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Published November 07, 2011, 05:00 AM

Market quiet ahead of report

Wheat started the week on the defense and traded with losses throughout the session. Early pressure was a result of spillover pressure from a sharply higher U.S. dollar. Additional selling was due to news that Egypt bought 120,000 metric tons of Ukraine wheat. The Minneapolis exchange was the best performer as concerns about tight stocks of high-quality wheat continue to support hard wheat’s.

By: Ray Grabanski, Special to Agweek

Wheat

Wheat started the week on the defense and traded with losses throughout the session. Early pressure was a result of spillover pressure from a sharply higher U.S. dollar. Additional selling was due to news that Egypt bought 120,000 metric tons of Ukraine wheat. The Minneapolis exchange was the best performer as concerns about tight stocks of high-quality wheat continue to support hard wheat’s.

The Nov. 1 session started under pressure from a sharply higher U.S. dollar and weakness in most commodity markets. The sharp break in global equity markets overnight also helped to pressure the market early. Winter wheat planting has been delayed in the eastern U.S. and now near the crop insurance deadline, which likely will result in those acres to be planted to other crops next spring. The wheat markets did find buying support into the close and spillover support from the corn market.

Wheat started the Nov. 2 session on the plus side with strength coming from a sloppy performance in the U.S. dollar. The dollar has been trading sharply higher because of continued concerns toward the EU debt crises. But once the U.S. dollar started the firm and the U.S. stock market started to retreat, wheat also lost its gains. Forecasts calling for rains for parts of the Southern Plains added to the late-session selling in the winter wheat exchanges. Minneapolis was able to hold onto its gains as tight supplies of high-quality wheat continue to support wheat.

The Nov. 3 session opened higher and traded with gains throughout the session. Early support came from a lower U.S. dollar. The dollar was giving back ground as news that Greece was calling off their vote on the debt bailout package. Technical buying also was a factor as wheat has traded to minor support lines. The upcoming report should not mean much to wheat, other than adjustments to the demand side, like reducing the export estimate. U.S. wheat exports have been terrible this year, which has evident in USDA’s export sales report.

USDA reported last week’s wheat’s export inspections pace at 20.8 million bushels. Last week’s wheat export sales pace was estimated at 11.8 million bushels.

Corn

To start the week, corn opened lower and was under pressure for the session. The market opened lower with the overnight trade and weakness from the outside markets. The dollar spiked higher on yen selling. The weather in South America also remains ideal for planting. The market did trade with double-digit losses at midday, but was able to come off of those into the close. Harvest has been moving along at a rapid pace, with the exception of the eastern Corn Belt.

Corn opened lower Nov. 1 and traded lower most of the session, before buying interest surfaced at the close. The corn market was under pressure early from the negative outside markets (because of concerns toward the European debt crises). The dollar traded sharply higher because of the surprise announcement by the Greek prime minister’s decision to hold a referendum that could possibly destroy the bailout deal and force them to default. Corn also felt pressure from the lack of any export news. But buying interest surfaced into the close as traders expect a drop in yield and production for corn in the upcoming report.

Corn opened higher Nov. 2, but buying interest went to the sidelines forcing the market to close lower. The positive outside markets and follow-through buying from Nov. 1 supported the open. A couple private firms estimate late Nov. 1 showed a slight increase in the corn yield compared with USDA’s October estimate. This pressured the market at midsession and into the close. To this point, most traders have been expecting a lower yield and a reduction in production for the Nov. 9 report.

Corn opened higher and traded with strength for the session. The market found support from the higher overnight trade, which carried over to the open. Talk that China may ease its monetary policy and slow farmer selling offered additional support. Another positive ethanol production report also created buying interest, along with export sales coming in above estimates. Most traders also are anticipating a drop in yield for next week’s report of about 1 bushel per acre.

Ethanol production for the week ending Oct. 28 averaged 916,000 barrels per day. This was up 0.77 percent from last week and up 5.9 percent from last year. Total ethanol production for the week was 6.412 million barrels, which is near a one-year high. Corn used in last week’s production is estimated at 97.57 million bushels as compared with an average of 96.3 million bushels needed per week to meet the USDA estimate. Stocks were 17.2 million barrels, down 0.53 percent on the week.

