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Published August 22, 2011, 04:55 AM

Another strong week

The wheat markets traded mixed with Minneapolis by far the best performer. Minneapolis found support from poorer-than-expected harvest results while Kansas City and Chicago were pressured by forecasts calling for rain.

By: Ray Grabanski, Special to Agweek

Wheat

The wheat markets traded mixed with Minneapolis by far the best performer. Minneapolis found support from poorer-than-expected harvest results while Kansas City and Chicago were pressured by forecasts calling for rain. For the week ending Aug. 18, Minneapolis September closed 49.5 cents higher, September Chicago was 5.25 cents higher, and September Kansas City was 1 cent lower.

Wheat opened the week higher with most of the strength spilling over from a weaker U.S. dollar. Additional support came from weather. The Southern Plain states remain hot and dry and it appears that it is very likely that winter wheat acreage will decline. Additional support was a result of concerns toward this year’s spring wheat harvest. The wet spring and summer has resulted in much poorer yields than expected. Protein levels remain good, but test weight has suffered because of poor growing conditions.

The Aug. 16 session started with modest gains but rallied throughout the session to end sharply higher. Early support came from weather concerns. FSA is reporting wheat acreage 600,000 to 700,000 acres lower than USDA estimated in its August crop production report. This should be supportive to wheat, whenever USDA officially announces it.

The wheat market opened the Aug. 17 session higher with support spilling over from a lower U.S. dollar as well as from spring wheat production concerns and possibility of lower acreage in the winter wheat region. Minneapolis has turned inverted and is in the beginning stages of the bull market.

Aug. 18’s session opened on the defense and traded with losses throughout the day. Technical pressure and profit taking was the main reason for the pull back. Wheat has traded higher for seven straight sessions and was in need of a correction. A stronger U.S. dollar added pressure. Egypt was in overnight and bought 240,000 metric tons of wheat with none coming from the United States. Weather forecasts have turned a little bearish as rains are forecast for the Southern Plains and Corn Belt with amounts expected to be between 0.5 of an inch and 1 inch.

Corn

Corn traded higher with December up 12 cents. Corn made new contract highs early in the week after follow-through buying from last week’s bullish USDA report. The negative outside markets did pressure the corn midweek. But continued talk of a reduction in yield and harvested acres added support to end the week.

To start the week, corn opened higher and traded with green numbers for the session. The strength in the overnight session and the strong outside markets supported the open, which pushed the December contract to a new high. Traders are expecting to see a 1 percent decline in corn’s crop condition rating, and that helped add some support. The report left conditions unchanged which should be considered negative.

Corn firmed up Aug. 16 as the session moved along and closed at a new contract high in December at $7.274. Corn was under pressure from spillover selling from the negative outside markets. The market did find some support at midsession as the outside markets firmed up. FSA also released its preliminary 2011 acreage for preventative acres at 9.6 million acres.

Corn traded higher Aug. 17, but traded on both sides of unchanged to end lower. December corn closed slipped lower at the close after posting a new contract high early in the session. Early support came from the concerns of lower yields and the possibility of a lower number of harvested acres. FSA report signals USDA should reduce harvested acreage another 500,000 acre.

Corn remained under pressure for the Aug. 18 session. A lower overnight session and negative outside markets pressured corn. The Dow was down 500 points, crude oil was off $6 and the dollar was higher. Global economic worries and talk that Europe is close to a recession pressured the outsides. Export sales were disappointing, and that added to the weakness. In addition, the weather forecast is calling for rain over the weekend for most of the eastern Corn Belt.

Ethanol production for the week ending Aug. 12 averaged 899,000 barrels a day. This is down 0.99 percent vs. last week and up 4.53 percent vs. last year. Corn used in last week’s production is estimated at 95.76 million bushels. Stocks were 17.582 million barrels, down 3.15 percent from last week. As a result of the drop in stocks, implied demand ranked third highest in the past 10 weeks.

Soybeans

The soybean exchange traded with decent gains this week with most of the strength coming from weather concerns. So far, the month of August has brought ideal growing conditions for soybeans, but forecasts continue to have heat returning. Additional strength came from an FSA report that showed lower soybean acreage than USDA. For the week ending Aug. 18, September closed 24.25 cents higher, while November gained 26.25 cents.

