Markets decline continuesThe wheat markets traded mostly lower. For the week ending May 31, July Minneapolis fell 33.5 cents, September Minneapolis was down 30 cents, July Chicago was down 36.25 cents, September Chicago lost 33.75 cents, July Kansas City fell 35 cents, and September Kansas City was down 34 cents.
By: Ray Grabanski, Agweek
Wheat: harvest progresses
The wheat markets traded mostly lower. For the week ending May 31, July Minneapolis fell 33.5 cents, September Minneapolis was down 30 cents, July Chicago was down 36.25 cents, September Chicago lost 33.75 cents, July Kansas City fell 35 cents, and September Kansas City was down 34 cents.
Wheat started last week — the short week — lower as improving weather conditions pressured the market. Recent rain in dry portions of Russia and Australia improved conditions. Outside markets were supportive before the U.S. dollar turned positive and placed additional pressure on the wheat markets. The May 29 weekly export inspections were above the amount needed to keep pace with the U.S. Department of Agriculture’s projections. USDA will likely need to increase wheat’s export projection, as inspections have been averaging more than 20 million bushels and only 10.9 million bushels are needed to make pace.
On May 30, wheat traded lower overnight after needed rain fell in the Black Sea region and Australia, though some traders question whether enough rain fell in the Black Sea region. The U.S. dollar was higher, leading to widespread selling in commodities, including wheat. The winter wheat harvest continues to advance. Increased stability in corn and soybeans later in the session helped wheat to close well off the daily lows.
The May 31 session had wheat trading lower overnight as the ongoing winter wheat harvest continues to pressure the market. Weather remains a negative factor as the Black Sea region has seen some needed rain, though more is likely needed. The outside markets were somewhat supportive early in the session, but turned negative later as the U.S. dollar strengthened.
USDA reported wheat export inspections pace for the week ending May 25 at 20.5 million bushels. This brings the year-to-date export shipments pace for wheat to 1.014 billion bushels compared with 1.26 billion bushels for last year. With one week left in the marketing year, shipments need to average 10.9 million bushels to keep pace with USDA’s projection of 1.025 billion bushels. Wheat export sales pace for the week ending May 25 was estimated at 11.8 million bushels with -0.2 million bushels (cancellation) being old crop while 12 million bushels were new crop. This brings the year-to-date export sales pace for wheat to 1.025 billion bushels compared with 1.297 billion bushels last year. With one week left in the marketing year, wheat has exceeded USDA’s projected export sales pace of 1 billion bushels.
USDA’s weekly crop condition rating report estimated the U.S. winter wheat crop at 54 percent good to excellent, 29 percent fair and 17 percent poor to very poor, a decrease of 4 percent from the previous week. Winter wheat heading was estimated at 85 percent complete as of May 27, compared with 79 percent for the previous week and 71 percent for the five-year average. USDA’s weekly crop condition rating report estimated the U.S. spring wheat crop at 79 percent good to excellent, 19 percent fair and 2 percent poor to very poor. Spring wheat emergence was estimated at 96 percent compared with 86 percent the previous week and 68 percent for the five-year average.
Corn: lack of any fresh export sales
The July corn contract continued to drift lower last week (dropping 23 cents for the week ending May 31), while December remained unchanged. The lack of any fresh export sales and chances of earlier harvested corn this year is pressuring the old-crop contract. A drop in crop conditions supported the new-crop contracts. Look for weather to direct the market activity for the next few weeks.
Corn closed lower each day last week because of a lack of any fresh news. Long liquidation selling pressured July to its lowest level since December 2010. Short-term demand has dropped off and cheaper corn in Brazil adds additional weakness. Crude oil has also been under pressure and is down more than $17 for the month and the largest monthly loss in four years. Additional weakness came from talk that China will import corn in the near future from Argentina once its GMO issues are resolved.
The new-crop contracts held their own against the losses in July. Support came from a 5 percent drop in the crop conditions last week. The crop dropped from 77 percent to 72 percent good to excellent, but still above the 63 percent rating last year. Rain also fell in the Midwest and eastern U.S. late last week. Talk that amounts were below what was forecast created some support as traders waited for confirmations. The weather forecast appears to be dry and warm for this week, but there are some runs with scattered rain throughout the country.
