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Published November 19, 2012, 10:46 AM

Markets retreat

Ray Grabanski's rundown of the market.

By: Ray Grabanski, Agweek

Wheat: slips to support

Wheat struggled all last week, trading with losses for most of the week. Pressure spilled over from the Nov. 9 bearish U.S. Department of Agriculture November crop production report. Additional selling was tied to technical pressure and profit taking as trader’s book profits for the year. For the week ending Nov. 15, December Minneapolis dropped 30.25 cents, December Chicago dropped 41 cents and December Kansas City declined 35.75 cents.

Wheat started the week lower, despite a lack of bearish technical signals. The weakness was attributed to sharp losses in the row crops, particularly soybeans, as well as from spillover selling from the Nov. 9 bearish crop production report. Dry conditions in the Southern Plains remain an issue that supports wheat prices, and rains over the weekend were expected to miss the areas that needed it most.

Wheat closed slightly lower and near the middle of the trading range on Nov. 13. Uncertain export news from the Ukraine continues to place pressure on wheat contracts. The late rally in corn and soybeans helped lift wheat off of the lows. Weather remains less than ideal in the Southern Plains, and will be a factor longer-term.

The Nov. 14 session had wheat trading with small gains because of support from a friendly USDA crop progress report (wheat conditions dropped 3 percent). But wheat could not hold the gains and slipped to trade mixed late in the session. Pressure came from concerns that if Congress does not come to some sort of compromise by the end of the year and the economy falls off the fiscal cliff, it likely will result in a sharp rally in the U.S. dollar, which in turn will hurt U.S. exports.

Wheat started Nov. 15 with small gains and rallied to post 6- to 8-cent gains during the early stage of the session. Early support was a result of continued concerns toward world wheat supplies. The Ukraine intends to halt wheat exports once the 5-million-metric -ton threshold is hit. Late in the session, wheat started to lose its strength, as spillover selling from a lower corn and soybean complex weighed on wheat.

USDA estimated wheat export shipments pace for the week ending Nov. 9 at 10.5 million bushels. This brings the year-to-date export shipments pace for wheat to 427.3 million bushels, compared with 488.8 million for last year. Wheat export sales pace for the week ending Nov. 9 was estimated at 11.6 million bushels. This brings the year-to-date export sales pace for wheat to 559.6 million bushels, compared with 617.4 million for last year. With 29 weeks left in wheat’s marketing year, shipments need to average 23.2 million bushels and sales need to average 18.6 million to make USDA’s projection of 1.1 billion bushels.

As of Nov. 11, 95 percent of the nation’s winter wheat crop was planted, compared with 92 percent the previous week and 94 percent for the five-year average. Emergence was estimated at 79 percent, compared with 73 percent the previous week and 81 percent for the five-year average. Winter wheat conditions dropped 3 percent to 36 percent good to excellent, 42 percent fair and 22 percent poor to very poor.

Corn: slightly lower on the week

Corn started the week with hard losses and slowly tried to regain those losses. Early selling was tied to profit taking as traders take profits before year end. For the week ending Nov. 15, December dropped 7.5 cents.

Corn traded sharply lower Nov. 12, with fund liquidation and technical selling the main driving force. The lack of any fresh export news and a bearish USDA report also kept buying on the sidelines. The weather in South America also has improved. Rain is falling in northern Brazil, while southern Brazil and Argentina are drying out. The weakness in the soybean complex also spilled over to the corn market.

The Nov. 13 session had corn trading on both sides of unchanged, with decent gains in the overnight and into the close, but near double-digit losses midmorning. Fund and technical selling continued to pressure the market. The futures did firm into the close as selling pressure slowed. Additional support came from a new sale of 158,496 metric tons of corn to an unknown destination.

The corn market closed near the middle of a narrow trading range on Nov. 14, with gains in soybean futures providing spillover support. The outside markets were mixed, as the Dow Jones was sharply lower, while crude oil was higher. South America’s weather is nonthreatening in the near-term, which puts some pressure on the market. USDA considers corn harvest essentially complete, and did not include it in its weekly crop progress report.

The corn market continued its sideways trend on Nov. 15, closing near the bottom of a narrow range in choppy trade. Spillover weakness from soybeans pressured the market. Wheat provided some support early, but that waned as wheat slipped later in the day. Weakness in the outside markets pressured as well, with the Dow and crude oil both lower.

