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Published October 15, 2012, 10:45 AM

USDA report pushes markets

Wheat traded with gains throughout last week. Most of the strength in the wheat was a result of position squaring ahead of the U.S. Department of Agriculture October crop production report.

Wheat: USDA report friendly

Wheat traded with gains throughout last week. Most of the strength in the wheat was a result of position squaring ahead of the U.S. Department of Agriculture October crop production report. For the week ending Oct. 11, December Minneapolis was 27.25 cents higher, December Chicago was 28.5 cents higher and December Kansas City gained 39.25 cents.

Wheat was the leader Oct. 8, trading with decent gains throughout most of the session. By the close, wheat did give back some of its gains, but still managed to end with gains. Early support was a result of the lack of news. Wheat also was supported by continued dry weather concerns in western Australia. Gains were trimmed late in the session by spillover pressure from the lower corn and soybean market.

Wheat was the leader of the grains again Oct. 9, making this the second day in a row where wheat led the grains. Support was a result of expectations that USDA will continue to tighten world wheat supplies. Gains were kept in check by a lighter-than-expected export inspections estimate for wheat.

Wheat was higher throughout the day Oct. 10 on follow-through commercial buying. Dry conditions in the Southern Plains could impact U.S. winter wheat production. Global wheat supplies remain a concern, as well.

Wheat opened and traded with gains throughout Oct. 11. Wheat was supported by spillover buying from a sharply higher corn and soybean market, as well as from a friendly USDA October crop production report. Total wheat production only increased 1 million bushels in USDA’s October crop production report. The report estimated wheat production at 2.269 billion bushels. This was off of planted acreage of 55.7 million (300,000 acres less than in September), harvested acreage of 49 million (200,000 acres higher than September) with a yield of 46.3 bushels (0.2 bushels lower than September). The biggest adjustments for wheat came in the demand numbers. USDA increased wheat feed demand 95 million bushels, but that was somewhat offset by a 50-million-bushel decrease in exports. The end result was a 44-million-bushel cut in ending stocks, now estimated at 654 million bushels (average trade estimate was at 627 million).

Corn: friendly USDA report

The corn market was up 25 cents for the week as of the Oct. 11 close, all of it coming from the Oct. 11 trade. The market traded slightly lower to start the week, with that lack of fresh news and trader positioning ahead of the USDA October crop production report. The report was friendly for corn, as USDA lowered corn yield and ending stocks.

Corn traded close to unchanged for the first three days of last week, as traders positioned ahead of the crop production report. The market also was assuming beginning stocks of 988 million bushels, which was revised lower from 1.181 billion in the September quarterly grain stocks report. The drop in the September stocks report suggests that domestic feed usage could be adjusted up. Additional pressure came from the Oct. 8 crop progress report that had corn harvest at a record 69 percent complete. Yield reports have been variable, but the majority has been better than previously estimated. Talk of ideal weather in South America and poor demand also is limiting the upside. The Brazilian government released its estimates for its corn crop on Oct. 9 at 73.2 million tons versus 72.6 million in 2011 to ’12. Export inspections continue to be disappointing.

Buying interest moved back into the market Oct. 11. Corn traded sharply higher with what was considered a friendly USDA report. The average U.S. corn yield came in at 122 bushels per acre, compared with 122.8 bushels per acre last month and slightly below estimates. Corn production was estimated at 10.706 billion bushels versus 10.727 billion last month, but 106 million bushels above trade expectations. U.S. ending stocks are estimated at 619 million bushels, down from 733 million last month. Total demand declined 100 million bushels as a result of lower exports. Planted acres were increased 500,000 acres and harvested acres were up 300,000. Globally, ending stocks were reduced to 117.27 million metric tons versus 123.95 million last month.

Ethanol production for the week ending Oct. 5 averaged 800,000 barrels per day, which is up 1.9 percent versus the previous week, but down 6.9 percent versus last year. Total ethanol production for the week was 5.6 million barrels. Corn used in production for the week ending Oct. 5 is estimated at 84 million bushels. Corn use needs to average 86.45 million bushels per week to meet this crop year’s USDA estimate of 4.5 billion, which was left unchanged in the October USDA report. Stocks as of Oct. 5 were 19.26 million barrels, which is up 2.4 percent versus the previous week and up 14.1 percent versus last year.

Soybeans: strong rally after report

Soybeans struggled for most of last week, with selling tied to what most expected to be a bearish October crop production report. Losses were trimmed late last week because sell the rumor buy the fact type trade took center stage. For the week ending Oct. 11, November soybeans were down 3 cents on the week.

