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Published July 30, 2012, 10:53 AM

Markets retreat on rainy forecast

The wheat market took a hit last week trading with sharp losses in almost every session. For the week ending July 26, September Minneapolis dropped 64 cents, September Chicago was off 59.25 cents and September Kansas City dropped 51 cents.

By: Ray Grabanski, Agweek

Wheat: following corn lower

The wheat market took a hit last week trading with sharp losses in almost every session. For the week ending July 26, September Minneapolis dropped 64 cents, September Chicago was off 59.25 cents and September Kansas City dropped 51 cents.

Wheat opened last week under pressure from spillover selling from a sharply lower corn and soybeans complex. Profit taking added to the sessions sell-off. The selling was enough to push wheat into sell stops, which accelerated the losses. Light selling was tied to pressure from the spring wheat harvest, which is starting to go into full swing in the Northern Plains. Reports so far have been better than expected.

The July 24 session opened and traded with losses basically following the corn market lower. Wheat really did not have much news of its own so it had to rely on the news from the other grains. Both corn and soybeans traded limit down at one point during the session, but recovered to end with modest losses (which seemed to be a victory in itself).

Wheat opened and traded with gains July 25, gaining back at least a part of the previous day’s losses. Production concerns helped wheat hold onto its strength. Traders are concerned about wheat production possibilities in the Black Sea region and Russia. The concern is not that production will be reduced; it’s that if production from the Black Sea region drops enough, demand for U.S. wheat will increase. Many traders are also concerned that the Black Sea region will put in place some sort of export restrictions, which will help to push wheat demand to the U.S.

The wheat markets started the session in lackluster fashion July 26 as spillover selling from a sloppy corn and soybean market pressured the wheat market. Wheat traded in a tug-of-war fashion with strength coming from reports out of Russia which is saying harvest activity is 22 percent complete with yields being reported off 28 percent from last year. But this news was somewhat overshadowed by reports out of the Spring Wheat Quality tour, which is estimating spring wheat yields close to 45.5 bushels per acre compared to 42.1 bushels last year. Additional selling was tied to a late sell off in corn and soybeans.

As of July 22, 12 percent of the nation’s spring wheat crop was harvested, compared with none the previous week and none for the five-year average. Spring wheat crop conditions dropped 5 percent to 60 percent good to excellent, 29 percent fair and 11 percent poor to very poor. Last year at this time, the crop was rated 74 percent good to excellent.

Corn: profit taking at contract highs

For the week ending July 26, September corn lost 43 cents while December was down 19 cents. Buying interest slowed last week once corn traded to a new all-time high. Demand destruction has been evident since corn traded above $7 and last week was proof of that as profit taking stepped in to bring corn off its highs. There was some rain last week throughout the Midwest and news of continued poor export sales also added weakness.

Corn traded lower July 23 as a result of widespread selloff in the grain complex. Corn hit a new all-time contract high the night of July 22, but once trading picked up, so did the selling. Overnight weakness came from negative news out of Greece and Spain. On July 24, corn broke sharply lower as a result of continued profit taking from July 23. We continued to trade lower and even limit down late in the morning. A wetter forecast for the northern tier states at the end of last week added pressure. The market came off its lows in the afternoon on July 24 and closed with small losses. Support came from another bullish crop conditions report in the afternoon on July 23. Corn dropped another 5 percent last week in the good to excellent category and down to 26 percent, while the poor to very poor increased 7 percent to 45 percent. The report showed that Illinois was at 66 percent, Indiana at 71 percent, Missouri at 79 percent, Iowa and Nebraska at 33 percent poor to very poor, with the largest increase coming from the western states.

On July 25, buying interest resurfaced after two days of losses. Support was because of triple digit temperatures in the Midwest last week and the six-to-10-day weather maps continue to keep above normal temperatures in the central and western Midwest, along with the lack of moisture in the West. Declining yield estimates continue to surface to offer support. Profit taking came back into the market on July 26. Pressure came from scattered rain throughout the Midwest.

Crop conditions had 26 percent of the crop rated as good to excellent, 29 percent fair and 45 percent poor to very poor. Corn silking was at 86 percent, compared with 56 percent one year ago and the five-year average of 59 percent. Corn in the dough stage was 22 percent, compared with 7 percent one year ago and a five-year average of 9 percent. Corn that is dented was 6 percent, compared with 2 percent one year ago and a five-year average of 2 percent.

Soybeans: rain changes increase

Soybeans struggled last week as weather forecasts started to show more frequent chances of decent rain events over the next few weeks. For the week ending July 26, November soybeans lost $1.1875.