USDA’s export inspections report was bearish for corn. There were 9.5 million bushels of corn reported shipped, below the 23.1 million needed to meet USDA’s projection of 1.15 billion. This was below the pre-report estimates of 15 million to 20 million bushels. Export sales report for corn was at 12.3 million bushels, well below the 16.6 million needed to meet USDA’s projection of 1.15 billion. This was above pre-trade estimates of 5.9 million to 11.8 million bushels, but should be viewed as bearish for corn.

Soybeans: sharp losses continue

As of the Nov. 15 close, January soybeans were down 49.25 cents on the week. The weather forecast in South America remains favorable, pressuring soybean futures.

Soybeans closed sharply lower on Nov. 12 on follow-through selling from both sides of the market. Favorable weather in South America continues to pressure the market. A lack of fresh bullish news has allowed soybeans to remain in a sharp downtrend, despite signals the market is technically oversold.

Soybeans traded sharply lower early Nov. 13 before rallying to close higher on Nov. 13 and 14. Strength in the corn market and a bullish National Oilseed Processors Association crush report supported the gains. NOPA crush margins for November were well above trade expectations, coming in at 153.54 million bushels, compared with 119.73 million in September. The Nov. 13 crop progress report showed the soybean harvest nearly finished at 96 percent complete. The export inspections released Nov. 13 were well above the amount needed to keep pace with USDA’s estimate. A sale of 120,000 metric tons of soybeans to China was announced Nov. 14.

Soybeans closed near the day’s lows on Nov. 15, proving that overall momentum for the market is still down. Late fund trader selling pushed the January contract to close at its lowest level since June. Favorable weather for South American soybeans in the forecast remains bearish for futures prices. The outside markets were negative, with crude oil and the Dow Jones lower, while the U.S. dollar stayed near unchanged.

USDA reported soybean export inspections pace for the week ending Nov. 9 at 64.1 million bushels. This brings the year-to-date export shipments pace for soybeans to 434.2 million bushels, compared with 314.3 million for last year at this time. Soybean export sales pace for the week ending Nov. 9 was estimated at 21.5 million bushels, bringing this year’s total to 973.7 million, compared with 730.1 million last year at this time.

Soybeans harvested as of Nov. 11 was at 96 percent, compared with 93 percent the previous week and the five-year average of 93 percent.

Barley

USDA estimated barley export shipments pace for the week ending Nov. 9 at 4,000 bushels. This brings year-to-date export shipments to 5.45 million bushels, compared with 5.58 million for last year at this time. There was no barley export sales reported. This brings the year-to-date export sales pace to 5.6 million bushels, compared with 3.8 million for last year at this time. Nov. 15 cash barley bids in Minneapolis had feed barley bids at $5.40 per bushel, while malting barley bids were at $7.20.

Durum

USDA reported durum export inspections (shipments) pace for the week ending Nov. 9 at 542,000 bushels with all of the bushels going to Italy. Durum export sales pace for the week ending Nov. 9 was at 400,000 bushels. This brings the year-to-date export sales pace for durum to 12.2 million bushels, compared with 12.3 million for last year. The Nov. 15 cash bids for milling quality durum were $8 in Berthold, N.D., while Dickinson, N.D., bids were at $8.15.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed $1.10 (Canadian) lower for the week ending Nov. 15. The canola market played a follower to the U.S. soybean complex, virtually mirroring soybeans moves. The U.S. soybean complex was under selling pressure from close to ideal growing conditions in South America, as well as from profit taking, as traders take profits on trades ahead of year end. Nov. 15 cash canola bids in Velva, N.D., were at $26.61 per hundredweight.

Sunflowers

As of Nov. 11, sunflower harvest was 93 percent complete, compared with 88 percent the previous week and the five-year average of 75 percent. Soybean oil export sales pace for the week ending Nov. 9 was estimated at 21 trillion metric tons, bringing the year-to-date total to 325.2 trillion metric tons, compared with last year’s 110.4 trillion. With 45 weeks left in the soybean oil export marketing year, soybean oil exports need to average 4.8 trillion metric tons per week to make USDA’s projection of 540 trillion. Nov. 15 cash sunflower bids in Fargo, N.D., were at $22.60 per hundredweight.

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