the U.S. dollar to push higher. News that Egypt bought 120,000 metric tons and South Korea purchased 225,000 metric tons of U.S. corn firmed the market back up. The nonthreatening weather for the next week and the improvement in crop conditions for corn limited buying interest into the close. There was continued talk that China may be in the market for more corn, but we still do not have any confirmation of last weekend’s rumored sales.

Corn futures opened 8 cents higher July 7 and traded with strength for the session, with the December closing 7 cents higher. The market found support early from the confirmation that China purchased 540,000 metric tons for 2011 to ’12 and there was another 300,000-metric-ton sale to an unknown destination. The outside markets also were supportive, with a lower dollar and strength in the crude oil market.

Corn used for ethanol continues to run behind USDA estimates. Ethanol production for the week ending July 1 averaged 904,000 barrels per day. This is up 1.23 percent vs. last week and up 5.73 percent vs. last year. Corn used in last week’s production is estimated at 94.92 million bushels. Corn use needs to average 107.6 million bushels per week to meet this crop year’s USDA estimate of 5 billion bushels. Stocks as of July 1 were 18.553 million barrels, down 4.78 percent for the week.

USDA’s export inspection report was seen as neutral for corn. There were 34.6 million bushels of corn reported shipped, below the 45.3 million bushels needed to meet USDA’s projection of 1.9 billion bushels. This was above the pre-report estimates of 28 million to 32 million bushels. Last week’s export sales report estimated corn at 56.4 million bushels, which was above what was needed to meet USDA projections of 1.9 billion bushels. This was above the estimates at 33.5 million to 53.1 million bushels and bullish for corn. This brings the year-to-date export sales pace for corn to 1.803 billion bushels compared to 1.977 billion bushels one year ago. Total shipments this week were at 41 million bushels, below the 46.3 million bushels needed this week.

Barley

USDA reported no barley sales or shipments for last week. Barley’s export shipments pace is at 230,000 bushels compared to 140,000 bushels for last year at this time. Cash barley bids in Minneapolis July 7 were at $4.90, while malting barley bids remained at $7.50.

Durum

USDA reported last week’s durum export shipments pace at 1.695 million bushels, with 1.56 million bushels going to Algeria. USDA reported export sales of 200,000 bushels of durum for the week, putting the total for the year at 5.8 million bushels vs. 11.6 million bushels at this time last year. Cash bids for milling quality durum improved $1 to $15 in Berthold, N.D., while bids in Dickinson, N.D., remained unchanged at $14.30.

Canola

Canola futures on the Winnipeg, Manitoba, exchange had gains of more than $10 (Canadian) a ton for the week. Canola had support from stronger soybean prices and a slowdown in farmer selling. World canola prices have remained strong because of production concerns not only in the U.S. but also Canada.

Sunflowers

The front month Aug soybean oil contract had gains of over $1.30 for the week. July 6’s cash old crop sunflower bids in Fargo, N.D., were at $36.25, while new crop bids were $27.40.

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