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Published September 04, 2012, 10:12 AM

Soybeans continue to lead grains

Wheat traded lower in every session except for one last week, and that one was enough to give wheat gains for the week. Early selling pressure was a result of a lack of news and lackluster trading as wheat looked for news.

By: Ray Grabanski, Agweek

Wheat: Russian meeting supportive

Wheat traded lower in every session except for one last week, and that one was enough to give wheat gains for the week. Early selling pressure was a result of a lack of news and lackluster trading as wheat looked for news. Late in the week, wheat rallied sharply higher because of reports that Russian officials were going to hold meeting to discuss their current wheat production issue. For the week ending Aug. 31, September Minneapolis gained 21.5 cents, September Chicago gained 16 cents and September Kansas City improved 13.5 cents.

Wheat was looking for something to give it direction Aug. 28. The only news for wheat was negative as the U.S. lost another wheat export sale, as Egypt purchased Russian wheat. Additional selling was tied to carry-over selling from a lower corn and soybean complex. The Aug. 28 session forced traders to have one eye on the weather as activity was centered on the developing hurricane and the path it was taking. The path was expected to move northeast once it came on shore, but then the path looked to be heading northwest, which would have put it on track to hit the dry southern winter wheat region. This added selling pressure to the winter wheat exchanges.

The Aug. 29 session saw a reversal of fortune for wheat. Wheat returned to the leader role on the news that Russia would be holding a meeting on Aug. 31 to discuss the future of its wheat export program. Russian officials have been adamant that they are not considering any sort of ban on wheat exports. Of course, if Russia was to implement some sort of export reduction plan, it would increase demand for U.S. wheat, which was why wheat rallied sharply higher.

Wheat opened and traded with strength early Aug. 30, but faded once the day session started. Traders turned to sellers thinking that the Aug. 29 gains were overdone. Additional selling was a result of forecasts for rain for much of the winter wheat region as hurricane Isaac moved north.

Corn: lack of fresh news

Corn moved in a sideways pattern for the third week in a row because of the lack of any fresh news. Early week losses came from higher yield estimates and disappointing demand numbers. The strength at midweek came from the sharply higher wheat market, but then settled back prior to end of the month and ahead of a three-day weekend. For the week ending Aug. 30, September gained 9 cents, while December was unchanged.

Corn was under pressure on Aug. 27 and 28, losing 8 and 6 cents, respectively. Early support came from Pro Farmer’s yield estimate of 120.25 bushels per acre, compared with USDA’s estimate of 123.4 bushels per acre. Another private company released its yield estimate at 127 bushels per acre. Demand has slowed and with corn at these prices versus the steady ethanol values, margins continue to tighten for ethanol facilities. The weekly ethanol report was disappointing and again below USDA’s estimate. The crop condition rating did fall by 1 percent in the Aug. 27 afternoon report, but the lower condition ratings have been built into the market.

The market rebounded Aug. 29, as buying interest resurfaced below the $8 level. Additional strength spilled over from a sharply higher wheat complex. Corn is being harvested and yields have been disappointing for the most part. Losses continued on Aug. 30, as the market gave back some of the Aug. 29 gains. Pressure came from some profit taking and end of the month positioning ahead of a three-day weekend. Exports sales were again disappointing with a negative number for old-crop sales because of cancellations. As of Aug. 23, cumulative corn sales stand at 24 percent of the USDA estimate for the 2012 to 2013 marketing year versus a five-year average of 21 percent. The slow sales pace suggests foreign buyers have shifted their needs to other origins or are using more wheat in feed rations.

Ethanol production for the week ending Aug. 24 averaged 819,000 barrels per day, which is down 0.49 percent versus the previous week and down 7.8 percent from last year. Total ethanol production for the week was 5.73 million barrels. Corn used in production for the week ending Aug. 24 is estimated at 87.3 million barrels. This crop year’s cumulative corn used for ethanol production is 4.87 billion bushels and usage needs to average 148.4 million bushels per week to meet this crop year’s USDA estimate of 5 billion. Stocks are at 18.5 million barrels, which is up 0.01 percent versus the previous week and up 3.4 percent versus last year.