Soybeans were sharply lower on July 23 and 24 and even traded limit down for a portion of the July 24 session. The market is overbought, with the record net-long futures position held by investors leading to profit taking. Additional rain in the forecast for the northern and eastern Corn Belt provided pressure, as well. The Euro-zone debt crisis returned to the headlines, leading to a higher U.S. dollar and widespread pressure on commodities. Further reduction in crop condition ratings combined with strong demand and tight global stocks indicates the fundamentally bullish longer-term supply and demand outlook. The July 23 export inspections were bullish, coming in above the amount needed to keep pace with the U.S. Department of Agriculture’s projection.

Soybeans traded lower overnight but were able to rally sharply higher throughout the day on July 25. The strong gains erased most of the July 24 losses as commercial buying supported the rally. There is more rain in the forecast, but the drought is not expected to break and yields are likely to continue to fall. The outside markets were positive with gains in the Dow Jones and a lower U.S. dollar.

The July 26 session started with modest losses and extended losses throughout the session. Early selling was tied to the eight-to-14-day weather forecast calling for decent rains for the driest areas of the Corn Belt. USDA export sales report was friendly soybeans and did manage to limit losses early, but once the market traded through support lines, it was tough for soybeans to gather strength.

Soybean blooming as of July 22 was at 79 percent, compared with 66 percent the previous week and the five-year average of 60 percent. As of July 22, soybeans setting pods were at 36 percent, compared with 16 percent the previous week and the five-year average of 19 percent. USDA’s weekly crop condition rating report estimated the U.S. soybean crop at 31 percent good to excellent, 34 percent fair and 35 percent poor to very poor, a decrease of 3 percent.

Barley

USDA reported barley export inspections for the week ending July 20 at 20,000 bushels with all of the bushels going to Mexico. Barley export sales pace for the week ending July 20 was estimated at 400,000 bushels.

As of July 22, 6 percent of the nation’s barley crop was harvested, compared with none the previous week and 1 percent for the five-year average. USDA’s weekly crop condition rating report estimated the U.S. barley crop at 57 percent good to excellent, 28 percent fair and 15 percent poor to very poor, a decrease of 3 percent.

Cash barley bids in Minneapolis ended last week at $5.80 per bushel, while malting barley bids were at $7.

Durum

USDA estimated durum export shipments pace for the week ending July 20 at 349,000 bushels, with all of the bushels going to Tunisia. Durum export sales pace for the week ending July 20 was estimated at a negative 100,000 bushels (cancellation).

As of July 22, 51 percent of North Dakota’s durum crop was turning, compared with 17 percent the previous week and 10 percent for the five-year average. Three percent of the crop was harvested. Durum’s crop condition rating dropped 7 percent to 59 percent good to excellent, 29 percent fair and 12 percent poor.

Cash bids for milling quality durum on July 26 were at $8.25 per bushel in Berthold, N.D., while Dickinson, N.D.’s bids were at $8.10.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending July 26 with almost $43 (Canadian) losses. Spillover pressure from a sharply lower U.S. soybean complex combined forces with profit taking and pushed canola lower. Additional selling was tied to thoughts of a larger-than-expected canola harvest potential.

As of July 22, North Dakota’s canola crop was 56 percent turning, compared with 24 percent the previous week and 18 percent for the five-year average. North Dakota’s canola crop condition rating dropped 10 percent to 66 percent good to excellent, 30 percent fair and 4 percent poor.

Cash canola bids in Velva, N.D., on July 26 were at $25.56 per hundredweight.

Dry beans

Dry bean conditions declined for the most part last week with all states except one seeing declining ratings. For the week ending July 22 the following states were reporting dry bean conditions. North Dakota: 52 percent good to excellent, 36 percent fair and 12 percent poor to very poor, a decrease of 6 percent from the previous week; Minnesota: 64 percent good to excellent, 28 percent fair and 8 percent poor to very poor, a decrease of 1 percent from the previous week; Nebraska: 48 percent good to excellent, 42 percent fair and 10 percent poor to very poor, a decrease of 7 percent; Colorado: 30 percent good to excellent, 49 percent fair and 21 percent poor to very poor, a decrease of 3 percent; and Michigan: 47 percent good to excellent, 31 percent fair and 22 percent poor to very poor, an increase of 4 percent from the previous week.

Sunflowers

As of July 22, North Dakota’s sunflower crop was 20 percent in bloom, compared with 4 percent the previous week and 6 percent for the five-year average. North Dakota’s sunflower crop condition report estimated the crop at 69 percent good to excellent, 28 percent fair and 3 percent poor, a decrease of 1 percent.

