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Published June 25, 2012, 01:34 PM

Weather rules

Wheat traded sharply higher for last week. July Minneapolis gained 56.25 cents, September Minneapolis was up 29.25 cents, July Chicago was up 52.25 cents, September Chicago gained 51.75 cents, July Kansas City gained 53 cents and September Kansas City was up 54 cents.

By: Ray Grabanski, Agweek

Wheat: following corn and soybeans

Wheat traded sharply higher for last week. July Minneapolis gained 56.25 cents, September Minneapolis was up 29.25 cents, July Chicago was up 52.25 cents, September Chicago gained 51.75 cents, July Kansas City gained 53 cents and September Kansas City was up 54 cents. Most of last week’s strength was a result of spillover buying from the corn and soybean complex, but light support was also caused by world production concerns as both Australia and Russia are hinting of lower production.

Wheat traded higher June 18 and 19 on spillover support from strong gains in corn and soybeans, which were supported by weather concerns. The dry conditions in the U.S. could hinder corn and soybean production, and global weather remains a factor for wheat trade. Early yield reports from Russia have been disappointing, and yields could be reduced in the rest of the Black Sea region and China. June 18 export inspections came in below expectations.

Wheat traded lower early in the session June 20 before spillover buying from soybeans led to gains into the close. Strong commercial buying and short covering were noted later in the session. Weather is the driving factor, as dry conditions in the Black Sea region resulted in the lowering of production estimates. Russian crop estimates continue to decline. The early weakness in the wheat market can be traced in part to losses in corn, but as corn recovered, so did wheat.

Wheat was lower overnight June 21 on pressure from weakness in the corn market. A bounce at midday was attributed to strong export sales and short-covering. Sharp gains in the U.S. dollar, however, led to weakness across commodities into the close. Spillover pressure from corn and soybeans combined with weakness in crude oil and the Dow Jones to push wheat lower. Weekly export sales June 21 were well above expectations.

The U.S. Department of Agriculture’s weekly crop condition rating report for last week estimated the U.S. winter wheat crop at 54 percent good to excellent, 29 percent fair and 17 percent poor to very poor, an increase of 1 percent from the previous week. Winter wheat heading was estimated at 94 percent complete as of June 17, compared with 92 percent for the previous week and 91 percent for the five-year average. Winter wheat harvest was estimated at 48 percent complete as of June 17, compared with 35 percent the previous week and 16 percent for the five-year average. Spring wheat crop rating was estimated at 76 percent good to excellent, 21 percent fair and 3 percent poor to very poor, an increase of 1 percent from the previous week. Spring wheat heading was estimated at 33 percent complete as of June 17, compared with 15 percent for the previous week and 7 percent for the five year-average.

Corn: Weather market

The July corn contract gained 3 cents, while December was up 42 cents as of close June 21. Old crop continues to find support from tight stocks, as well as from strong basis offers. The dry weather forecast continues to support new crop. Look for the market to watch weather forecast close this week, as well as positioning ahead of the June USDA quarterly stocks and planted acreage report.

Corn traded sharply higher June 18 as most of Indiana and Ohio missed weekend rains. Traders were also expecting to see another decline in the June 18 crop conditions rating report, but they were not expecting the reduction to be 3 percent, now rated at 63 percent good to excellent. Buying interest continued on June 19 with the market breaking through resistance and the 100-day moving average. Forecasts are also continuing to call for warm, dry conditions for the eastern U.S.

The market slowed down on June 20 and traded with double-digit losses early as profits were taken after making a four-week high on June 19. Ethanol production also hit a six-week low and tighter profit margins may cause some plants to go into wet idle. Weather talk came back into the market, helping it to firm into the afternoon and close slightly higher. Profit taking drove the futures lower June 21 with rain in the northern and western Corn Belt. There also appears to be a better chance of rain in the eastern Corn Belt over the next few days. The export sales report was also disappointing and that added pressure.

Ethanol production for the week ending June 15 averaged 900,000 barrels per day, which is down 2.2 percent versus the previous week and down slightly from 2011. Total ethanol production reached a six-week low at 6.3 million barrels. Corn used in production for the week ending June 17 was 95.87 million bushels, which is the lowest since May 4 and compares with 97.2 million needed each week to reach the USDA projection for the year. Stocks were 21.2 million barrels, which is up 2.5 percent from the week ending June 15 and up 8.6 percent from last year.

