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Published October 24, 2011, 05:00 AM

Soybeans struggle

Wheat opened the week mixed with the winter wheat contracts lower while the Minneapolis exchanges started higher.

By: Ray Grabanski, Special to Agweek

Soybeans struggle

Wheat

Wheat opened the week mixed with the winter wheat contracts lower while the Minneapolis exchanges started higher. The stronger Minneapolis market did spill over to help support the winter wheat contracts. The winter wheat contracts were pressured by a stronger U.S. dollar and from news that Iraq bought 350,000 metric tons of wheat from Canada, Russia, and Australia. Wheat was able to shake off the bearish news and trade with small gains during the second half of the session. Support came from weather forecasts calling for the return of warm dry weather to the Southern Plain states.

The Oct. 18 session opened with gains. The winter wheat exchanges did struggle for part of the session, but in the end, Minneapolis was the big winner while Chicago ended with modest gains and Kansas City dropped lower. The Minneapolis market was supported by concerns about tight supplies of high-quality wheat. The strength in the Minneapolis markets spilled over to help push Chicago higher late the session. The Kansas City market was under pressure from planting progress as many producers are back in the fields seeding wheat since soil moisture concerns have improved.

The wheat exchanges all opened higher Oct. 19 with support coming from a lower U.S. dollar market as well as from spillover strength from the other grains. Weather forecasts calling for dry conditions to continue in the Southern Plain states added to the early session strength. Selling did return to the wheat market once the soybean complex turned lower. The major blow to the bulls came when the U.S. dollar recovered.

The Oct. 20 session had wheat trading on both sides of the fence. Minneapolis was the market of choice early in the session because of concerns of short supplies of high-quality wheat. Late in the session, the winter wheat exchanges started to firm because of weather concerns. Weather forecasts are calling for warm, dry conditions to move back into the Southern Plains states. This certainly will cause concern for the newly planted winter wheat. Additional late-session buying strength was a result of news that the EU debt issue could be resolved shortly because of an important vote in Greece. This resulted in the U.S. dollar to come under pressure, which in turn helped to support the grains.

Corn

To start the week, corn ended close to unchanged. It was a quiet session as corn searched for direction.

Corn felt pressure from the negative outside markets (the dollar traded with strength and crude oil was lower). By midday, the market traded with small gains because of Informa’s estimates. Informa lowered corn planted acreage for 2012 to 93.1 million acres, down 1.2 million from its September estimate.

Corn firmed throughout the session and ended slightly higher. The market felt pressure early with weak economic data coming out of China, as its GDP number shows the slowest growth in two years. The outside markets also had a negative tone, but they firmed late to offer support. Commercial buying interest also surfaced after the lower open. The lack of farmer selling is helping to keep the corn market firm.

Corn opened higher Oct. 19 and traded with green numbers until the close, at which time the market moved lower. Corn found support from rain-delayed harvest progress in the Eastern Corn Belt. Traders also are expecting a large export sales report with the listing of last week’s Chinese purchase. The weekly ethanol production also was supportive, but buying interest dried up late leaving, corn vulnerable to pressure from the weakness in the soybean trade.

Corn opened lower Oct. 20 but firmed to end with strong gains. The negative outside markets pressured the open, but support held at the lows of the week. The lack of farmer selling and rain in the Eastern Corn Belt also offered support. As expected, the export sales for corn were good at 72.7 million bushels.

Ethanol production for the week ending Oct. 14 averaged 908,000 barrels a day, which is up 5.58 percent vs. the previous week and up 3 percent vs. last year. Total ethanol production for the week was 6.356 million barrels. Corn used in last week’s production is estimated at 96.7 million bushels. This crop year’s cumulative corn used for ethanol production for this crop year is 583.53 million bushels. Corn use needs to average 96.3 million bushels a week to meet this crop year’s USDA estimate of 5 billion bushels. Stocks were 17.053 million barrels, which is up 1 percent vs. last week and up 6.36 percent vs. last year.

