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Published August 04, 2011, 10:52 AM

Improving weather pressures grain

Wheat started the week on the defense with selling tied to spillover selling from a lower overnight session. Weather forecasts have dramatically improved, as most are calling for warm weather, not hot weather.

By: Ray Grabanski, Special to Agweek

Wheat

Wheat started the week on the defense with selling tied to spillover selling from a lower overnight session. Weather forecasts have dramatically improved, as most are calling for warm weather, not hot weather. Light pressure also was because of a surprise rain shower that moved through the Southern Plains. Additional selling was tied to reports that Russia’s wheat crop production could be as high as 58 million metric tons.

The July 26 session opened with losses, as pressure from a bearish USDA crop progress report influenced wheat. The report continues to show an advancing winter wheat harvest and an improving spring wheat crop. Additional selling was tied to news that Egypt was buying wheat from Russia. By midsession, wheat was able to cut its losses because of a stronger soybeans market. Additional support came from a weaker U.S. dollar. After scouting eight wheat fields from the Red River Valley to Mandan, in western North Dakota, the Wheat Quality Tour is estimating North Dakota wheat yield at 49.5 bushels per acre, up from last year’s estimate. The tour was not finding a lot of headed spring wheat, so the scouts were counting plants or tillers to determine the yield.

Wheat started the July 27 session on the defense with selling pressure tied to lost export sales. Since the Black Sea region has been back in the export market, most countries have been going to that region to get their wheat needs met. Overnight, Syria, Egypt and the United Nations all bought wheat from the Black Sea region. The Wheat Quality Tour had been scouting wheat in the Northern Plains and, after a day and a half touring, they were finding a poorer and more disease-prone crop than last year.

Wheat opened the July 28 session mixed, with pressure coming from a disappointing export sales report. But wheat ignored the slow demand news and firmed up, with support coming from reports out of the Wheat Quality Tour, which was finding a more disappointing wheat crop as it headed west. Scouts were reporting a varied crop as some fields were heading out and ripening while others had not headed out yet. Yield potential has dropped as the tour headed west as now the group had the crop estimate closer to 38 bushels per acre. Tour participants say the crop has potential if it has time to mature, but right now, disease pressure is great. Late in the session, technical selling pressured wheat.

Corn

Corn ended lower this week, with December corn down 17 cents. Corn was under some pressure this week from continued debt ceiling negotiations and an improving weather forecast. Pressure also was from competition from wheat in feed rations as it appears that the higher corn prices have slowed demand.

To start the week, corn traded with red ink for the session. Pressure was from reports of rainfall through the weekend across the Midwest. The funds also were active sellers early, at which time corn traded 20 cents lower into midsession. But, the selling dried up and the corn market came off of its lows into the close. The market found some support from trade estimates for USDA’s crop conditions report. Japan bought 101,000 metric tons of U.S. corn, which offered support. The export inspection report was seen as neutral and had little effect on the market.

July 26, corn was able to firm and close higher. The positive outside markets and deteriorating crop conditions offered support.

Corn opened the July 27 session lower, but firmed to end with green numbers. The market was pressured from the lower overnight trade and the outside markets. But the market found support from the surge in wheat and fund buying. Corn also found support from declining yield estimates that are coming in below USDA’s 158.7 bushels per acre estimate. The estimated drop in production is being attributed to the extreme heat in which corn is trying to pollinate.

July 28, corn traded under pressure for the session. Corn continued to monitor the weather forecast and the rain that fell in the Midwest and parts of the eastern Corn Belt the previous night, which added pressure. The forecast calls for additional moisture to fall in the Midwest and Delta regions. A negative export sales report added to the weakness. The International Grain Council estimated world corn production at a record high 859 million metric tons and up from 858 million metric tons from June’s estimate and up from 827 million metric tons last year.

Ethanol production for the week ending July 22 averaged 874,000 barrels per day. This is up 1,000 barrels per day vs. the previous week and up 58,000 barrels per day vs. last year. Total ethanol production for the week was 6.118 million barrels, up 7,000 barrels vs. the previous week and up 406,000 barrels vs. last year.

This crop year’s cumulative corn used for ethanol production for this crop year is 4.4 billion bushels. Corn use needs to average 113.715 million bushels per week to meet this crop year’s USDA estimate of 5.05 billion bushels. Stocks were 18.872 million barrels. This is down 273,000 barrels vs. the previous week and down 651,000 barrels vs. last year.

Soybeans

The soybean market struggled for most of the week as improving weather forecasts combined with concerns that Washington will not get a debt ceiling discussion moved off dead center. That news pressured the soybean complex. For the week ending July 28, August soybeans were 12.5 cents lower while November soybeans were 16.75 cents lower.

Soybeans started the week on the defense as traders remove part of the recent weather premium built into the market. Weather forecasts are continuing to call for warm weather for much of the Corn Belt in the next week. Forecasts are also calling for rains throughout the week.

The July 26 session had soybeans higher throughout the session. Support was because of a 2 percent decline in soybeans’ crop condition rating. Additional support spilled over from a lower dollar. Adding support was a report from Oil World stating China was going to have to increase imports of vegetable oils because of slow purchases in the past few months.

The soybean market opened the July 27 session on the defense and remained that way for most of the session. Selling was tied to weather forecasts that are calling for generous rains for much of the Corn Belt in the next few days. Additional selling was tied to a stronger U.S. dollar, which continues to see strength from concerns that no compromise is occurring on the debt ceiling discussion. Traders are concerned that if no compromise takes place, it will push the weak U.S. economy back into a recession. This has kept traders on the sidelines for the past few weeks.

The July 28 session had soybeans open on the defense and remained under pressure throughout the session. Selling was tied to a disappointing export sales report. Additional selling pressure came from improving weather forecasts. The six- to 10-day forecast is calling for heat to return, but if the soil is saturated, the likelihood of crop damage will be lessened. The eight- to 14-day forecasts are calling for normal temperatures. Traders also continue to be reluctant to enter the market because of concerns toward the state of the economy because of the lack of action in Washington. The census crush report estimated June’s soybean crush pace at 124.3 million bushels, which was close to expectations of 124.9 million bushels.

Barley

USDA reported no barley shipments last week. The barley export sales pace was estimated at 1.1 million bushels, with all of the bushels going to Saudi Arabia.

Cash barley bids in Minneapolis dropped 5 cents this week, putting feed barley bids at $5.25 while malting barley slipped to $7.80.

Durum

USDA reported last week’s durum export shipments pace at 386,000 bushels, with all of the bushels going to Italy. Last week’s durum export sales pace was estimated at 2.8 million bushels.

July 28 cash bids for milling quality durum were at $12.50 in Berthold, N.D., while bids in Dickinson, N.D., were $12.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending July 28 with $5.50 (Canadian) losses. The canola market started the week and ended the week (as of July 28) lower, but traded with gains during the middle of the week. Pressure was because of spill over selling from a lower soybean complex (which was pressured by improving weather forecasts). Losses were limited by a weaker Canadian dollar.

Thursday’s cash canola old crop bids in Velva, N.D., were at $25.98 with new crop September bids at $25.75.

Dry beans

As of July 24, North Dakota’s dry bean crop was 55 percent in bloom compared to 15 percent the previous week and 74 percent for the five-year average. Five percent of the state’s crop was setting pods compared with none the previous week and 31 percent for the five-year average

Sunflowers

July 28 cash old crop sunflower bids in Fargo, N.D., were at $35.55 while new crop bids were $28.35.

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