Soybeans started the week higher with support coming from lower rain fall amounts for the weekend. Much of the Corn Belt was expected to see a decent amount of rain this past weekend but instead only a small region of the belt received upward of a 0.5 inch, far less than expected. Light support also was a result of a sharply lower U.S. dollar and from a better-than-expected NOPA Crush report. The NOPA Crush report estimated last week’s crush at 122.9 million bushels compared with estimates of 117.7 million bushels.

The Aug. 16 session had soybeans taking a different path, ignoring the trading direction of the other grains and following the trend set by the outside markets. Wheat traded with strong gains, and that spilled over to push corn higher (and helping corn end at new highs) and to some degree did help soybeans from collapsing, but in the end, soybeans seemed to be paying more attention to the declining world economy.

The soybean market opened and traded Aug. 17’s session with strength with support spilling over from a weaker U.S. dollar as well as from reports for the FSA that soybeans harvest acreage is overstated and will need to decline in USDA’s next crop production report. This news has created a lot of discussion as to how USDA numbers and FSA numbers do not align with each other. Additional support was a result of weather forecasts calling for heat to return the last week of August.

World economic concerns and a sharply higher U.S. dollar pressured the soybean market Aug. 18. Soybeans are an export dependent market, and if there is a tightening of money in the world, soybeans are a market that will see a slowdown in demand. Additional pressure came from weather forecasts calling for rain over the weekend for much of the Corn Belt and Southern Plain states. Heat is still in the forecast for the last week of August, but traders feel rain will help alleviate any issue of heat damage.

As of Aug. 14, soybean blooming is estimated at 94 percent compared with 87 percent last week and 94 percent for the five-year average. Pod setting is estimated at 70 percent complete compared with 51 percent last week and 78 percent for the five-year average. Soybean crop condition rating was unchanged at 61 percent good/excellent, 26 percent fair and 13 percent poor/very poor.

Barley

USDA reported last week’s barley export shipments pace at 40,000 bushels with all of barley going to Mexico. Last week’s barley export sales pace was estimated at 100,000 bushels with all of the bushels going to Algeria.

As of Aug 14, barley harvest was reported at 8 percent complete compared with 2 percent last week and 37 percent for the five-year average. Barley’s crop condition rating dropped 4 percent to 68 percent good/excellent, 26 percent fair and 6 percent poor/very poor.

Durum

USDA reported no durum shipments for last week. Last week’s durum export sales pace was estimated at 400,000 bushels.

As of Aug. 14, 35 percent of North Dakota’s durum crop was turning compared with 12 percent last week and 74 percent for the five-year average. North Dakota’s durum crop condition rating declined 2 percent to 71 percent good/excellent, 26 percent fair and 3 percent poor. North Dakota on average produces about 67 percent of the nation’s durum.

Aug. 18’s cash bids for milling quality durum are at $11 in Berthold, N.D., while bids in Dickinson, N.D., were $11.40.

Canola

Canola futures on the Winnipeg, Manitoba, exchange ended the week ending Aug. 18 with just a bit more than $3.30 (Canadian) gains. Canola traded back and forth all week with support coming from a stronger U.S. soybean complex and weaker Canadian dollar. Weakness was a result of improving crop condition in Canada and from concerns that an overall weak world economy might cut world canola demand.

As of Aug. 14, 70 percent of North Dakota’s canola was turning compared with 46 percent last week and 83 percent for the five-year average. North Dakota’s canola crop condition rating improved 1 percent to 78 percent good/excellebt, 19 percent fair and 3 percent poor.

Cash canola bids in Velva, N.D., decreased 43 cents to $25.10.

Sunflowers

As of Aug. 14, 63 percent of North Dakota’s sunflower crop was in bloom compared with 36 percent last week and 81 percent for the five-year average. The North Dakota sunflower crop condition rating dropped 2 percent to 71 percent good/excellent, 25 percent fair and 4 percent poor.

Aug. 18’s cash old crop sunflower bids in Fargo, N.D., were at $33.20, while new crop bids were $28.50.

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