USDA’s export inspection report was seen as bearish for corn. There were 21.17 million bushels of corn reported shipped, below the 34.2 million bushels needed to meet USDA’s projection of 1.65 billion bushels. This was below the pre-report estimates of 29 million to 34 million bushels. The export sales report for corn was at 72.7 million bushels, which was above what was needed to meet USDA projection of 1.6 billion bushels. This was below the estimates at 78.7 million to 98.4 million bushels and neutral for corn. Total shipments this week were at 22.2 million bushels and below the 30.9 million bushels needed this week.

Soybeans

The soybean market opened the week lower. Soybeans had been able to put together five straight sessions of higher closes, but this week was met with technical selling as well as from a stronger U.S. dollar. Hedge selling pressure after what was considered to be an active harvest weekend also was noted. Harvest activity has been fast because of ideal weather conditions.

The Oct. 18 session also was on the lower side as a host of negative items pressuring the market. Weather forecasts continue to be as close to ideal to aid in harvest activity as temperatures for the Corn Belt will be seasonal while the Plains are expected to see higher temperatures. The next few days have rain for the Corn Belt, which will slow harvest slightly, but once this system moves through, dry weather returns. Weather also is staying close to perfect for planting activity in South America as rains have helped to replenish dry soil conditions.

The soybean market was able to start the Oct. 19 session higher with support coming from tight cash supplies. Additional support came from the lack of farmer selling as yields have been low enough in many areas that it has lead to producers to hold back and not sell overrun soybeans. The soybean complex gave back all of its gains late because of pressure spurred on by news Taiwan that rejected all soybean tenders because of higher prices. Additional selling was tied to the unwinding of long soybean/short corn spreads.

The Oct. 20 soybean call was higher because of another week of strong exports, but instead, soybeans started on the defense and actually sold off to trade with large losses by midsession. Selling was tied to harvest progress as rain is moving out of the Corn Belt. This will allow combines to return to a majority of the region. A stronger start to the dollar added pressure. But once the U.S. dollar started the selloff, soybeans started to recover. The dollar started to slip lower on the news that France and Germany was about to complete the debt agreement with Greece. Technically, the Oct. 20 close was significant as soybeans rallied back from strong support levels.

Barley

USDA reported last week’s barley export shipments pace at 14,000 bushels. This brings barley’s year-to-date export shipments pace to 5.38 million bushels compared with 3.35 million bushels for last year. Last week, no barley export sales were reported. This brings the year-to-date export sales pace for barley to 3.7 million bushels compared with 4.4 million bushels for last year at this time.

Durum

USDA reported last week’s durum export shipments pace at 278,000 bushels. Last week, no durum export sales were reported. This brings the year-to-date export sales pace for durum to 11.6 million bushels compared with 22.5 million bushels for last year. The Oct. 20 cash bids for milling-quality durum were $12.25 in Berthold, N.D., while bids in Dickinson, N.D., were at $12.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Oct. 20 with $13.50 (Canadian) losses. The canola market traded lower during every session of the week. Early selling pressure came from spillover selling from a lower U.S. soybean complex. Losses were kept in check by light farmer selling. The Oct. 20 cash canola bids in Velva N.D., were $24.35.

Dry beans

These states are reporting dry bean crop progress: North Dakota: harvested completed; Minnesota: harvested completed; Nebraska: 96 percent harvested compared with 94 percent last week and 95 percent for the five-year average; and Michigan: 91 percent harvested compared with 71 percent last week and 88 percent for the five-year average. Bids are off the board in many locations. Do not consider selling dry beans at this time. Consider 2012 forward contracts as acres are bound to increase sharply next year.

Sunflowers

As of Oct. 16, 23 percent of the nation’s sunflower crop was harvested compared with 8 percent last week and 20 percent for the five-year average. North Dakota’s sunflower crop is 12 percent harvested compared with 5 percent last week and 185 for the five-year average. North Dakota’s sunflower crop condition rating dropped 1 percent to 69 percent good to excellent, 23 percent fair and 8 percent poor. Oct. 20 cash sunflower bids in Fargo, N.D., were $26.40.

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