Ethanol production for the week ending May 25 averaged 902,000 barrels per day, which is down 1.85 percent versus the previous week and down 0.77 percent versus last year. Corn used in ethanol production for the week ending May 25 was estimated at 96 million bushels as compared with 93.5 million bushels necessary each week to meet the USDA’s estimate for the season. Stocks were 21.5 million barrels, up 0.5 percent versus the previous week and up 6.3 percent versus last year.
Emergence of the corn crop was at 92 percent, up from the 76 percent the previous week and the five-year average of 69 percent. Crop conditions had 72 percent of the crop rated as good to excellent, 23 percent fair and 5 percent poor to very poor.
USDA reported corn export inspections pace for the week ending May 25 at 29.5 million bushels. This brings the year-to-date export shipments pace for corn to 1.19 billion bushels compared with 1.3 billion bushels for last year at this time. Corn export sales pace for the week ending May 25 was estimated at 11.1 million bushels. This brings the year-to-date export sales pace for corn to 1.5 billion bushels compared with 1.7 billion bushels last year at this time. With 14 weeks left in corn’s marketing year, shipments need to average 36.4 million bushels and sales need to average 1.5 million bushels to meet USDA’s 1.7 billion bushels projection.
Soybeans: solid losses for the week
As of the May 31 close, July soybeans were down 42 cents on the week and the November contract was down 19 cents.
Soybeans traded higher overnight on support from both commercial and noncommercial traders. Outside markets were supportive early in the day with the U.S. dollar lower, but the dollar turned higher into midday and exerted pressure on the soybean complex. Spillover selling from losses in the other grains pressured as well, pulling soybeans well off the daily highs. Soybeans have been growing less bullish fundamentally as the November to January futures spread strengthened from an inverse to a slight carry.
The May 30 session started lower because of negative outside markets, most notably the higher U.S. dollar (which is tied to European economic concerns). This led to long liquidation selling. Pressure came from weakness in many commodities, including wheat. Old-crop soybeans felt additional pressure from reports the Chinese economy is slowing down. New-crop soybeans saw buying support later in the session from longer-term weather uncertainties.
Soybeans traded lower May 31 and fell throughout the day before hitting their lowest level since March 13 near the close of pit trade. Heavy long liquidation was seen as investors positioned themselves for the end of the month. Additional pressure came from sluggish Chinese demand and outside markets that turned more negative as the day went on. The U.S. dollar was lower early, but gained strength throughout the session. Strength in the corn market provided underlying support to soybeans.
USDA reported soybean export inspections pace for the week ending May 25 at 12.4 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.15 billion bushels compared with 1.393 billion bushels for last year at this time. Soybean export sales pace for the week ending May 25 was estimated at 15.3 million bushels with 8.8 million bushels being old crop and 6.5 million bushels being new crop. This brings the year-to-date export sales pace for soybeans to 1.33 billion bushels compared with 1.53 billion bushels last year at this time. With 14 weeks left in soybean’s marketing year, shipments need to average 12.1 million bushels and sales have exceeded USDA’s 1.315 billion bushels projection.
USDA reported no barley export inspections or sales for the week ending May 25.
Cash barley bids in Minneapolis decreased slightly last week, putting feed barley bids at $5.20 per bushel while malting barley bids remained at $6.95.
Canola traded with losses throughout last week. Pressure throughout the week came from a sell-off in commodities tied to European debt issues and a higher U.S. dollar. Weakness in the Chicago Board of Trade soybean complex and crude oil were two major contributing factors.
Cash canola old-crop bids in Velva, N.D., May 31 were at $28.42 per hundredweight while new crop bids were $24.01.
USDA reported durum export shipments pace for the week ending May 25 at 318,000 bushels with all of the bushels going to Germany. There was no durum export sales reported for the week ending May 25.
Cash bids for milling quality durum May 31 were at $7 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was at $7.20.
As of May 27, 64 percent of North Dakota’s sunflower crop was planted compared with 36 percent the previous week and 37 percent for the five-year average.
The soybean oil export sales pace for the week ending May 25 was estimated at a combined total of 17.7 trillion metric tons, with 12.7 trillion metric tons being old crop and 5 trillion metric tons for new crop. This brings the year-to-date total to 433.2 trillion metric tons, compared with last year’s 1,206.8 trillion metric tons.
Cash sunflower old crop bids on May 31 in Fargo, N.D., were at $25.40 per hundredweight while new crop bids were $23.40.
Grabanski is president of Progressive Ag, a Fargo, N.D.-based hedge brokerage firm. Reach Grabanski at (800) 450-1404.