Production concerns supportiveWheat started the week sharply higher. Minneapolis continued to be the leader opening sharply higher and trading with as much as 20 cents gains at one point. Minneapolis was supported by poor harvest resulted.
By: Ray Grabanski, Special to Agweek
Wheat started the week sharply higher. Minneapolis continued to be the leader opening sharply higher and trading with as much as 20 cents gains at one point. Minneapolis was supported by poor harvest resulted. Winter wheat was supported by less rain over the weekend than forecast. But all of the wheat exchanges lost their gains as technical selling stepped in once the market traded to resistance levels. Chicago was able to hold onto gains because of spillover support from a stronger corn and soybeans exchange.
Wheat opened the Aug. 23 session higher and traded with good gains throughout the session. A weaker U.S. dollar helped wheat to start higher, while additional support was a result of production concerns. Winter wheat contracts were supported by a stronger corn and soybean complex.
The wheat exchanges started the Aug. 24 session on the defense, but most months were only slightly lower. Wheat was pressured by a bearish Statistics Canada report. The report estimated Canada’s wheat production at 24.1 million metric tons compared with estimates calling for 23.5 million metric tons. Technically, wheat was in need of a correction, especially in Minneapolis. The September Minneapolis exchange has rallied $2 between July 12 and Aug. 22 with little setback.
The Aug. 25 session opened lower with selling tied to technical selling. Additional selling was a result of a poorer-than-expected export sales pace. But the wheat was not content on trading lower. By midsession, wheat started to firm, but Minneapolis was a little slower to gain momentum. Late-session strength continued to be from winter wheat acreage concerns. World wheat production is plentiful, but now we are seeing some domestic production concerns take center stage.
USDA reported last week’s wheat’s export inspections pace at 17.4 bushels. This brings the year to date export shipments pace for wheat to 251 million bushels compared with 212.6 million bushels for last year at this time. Last week’s wheat export sales pace was estimated at 12.8 million bushels. This brings the year-to-date export sales pace for wheat to 434.8 million bushels compared with 479.8 million bushels last year. With 41 weeks left in wheat’s marketing year, shipments need to average 20.7 million bushels and sales need to average 16.2 million bushels to make USDA 1.1 billion-bushel projection.
To start the week, corn traded with enough strength to push December to a new contract high. Support came from strength in overnight session and from positive outside markets. Rainfall over the weekend was also disappointing, as it missed the dry areas in the Eastern states.
Corn opened higher Aug. 23 and traded with strength for the session. December corn closed sharply higher and at another new contract high. The outside markets were supportive, along with the drop in the crop conditions in the Aug. 22eport. Additional support was a result of a poorer-than-expected yield reports from the Pro Farmer Tour.
Corn opened unchanged Aug. 24 and traded in a narrow two-sided range. The Pro Famer crop tour came out with smaller yields in Nebraska and Indiana. The Commodity Weather Group also lowered its estimated yield to 148.7 bushels an acre, which is down from the 150-bushel-an-acre yield that it reported in early August. Corn also is trading at new all-time highs in China ahead of its harvest. Pressure in the market came from some long liquidation ahead of Bernanke’s speech Aug. 26.
Corn opened lower Aug. 25 but traded on both sides of unchanged for the session. Early pressure came from weakness in gold and stock markets, along with talk that the market is overbought. But continued talk of production problems offered support. The crop tour estimated the Illinois corn crop at lower than last year as well as from the three-year average.
Ethanol production for the week ending Aug. 19 averaged 904,000 barrels per day, up 0.56 percent from the previous week and up 8.26 percent from last year. Stocks were 18.243 million barrels, which was up 661,000 barrels (3.76 percent) vs. last week and up 2.16 percent from last year.