USDA’s export inspection report was neutral for corn. There were 27.7 million bushels of corn reported shipped, slightly below the 31.2 million bushels needed to meet USDA’s projection of 1.6 billion bushels. This was within the pre-report estimates of 27 million to 34 million bushels. The export sales report for corn was at 24.5 million bushels, which was above the 17.7 million bushels that was needed to meet USDA projection of 1.6 billion bushels. This was above the estimates of 15.7 million to 23.6 million bushels and friendly for corn.

Soybeans

To start the week, soybeans opened lower and extended early-session losses mainly because of a sharply higher U.S. dollar. The dollar is getting support from rumors that not all of Europe is behind the current debt restructure plan. Additional support for the dollar came from a declining Japanese Yen. The soybean market did stage a slight recovery from weather reports calling for a chance of rain late in the week. This is expected to delay harvest progress. Soybean deliveries were heavy early in the day, which pressured the market, but in reality, it shows that cash grain movement is slow and end users are forcing deliveries to get product.

The Nov. 1 session opened sharply lower and traded under pressure for the session. Continued concerns in Europe over debt issues and poor economic news from China caused a surge in the U.S. dollar. Additional pressure came from ideal weather conditions in South America. The soybean market did recover some of its lasses late in the day on strength from a rallying corn and wheat market, but soybeans still closed near 15 cents lower.

The soybean complex started Nov. 2’s session higher with support coming from a lower U.S. dollar as well as from rumors that China was in overnight and bought two to four cargoes of U.S. soybeans. This of course could not be confirmed and that lead to the market struggling in the afternoon. Global economic uncertainty added selling pressure as EU’s debt crises continues to hang over the market. Deliveries have been taking place with all being stopped by commercial firms. Farmer selling continues to be light as that is adding support.

The Nov. 3 session started with smaller-than-expected gains. The overnight session opened and traded in a lackluster fashion until 4 a.m. That is when Greece made the announcement that it will not hold a referendum vote on the debt crises plan. This sent the grains sharply higher. But the day session’s open was lower than expected because of a disappointing export sales report. Soybeans were able to shake the poor report off and concentrate on the friendly world news. Soybeans strength also was supported by a weaker U.S. dollar. Technical buying because of an oversold market condition also was noted.

USDA reported last week’s soybean export inspections pace at 48.5 million bushels. Last week’s soybean export sales pace was estimated at 7.7 million bushels. With 44 weeks left in soybean’s marketing year, shipments need to average 26.5 million bushels and sales need to average 15.8 million bushels to make USDA 1.375 billion-bushel projection.

Barley

USDA reported last week’s barley export shipments pace at 24,000 bushels. Last week, no barley export sales were reported. Cash barley bids in Minneapolis decreased 5 cents this week putting feed barley bids at $5.25, while malting barley bids were at $7.65.

Durum

USDA reported last week’s durum export shipments pace at 997,000 bushels with 727,000 bushels going to Italy. Last week, no durum export sales were reported. The Nov. 3 cash bids for milling-quality durum were at $12.25 in Berthold, N.D., while bids in Dickinson, N.D., were at $12.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed 50 cents higher for the week ending Nov. 3. The canola market started the week on the defense with early pressure spilling over from a lower U.S. soybean complex. Canola continued to be under pressure the next two sessions on pressure from a stronger U.S. Canadian dollar as well as from concerns that Greece will not accept the current debt package. The end of the week brought strength back to the canola market with support came from a stronger U.S. soybean complex. Strength also was generated by news that Greece was canceling the referendum on the debt bailout package.

Nov. 3 cash canola bids in Velva, N.D. were at $24.96.

Sunflowers

As of Oct. 30, 67 percent of the nation’s sunflower crop was harvested compared with 43 percent last week and 47 percent for the five-year average. North Dakota’s sunflower crop is 59 percent harvested compared with 35 percent last week and 47 percent for the five-year average. North Dakota’s sunflower crop condition rating improved 4 percent to 71 percent good/excellent, 21 percent fair and 8 percent poor.

Nov. 3’s cash sunflower bids in Fargo, N.D., were at $27.25. Hold off on selling 2011 crop.

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