Soybeans were lower early Oct. 8, but commercial buying provided support to lift the market to just below unchanged into the close. The buying continued as the Oct. 9 trading session opened higher, but could not be sustained and late selling led to a lower close, near the daily lows. Positioning ahead of the Oct. 11 USDA report was the main force in the market early in the week. Favorable weather for the South American crop continues to put pressure on soybean futures.

The Oct. 10 session also brought in light selling pressure from both commercial and noncommercial traders. Traders were taking profits in anticipation of the Oct. 11 USDA report, sending the market to a new weekly low. USDA announced a sale of 120,000 metric tons of soybeans to China for 2012 to ’13 delivery.

Soybeans were higher early ahead of a USDA report on Oct. 11. Soybean yield was increased to 37.8 bushels per acre, compared with 37 expected and 35.3 last month. Production was up to 2.86 billion bushels, compared with 2.75 billion expected and 2.634 billion last month. U.S. ending stocks were 130 million bushels, close to the pre-report estimate of 134 million. Global ending stocks were increased more than expected to 57.56 million metric tons, compared with the 53.1 million metric tons expected. The market was higher, despite the seemingly bearish report, as some saw the report as slightly bullish against expectations. A bigger factor was the sharply higher corn market.

USDA reported soybean export inspections pace for the week ending Oct. 5 at 45.6 million bushels. Soybean export sales pace for the week ending Oct. 5 was estimated at 18.4 million bushels and shipments were reported at 43.3 million.

Barley

USDA’s October crop production report estimated barley 2012 ending stocks at 80 million bushels, an increase of 19 million from last month. The dramatic increase in stocks was a result of a 25-million-bushel decrease in barley feed demand. Barley’s supply was decreased by 6 million bushels because of a decrease in production by 1 million bushels and a 5-million-bushel decrease in imports. Barley’s projected price increased 25 cents to $6.50.

Oct. 11 cash barley bids in Minneapolis had feed barley bids at $5.50 per bushel, while malting barley bids were at $7.05.

Durum

USDA reported durum export inspections (shipments) pace for the week ending Oct. 5 at 977,000 bushels, with 848,000 bushels being split between Algeria and Venezuela. Durum export sales pace for the week ending Oct. 5 was estimated at a negative 100,000 bushels (cancellation).

USDA’s October crop production report estimated durum 2012 ending stocks at 39 million bushels, a decrease of 5 million bushels from last month. Durum’s supply was not changed at 152 million bushels. There were adjustments into how the supply estimate was figured, as durum production dropped 4 million bushels to 82 million, but imports increased 5 million bushels to 45 million. Domestic use was increased 5 million bushels to 88 million, and that followed through to show up as a reduction in ending stocks.

Oct. 11 cash bids for milling quality durum were at $8 per bushel in Berthold, N.D., and Dickinson, N.D.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Oct. 11 with close to $12 (Canadian) gains. Canola was supported by a friendly USDA crop production report. USDA estimated the U.S. canola crop production for 2012 at 2.484 billion pounds, an increase of 61.5 percent from last year. Canola harvested acreage was estimated at 1.738 million acres (an increase of 66.6 percent from last year) and canola’s yield was estimated at 1,430 pounds per acre. North Dakota’s canola production was estimated at 2.059 billion pounds, an increase of 61.5 percent from last year.

Oct. 11 cash canola bids in Velva, N.D., were at $28.40 per hundredweight.

Dry beans

Total dry bean production was estimated at 31.033 million hundredweight, an increase of 56.5 percent from last year, according to USDA’s October crop production report. The report estimated this year’s planted acreage at 1.734 million (an increase of 43.8 percent), harvested acreage at 1.69 million (an increase of 46.2 percent from last year), with an average yield of 1,836 pounds. North Dakota’s total dry bean crop was estimated at 11.73 million hundredweight (an increase of 56.5 percent from last year). This was off of a planted acreage estimate of 700,000 (an increase of 70.7 percent from last year), harvested acreage of 690,000 (an increase of 81.6 percent from last year), and a yield of 1,700 pounds (an increase of 7 percent from last year).

Sunflowers

Total sunflower production was estimated at 2.46 billion pounds, an increase of 20.5 percent from last year. Sunflowers harvested acreage is estimated at 1.82 million (an increase of 24.5 percent from last year) with a yield of 1,354 pounds. North Dakota’s total sunflower crop is estimated at 1.25 billion pounds (an increase of 62.8 percent from last year). December soybean oil increased 70 cents to close at $51.33.

Oct. 11 cash sunflower bids in Fargo, N.D., were at $26.10.

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