Crop conditions had 22 percent of the crop rated as good to excellent, 26 percent fair and 52 percent poor to very poor. Corn in the dough stage was 95 percent, compared with 83 percent one year ago and a five-year average of 81 percent. Corn that is dented was 63 percent, compared with 47 percent one year ago and a five-year average of 46 percent. Corn that was mature was 26 percent, compared with 7 percent one year ago and a five-year average of 8 percent. Corn that was harvested was 6 percent, compared with 2 percent one year ago and a five-year average of 2 percent.

Soybeans continue higher

Soybeans continue to be the market of choice for traders, as it continued to post strong weekly gains (for the second week in a row). For the week ending Aug. 30, November soybeans were up 32 cents.

Soybeans were higher early Aug. 27, tagging a new all-time high for the fourth time in five days. By midday, soybeans had given back gains and slipped lower on technical selling pressure. The near record-long position held by investors and the near record prices leave the market susceptible to noncommercial long liquidation. Attention is directed at Tropical Storm Isaac as traders wait to see what sort of impact the storm will have on crops. The Aug. 27 export inspections met USDA’s projection of 1.35 billion bushels with one reporting week left.

The Aug. 28 session saw losses caused by profit taking, but commercial buying was able to help turn the market around into midday. Aug. 27 crop conditions were worse than expected, falling 1 percent, which helped add support. USDA announced a sale of 110,000 metric tons to China for 2012 and 2013 delivery.

Strength returned to the Aug. 29 session, as soybeans traded higher on spillover support from sharp gains in wheat and corn, closing 1 cent off the daily high. Commercial buying remains solid as early harvest reports have been disappointing. Chinese buying interest remains supportive.

Soybeans were trading lower early, but turned around and set another new contract high Aug. 30. Yield concerns supported the market as traders worried about possible crop damage from the hurricane. Hurricane Isaac is expected to bring heavy rains (as much as 6 to 12 inches) to much of the central and eastern Corn Belt. This will help replenish soil moisture shortages, but it might result in some crop loss, as the crop is near maturity. Aug. 30 export sales were strong.

Barley

As of Aug. 26, 79 percent of the nation’s barley was harvested, compared with 66 percent the previous week and 55 percent for the five-year average.

Cash barley bids in Minneapolis were at $5.90 per bushel for feed barley, while malting barley bids were $7.

Durum

As of Aug. 26, 81 percent of North Dakota’s durum crop was harvested, compared with 60 percent the previous week and 32 percent for the five-year average.

Cash bids for milling quality durum were at $8 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $7.85.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed with more than $2 (Canadian) gains for the week ending Aug. 30. Canola started the week under pressure, but managed to recover all of the week’s losses Aug. 29. Early pressure was a result of spillover selling from a lower U.S. soybean complex, as well as pressure from a lower palm oil market. Late week strength was a result of production concerns, as early harvest results have been slightly disappointing. Canola also was supported by late-week buying in the U.S. soybean complex.

Aug. 30 cash canola bids in Velva, N.D., were at $27.57 per hundredweight.

Dry beans

For the week ending Aug. 26, the following states were reporting dry bean conditions: North Dakota: 55 percent good to excellent, 32 percent fair and 13 percent poor to very poor, an increase of 3 percent from the previous week, 17 percent was cut, compared with 2 percent for the five-year average; Minnesota: 65 percent good to excellent, 28 percent fair and 7 percent poor or very poor, unchanged from the previous two weeks, 30 percent was dropping leaves; Nebraska: 43 percent good to excellent, 49 percent fair and 9 percent poor to very poor, a decrease of 3 percent, 17 percent has turning color, compared with 22 percent for the five-year average; Idaho: 10 percent harvested, compared with 17 percent for the five-year average; and Michigan: 50 percent good to excellent, 30 percent fair and 20 percent poor to very poor, a decrease of 2 percent from the previous week, 28 percent was turning leaves, compared with 25 percent for the five-year average.

Sunflowers

As of Aug. 26, North Dakota’s sunflower crop had 26 percent bracts turning yellow, compared with 5 percent for the previous week and 8 percent for the five-year average. North Dakota’s sunflower crop condition report estimated the sunflower crop at 65 percent good to excellent, 28 percent fair and 7 percent poor, a decrease of 2 percent.

Aug. 30 cash sunflower bids in Fargo, N.D., were at $27.60 per hundredweight.

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