Soybean oil export sales pace for the week ending July 20 was estimated at 13.2 trillion metric tons with 7.2 trillion metric tons being old crop and 6 trillion metric tons being new crop.

Cash sunflower bids in Fargo N.D., on July 26 were at $23.80 per hundredweight.

Wheat opened last week under pressure from spillover selling from a sharply lower corn and soybeans complex. Profit taking added to the sessions sell-off. The selling was enough to push wheat into sell stops, which accelerated the losses. Light selling was tied to pressure from the spring wheat harvest, which is starting to go into full swing in the Northern Plains. Reports so far have been better than expected.

The July 24 session opened and traded with losses basically following the corn market lower. Wheat really did not have much news of its own so it had to rely on the news from the other grains. Both corn and soybeans traded limit down at one point during the session, but recovered to end with modest losses (which seemed to be a victory in itself).

Wheat opened and traded with gains July 25, gaining back at least a part of the previous day’s losses. Production concerns helped wheat hold onto its strength. Traders are concerned about wheat production possibilities in the Black Sea region and Russia. The concern is not that production will be reduced; it’s that if production from the Black Sea region drops enough, demand for U.S. wheat will increase. Many traders are also concerned that the Black Sea region will put in place some sort of export restrictions, which will help to push wheat demand to the U.S.

The wheat markets started the session in lackluster fashion July 26 as spillover selling from a sloppy corn and soybean market pressured the wheat market. Wheat traded in a tug-of-war fashion with strength coming from reports out of Russia which is saying harvest activity is 22 percent complete with yields being reported off 28 percent from last year. But this news was somewhat overshadowed by reports out of the Spring Wheat Quality tour, which is estimating spring wheat yields close to 45.5 bushels per acre compared to 42.1 bushels last year. Additional selling was tied to a late sell off in corn and soybeans.

As of July 22, 12 percent of the nation’s spring wheat crop was harvested, compared with none the previous week and none for the five-year average. Spring wheat crop conditions dropped 5 percent to 60 percent good to excellent, 29 percent fair and 11 percent poor to very poor. Last year at this time, the crop was rated 74 percent good to excellent.

Corn: profit taking at contract highs

For the week ending July 26, September corn lost 43 cents while December was down 19 cents. Buying interest slowed last week once corn traded to a new all-time high. Demand destruction has been evident since corn traded above $7 and last week was proof of that as profit taking stepped in to bring corn off its highs. There was some rain last week throughout the Midwest and news of continued poor export sales also added weakness.

Corn traded lower July 23 as a result of widespread selloff in the grain complex. Corn hit a new all-time contract high the night of July 22, but once trading picked up, so did the selling. Overnight weakness came from negative news out of Greece and Spain. On July 24, corn broke sharply lower as a result of continued profit taking from July 23. We continued to trade lower and even limit down late in the morning. A wetter forecast for the northern tier states at the end of last week added pressure. The market came off its lows in the afternoon on July 24 and closed with small losses. Support came from another bullish crop conditions report in the afternoon on July 23. Corn dropped another 5 percent last week in the good to excellent category and down to 26 percent, while the poor to very poor increased 7 percent to 45 percent. The report showed that Illinois was at 66 percent, Indiana at 71 percent, Missouri at 79 percent, Iowa and Nebraska at 33 percent poor to very poor, with the largest increase coming from the western states.

On July 25, buying interest resurfaced after two days of losses. Support was because of triple digit temperatures in the Midwest last week and the six-to-10-day weather maps continue to keep above normal temperatures in the central and western Midwest, along with the lack of moisture in the West. Declining yield estimates continue to surface to offer support. Profit taking came back into the market on July 26. Pressure came from scattered rain throughout the Midwest.

Crop conditions had 26 percent of the crop rated as good to excellent, 29 percent fair and 45 percent poor to very poor. Corn silking was at 86 percent, compared with 56 percent one year ago and the five-year average of 59 percent. Corn in the dough stage was 22 percent, compared with 7 percent one year ago and a five-year average of 9 percent. Corn that is dented was 6 percent, compared with 2 percent one year ago and a five-year average of 2 percent.

Soybeans: rain changes increase

Soybeans struggled last week as weather forecasts started to show more frequent chances of decent rain events over the next few weeks. For the week ending July 26, November soybeans lost $1.1875.

