Harvest progress pressures grains
By: Ray Grabanski, Agweek
Wheat: Russia concerns in market
Wheat traded with little fanfare to start the short week last week, but trade with enthusiasm late in the week. Russia was back in the news helping give wheat some fire. But for the week ending Sept. 6, wheat saw little changes as December Minneapolis gained 1.25 cents, December Chicago improved by 2.5 cents and December Kansas City improved 5.5 cents.
Wheat opened the short week with decent gains, with strength coming from soybeans and corn. But once soybeans started to retreat, it did not take wheat long to slip lower, as well. Light support was a result of the U.S. Department of Agriculture’s export inspections report, which has wheat shipments stronger than expected. But the sell off in soybeans combined with news that not only did Russia not implement an export ban, but it reported a sale of 240,000 metric tons of wheat to Egypt. This shows how eager Russia is to sell wheat. Traders still are expecting Russia to implement some sort of export reduction plan, but this certainly has to make them question when that will happen. For sure, Russia now has 240,000 metric tons less wheat in stocks and is much closer to needing to implement the ban.
The Sept. 5 session opened and traded lower with early selling pressure as a result of carryover selling from a lower corn and soybean complex. Selling also was tied to pressure from improving weather conditions. Hurricane Isaac brought in much-needed rain into much of the Delta regions of the U.S., as well as into parts of the Southern Plains (but not as much to the Plains). This will help replenish soil moisture levels just as most producers were preparing to plant winter wheat.
Wheat pushed sharply higher Sept. 6, retaking the leader role. Wheat was supported by news Egypt once again bought wheat. Egypt bought 480,000 metric tons of wheat from Russia (300,000 metric tons), Romania (120,000 metric tons), and Ukraine (55,000 metric tons). The price of wheat this time was much higher, as the Black Sea region seems to be getting a little smarter and at least increasing its price somewhat to get close to the world price of wheat. This should have pressured wheat, but instead traders are convinced it will lead to wheat supplies declining much faster than expected in the Black Sea region and ultimately force importers to come to the U.S.
As of Sept. 2, spring wheat harvest was estimated at 95 percent, compared with 89 percent the previous week and 72 percent for the five-year average.
Corn: yield reports
Corn continued to trade in a sideways pattern and is unchanged from where it was one month ago. The futures now are looking to yield reports for direction, while the earlier harvested fields have been disappointing. The harvest is young, but progress is starting to pick up. For the week ending Sept. 6, December corn was off 1.25 cents.
Corn traded sharply higher early Sept. 6 with spillover support from the soybean market. Additional support came from disappointing yield results in the early harvested crop. Japan bought 180,000 metric tons of U.S. corn, but it is for 2013 to 2014 crop year. Buying interest moved to the sidelines on Sept. 5 and the market closed 15 cents lower. Profit taking and technical selling pressured the market. Estimates were that the crop condition report would remain unchanged from the previous week and it did, along with 10 percent of the crop harvested. The cash market also has softened as harvest is under way.
Corn traded with small losses in the overnight Sept. 6, but firmed as the day moved along and closed with 7 cent gains. Buying interest resurfaced after hitting support levels. USDA also announced that private exporters sold 217,424 metric tons of U.S. corn to an unknown destination for the 2012 to 2013 and 2013 to 2014 marketing years. A private firm released its yield estimate Sept. 7 at 121.4 bushels per acre versus last month’s USDA number of 123.4 bushels per acre.
Ethanol production for the week ending Aug. 31 averaged 829,000 barrels per day. This is up 1.2 percent versus the previous week, but down 7.5 percent versus last year. Total ethanol production for the week was 5.8 million barrels versus 5.73 the previous week. Corn used in production for the week ending Aug. 31 is estimated at 88.3 million bushels. The cumulative corn used for ethanol production for this crop year is 4.96 billion bushels, compared with 5 billion USDA estimated for 2011 to 2012. Stocks as of Aug. 31 were 18.73 million barrels, which is up 1.3 percent versus the previous week and up 9.7 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 that is dented was 86 percent, compared with 65 percent one year ago and a five-year average of 63 percent. Corn that was mature was 41 percent, compared with 15 percent one year ago and a five-year average of 16 percent. Corn that was harvested was 10 percent, compared with 3 percent one year ago and a five-year average of 3 percent.