USDA’s export inspection report was seen as bearish for corn. There were 29.5 million bushels of corn reported shipped, below the 43.8 million bushels needed to meet USDA’s projection of 1.825 billion bushels. This was at the low end of the pre-report estimates of 28 million to 35 million bushels. Last week’s export sales report for corn was at 20.7 million bushels, which was above what was needed to meet USDA projection of 1.825 billion bushels. This was at the low end of the estimates at 19.7 million to 27.6 million bushels and neutral for corn. This brings the year-to-date export sales pace for corn to 1.906 billion bushels compared with 2.063 billion bushels one year ago. Total shipments this week were at 32.5 million bushels, below the 44.4 million bushels needed this week.
Soybeans started the week with solid gains because of disappointing weekend rains for much of the Corn Belt. Additional support came from weather forecasts calling for higher temperatures. Light support was a result of a stronger U.S. energy sector as well as from spillover support from a sloppy U.S. dollar performance.
The Aug. 23 session had soybeans open and trade with decent strength throughout the session as a weaker U.S. dollar and declining crop ratings helped to push the market higher. Light support also was coming from the Pro Farmer Crop Tour, which is finding lower pod counts than last year. Weather concerns also continue to be in traders’ minds as persistent dry conditions continue to stress the soybeans in much of the Corn Belt states.
The soybean market traded on both sides of the fence Aug. 24 with support coming from continued poor survey results from the Pro Farmer Crop Tour. The tour continues to find lower pod numbers than expected. Additional support came from the idea that the Federals Reserve is on track to announce some sort of economic stimulus package Aug. 26. Technical selling developed on the close to push soybeans to end with small losses. Soybeans have been content trading in a range between $13 and $14 and currently they are at the high end of that range.
The Aug. 25 session saw soybean traders reluctant to enter the market as many seem willing to wait and see what the Federal Reserve would say in its meeting. Most are expecting the Fed to announce another set of measures to help spur the economy. The issue with another QE3 is tied to the thought that if the Fed does implement another stimulus package traders will start to move money out of the commodities and back into the stock market, which would result in a commodity selloff.
USDA reported last week’s soybean export inspections pace at 10.9 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.472 billion bushels compared with 1.442 billion bushels for last year at this time. With only two weeks left in the marketing year, soybean shipments need to average 11.5 million bushels to make USDA’s projection of 1.495 billion bushels. Last week’s soybean export sales pace was estimated at a combined total of 24.1 million bushels, with 3.9 million bushels being old crop and 20.2 million bushels being new crop. This brings the year-to-date export sales pace for soybeans to 1.552 billion bushels compared with 1.517 billion bushels last year at this time. Soybean sales have exceeded USDA’s projection of 1.495 billion bushels.
USDA reported last week’s barley export shipments pace at 124,000 bushels with all of barley going to Mexico. Last week, no barley export sales were reported.
Stats Canada estimated Canada’s 2011 barley production at 8.27 million metric tons, right in line with expectations.
Cash barley bids in Minneapolis dropped 5 cents putting feed barley bids at $5.30, while malting barley bids were at $7.80.
USDA reported last week’s durum export shipments pace at 92,000 bushels. Last week’s durum export sales pace was estimated at 400,000 bushels.
Stats Canada estimated the 2011 Canada durum production at 3.75 million metric tons, right in line with expectations. Cash bids for milling quality durum remained unchanged at $11.25 in Berthold, N.D., while bids in Dickinson, N.D., improved 25 cents to $11.65.
Canola futures on the Winnipeg, Manitoba, exchange ended the week Aug. 25 with $7.50 (Canadian) gains. The canola market was supported early in the week by spill over strength from a stronger U.S. soybean complex. Light support also was a result of active commercial buying. Late-session strength came from a friendly Stats Canada Production report, which is estimating this year’s canola production at 13.2 million metric tons, compared with estimates of 13.6 million metric tons.
Thursday’s cash canola bids in Velva, N.D., were $25.36.
Thursday’s cash old crop sunflower bids in Fargo were at $33.30 while new crop bids were $28.60.