Soybeans were sharply lower on July 23 and 24 and even traded limit down for a portion of the July 24 session. The market is overbought, with the record net-long futures position held by investors leading to profit taking. Additional rain in the forecast for the northern and eastern Corn Belt provided pressure, as well. The Euro-zone debt crisis returned to the headlines, leading to a higher U.S. dollar and widespread pressure on commodities. Further reduction in crop condition ratings combined with strong demand and tight global stocks indicates the fundamentally bullish longer-term supply and demand outlook. The July 23 export inspections were bullish, coming in above the amount needed to keep pace with the U.S. Department of Agriculture’s projection.

Soybeans traded lower overnight but were able to rally sharply higher throughout the day on July 25. The strong gains erased most of the July 24 losses as commercial buying supported the rally. There is more rain in the forecast, but the drought is not expected to break and yields are likely to continue to fall. The outside markets were positive with gains in the Dow Jones and a lower U.S. dollar.

The July 26 session started with modest losses and extended losses throughout the session. Early selling was tied to the eight-to-14-day weather forecast calling for decent rains for the driest areas of the Corn Belt. USDA export sales report was friendly soybeans and did manage to limit losses early, but once the market traded through support lines, it was tough for soybeans to gather strength.

Soybean blooming as of July 22 was at 79 percent, compared with 66 percent the previous week and the five-year average of 60 percent. As of July 22, soybeans setting pods were at 36 percent, compared with 16 percent the previous week and the five-year average of 19 percent. USDA’s weekly crop condition rating report estimated the U.S. soybean crop at 31 percent good to excellent, 34 percent fair and 35 percent poor to very poor, a decrease of 3 percent.

Barley

USDA reported barley export inspections for the week ending July 20 at 20,000 bushels with all of the bushels going to Mexico. Barley export sales pace for the week ending July 20 was estimated at 400,000 bushels.

As of July 22, 6 percent of the nation’s barley crop was harvested, compared with none the previous week and 1 percent for the five-year average. USDA’s weekly crop condition rating report estimated the U.S. barley crop at 57 percent good to excellent, 28 percent fair and 15 percent poor to very poor, a decrease of 3 percent.

Cash barley bids in Minneapolis ended last week at $5.80 per bushel, while malting barley bids were at $7.

Durum

USDA estimated durum export shipments pace for the week ending July 20 at 349,000 bushels, with all of the bushels going to Tunisia. Durum export sales pace for the week ending July 20 was estimated at a negative 100,000 bushels (cancellation).

As of July 22, 51 percent of North Dakota’s durum crop was turning, compared with 17 percent the previous week and 10 percent for the five-year average. Three percent of the crop was harvested. Durum’s crop condition rating dropped 7 percent to 59 percent good to excellent, 29 percent fair and 12 percent poor.

Cash bids for milling quality durum on July 26 were at $8.25 per bushel in Berthold, N.D., while Dickinson, N.D.’s bids were at $8.10.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending July 26 with almost $43 (Canadian) losses. Spillover pressure from a sharply lower U.S. soybean complex combined forces with profit taking and pushed canola lower. Additional selling was tied to thoughts of a larger-than-expected canola harvest potential.

As of July 22, North Dakota’s canola crop was 56 percent turning, compared with 24 percent the previous week and 18 percent for the five-year average. North Dakota’s canola crop condition rating dropped 10 percent to 66 percent good to excellent, 30 percent fair and 4 percent poor.

Cash canola bids in Velva, N.D., on July 26 were at $25.56 per hundredweight.

Dry beans

Dry bean conditions declined for the most part last week with all states except one seeing declining ratings. For the week ending July 22 the following states were reporting dry bean conditions. North Dakota: 52 percent good to excellent, 36 percent fair and 12 percent poor to very poor, a decrease of 6 percent from the previous week; Minnesota: 64 percent good to excellent, 28 percent fair and 8 percent poor to very poor, a decrease of 1 percent from the previous week; Nebraska: 48 percent good to excellent, 42 percent fair and 10 percent poor to very poor, a decrease of 7 percent; Colorado: 30 percent good to excellent, 49 percent fair and 21 percent poor to very poor, a decrease of 3 percent; and Michigan: 47 percent good to excellent, 31 percent fair and 22 percent poor to very poor, an increase of 4 percent from the previous week.

Sunflowers

As of July 22, North Dakota’s sunflower crop was 20 percent in bloom, compared with 4 percent the previous week and 6 percent for the five-year average. North Dakota’s sunflower crop condition report estimated the crop at 69 percent good to excellent, 28 percent fair and 3 percent poor, a decrease of 1 percent.

Soybean oil export sales pace for the week ending July 20 was estimated at 13.2 trillion metric tons with 7.2 trillion metric tons being old crop and 6 trillion metric tons being new crop.

Cash sunflower bids in Fargo N.D., on July 26 were at $23.80 per hundredweight.

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