Soybeans slip lower
Soybeans struggled last week, actually losing ground for the first time in about six weeks (week of July 30). For the week ending Sept. 6, November soybeans were down 9.5 cents.
Soybeans were higher early on Sept. 4, setting a new record high overnight at $17.89. Weather concerns supported the market, as recent temperatures from South Dakota to Nebraska have been near 100 degrees with little rainfall. Demand out of China remains strong, as the U.S. will remain the lone supplier until South America’s harvest in early 2013. Crop conditions released Sept. 4 were expected to be stable. Soybeans rated good to excellent stayed at 30 percent, while poor to very poor fell 1 percent.
Commercial selling on Sept. 5 combined with noncommercial long-liquidation to pressure the market. Ideas that recent rainfall and lower temperatures may have been beneficial to soybeans added to the negative tone. Strong end-user demand and poor reports on pod-filling should provide support, but profit taking could continue as the market remains slightly overbought.
Technical selling continued Sept. 6, pushing soybeans lower for another session. A private commercial trading company revised its yield and projection estimates higher, putting some pressure on the market. Throughout the day, strength in the corn and wheat spilled over to soybeans to support the market. Weakness in the U.S. dollar and sharp gains in the Dow Jones Industrial Average provided additional support, but a lack of interest from commercial and noncommercial traders ultimately led to a lower close.
Soybeans dropping leaves as of Sept. 2 was at 19 percent, compared with 8 percent the previous week and the five-year average of 9 percent. USDA’s weekly crop condition rating report estimated the U.S. soybean crop at 30 percent good to excellent, 33 percent fair and 37 percent poor to very poor, which was unchanged from the previous week.
As of Sept. 2, 89 percent of the nation’s barley was harvested, compared with 79 percent the previous week and 71 percent for the five-year average.
USDA reported no durum export inspections (shipments) for the week ending Aug. 31. Durum export sales pace was estimated at 300,000 bushels. This brings the year-to-date export sales total to 9 million bushels, compared with 10.7 million for last year at this time.
As of Sept. 2, 92 percent of North Dakota’s durum crop was harvested, compared with 81 percent the previous week and 48 percent for the five-year average.
The Sept. 6 cash bids for milling quality durum were at $8 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $8.05.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Sept. 6 with more than $2 (Canadian) gains. Canola strength came from a strong export market. Commercial firms were aggressive buyers of canola in an attempt to cover export demand. Rumors are circulating that China is looking at switching some of its vegetable oil demand to canola and that helped push canola higher. Reports of declining yields as harvest advances added support.
As of Sept. 2, 91 percent of North Dakota’s canola crop was harvested, compared with 71 percent the previous week and 49 percent for the five-year average.
Sept. 6 cash canola bids in Velva, N.D., were at $28.81 per hundredweight.
For the week ending Sept. 2, the following states were reporting dry bean conditions: North Dakota: 51 percent good to excellent, 33 percent fair 16 percent poor to very poor, a decrease of 3 percent from the previous week, 26 percent was harvested, compared with 3 percent for the five-year average; Minnesota: 66 percent good to excellent, 27 percent fair and 7 percent poor to very poor, a 1 percent increase from the previous week, 21 percent was harvested, compared with 7 percent for the five-year average; Nebraska: 45 percent good to excellent, 46 percent fair and 9 percent poor to very poor, an increase of 2 percent, 18 percent was dropping leaves, compared with 19 percent for the five-year average; Idaho: 18 percent harvested, compared with 28 percent for the five-year average; and Michigan: 48 percent good to excellent, 30 percent fair and 22 percent poor to very poor, a decrease of 2 percent from the previous week, 24 percent was dropping leaves, compared with 21 percent for the five-year average.
As of Sept. 2, North Dakota’s sunflower crop had 50 percent bracts turning yellow, compared with 26 percent for the previous week and 20 percent for the five-year average. North Dakota’s sunflower condition report estimated the crop at 64 percent good to excellent, 31 percent fair and 5 percent poor, a decrease of 1 percent.
Sept. 6 cash sunflower bids in Fargo, N.D., were at $28.20 per hundredweight.