Crop conditions had 63 percent of the crop rated as good to excellent, 28 percent fair and 9 percent poor to very poor. Corn silking was at 5 percent, compared with 2 percent for one year ago and the five-year average.

Soybeans make gains

As of the June 21 close, July soybeans were up 62.5 cents on the week and the November contract was up 57.25 cents. Short-term fundamentals remain bullish for the soybean market as global stocks tighten and drought concerns rise. Weather will be the main focus of traders early this week, but then attention will turn to USDA’s reports later this week.

Soybeans traded higher throughout the session on June 18 on the way to moderate gains. July was higher, but new-crop contracts were the leader with sharp gains tied to weather concerns in the Corn Belt. Recent rains may not have been enough, as the next several days are expected to be hotter and drier, especially in the eastern Corn Belt. Without sufficient moisture, we could see fewer double-crop acres as well. The June 18 export inspections were well below expectations.

The June 19 session had soybeans sharply higher overnight and they didn’t slow down for the day session as the November contract traded at its highest level since April 9. Weather was a major factor, as the day forecast remains hot and dry for several days. Crop conditions declined 4 percent the week ending June 15 as a result of weather conditions and that added to the positive tone. Demand for soybeans remains strong, and USDA announced a sale of 140,000 million tons of old crop to undisclosed destinations.

Selling pressure started to emerge during the night session June 19 as soybeans traded lower, but the market recovered to trade higher at midday and remained stronger throughout the remainder of the June 20 session. Early pressure came from profit taking after June 19 sharp gains, but it wasn’t long before weather concerns took over, leading to the rally to moderate gains. The forecast is warm and dry, hurting crop expectations and hindering double-crop planting.

Soybeans were lower overnight June 21 and traded both sides of unchanged into midday. The market is technically overbought, which led to some short-term noncommercial selling. Better weather forecast for this past weekend was a negative force. Outside markets were negative with sharp losses in crude oil and the Dow Jones. The U.S. dollar was sharply higher, pressuring commodities. The negative forces prevented soybeans from moving above June 20 highs, which triggered some profit taking. The June 21 export sales report from USDA was within expectations.

Soybean blooming as of June 17 was at 5 percent, above the five-year average of 2 percent. Emergence was at 95 percent for the week ending June 17, up from 90 percent the previous week and the five-year average of 81 percent. USDA’s weekly crop condition rating report estimated the U.S. soybean crop at 56 percent good to excellent, 32 percent fair and 12 percent poor to very poor, a decrease of 4 percent.

Barley

USDA reported barley export inspections for the week ending June 15 at 8,000 bushels. This brings barley’s year-to-date export shipments pace to 44,000 bushels, compared with 194,000 bushels last year. There were no reported barley export sales for the week ending June 15.

USDA’s weekly crop condition rating report estimated the U.S. barley crop at 67 good to excellent, 30 percent fair and 3 percent poor to very poor, an increase of 3 percent. Barley heading was at 19 percent, compared with 5 percent the previous week and 6 percent for the five-year average.

As of the June 21 close, cash barley bids in Minneapolis decreased slightly for the week, putting feed barley bids at $5.05 per bushel, while malting barley bids fell to $7.

Canola

Canola futures were higher for the week, in large part because of sharp gains in Chiago Board of Trade soybean futures. Changes in weather and talk of fresh export business were factors also.

As of the June 21 close, November canola gained $17 (Canadian) per hundredweight. Cash canola new-crop bids in Velva, N.D., were 19 cents higher at $24.20.

Durum

The durum export sales pace for the week ending June 15 was estimated at 400,000 bushels, bringing the year-to-date total to 5.7 million, compared to 6.1 million bushels last year at this time.

As of the June 21 close, cash bids for milling quality durum were unchanged for the week at $7 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was unchanged at $7.05.

Sunflowers

As of June 17, 100 percent of North Dakota’s sunflower crop was planted, compared with 96 percent the previous week and 89 percent for the five-year average.

Soybean oil export sales pace for the week of June 15 was estimated at 20.4 trillion metric tons, bringing the year-to-date total to 473.4 trillion, compared to last year’s 1,233.6 trillion metric tons.

As of June 21 close, July soybean oil was $1.37 per hundredweight higher for the week. Cash sunflower new crop bids in Fargo, N.D., lost 20 cents to $22.40 per hundredweight.

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