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Published November 26, 2012, 10:27 AM

Grains rally on thin volume

The wheat markets had small gains for the week of Thanksgiving, with December Minneapolis up 8 cents, Chicago up 11 cents and Kansas City up 6 cents.

By: Ray Grabanski, Agweek

Wheat: quiet trade in holiday week

The wheat markets had small gains for the week of Thanksgiving, with December Minneapolis up 8 cents, Chicago up 11 cents and Kansas City up 6 cents. Chicago wheat found support from the higher row crop markets, and the hard wheat markets struggled to follow along because of a lack of fresh news.

The wheat markets traded with small gains on Nov. 19, unable to follow the double-digit gains seen in the corn and soybean markets. Export inspections were weak once again, and traders were waiting for fresh export news. Trade was also pensive ahead of the Nov. 19 crop conditions report for winter wheat.

The wheat markets traded with small gains Nov. 20. The Nov. 19 weekly progress report showed another decline in the winter wheat conditions, but traders paid little attention because of the fact that the summer harvest still is many months away. Gains were also limited in the wheat markets as a result of strength in the U.S. dollar.

The wheat markets drifted Nov. 21 in quiet trade ahead of the Thanksgiving holiday. Traders had little news to spark any large moves, and outside markets didn’t give much direction either. While the row crop markets were fairly active last week, the wheat markets have held steady within a narrow range.

The Nov. 23 short trading day brought quiet gains of 2 to 4 cents into the wheat markets. The dollar was sharply lower, which gave support to wheat, as did the gains in the row crop markets. Exports were neutral, with decent sales, but disappointing shipments.

The U.S. Department of Agriculture reported export inspections of 11.1 million bushels of wheat for the week ending Nov. 16. This brings the year-to-date export inspections pace to 438.4 million bushels, down from 502.5 million at this time last year. Wheat’s export sales pace for the week ending Nov. 16 was estimated at 23.3 million bushels. This brings the year-to-date export sales pace for wheat to 582.9 million bushels, compared with 640 million for last year. Shipments of 12.1 million bushels were reported. With 28 weeks left in wheat’s marketing year, shipments need to average 23.4 million bushels and sales need to average 18.6 million to make USDA’s projection of 1.1 billion.

As of Nov. 18, 84 percent of the nation’s winter wheat crop was emerged, compared with 79 percent the previous week and 86 percent for the five-year average. Winter wheat conditions dropped 2 percent to 34 percent good to excellent, 42 percent fair and 24 percent poor to very poor.

Corn: no change to ethanol mandate

The big news last week was EPA’s announcement that the RFS mandate would be left unchanged. Talk of transportation problems in the U.S. and estimates of a smaller South American corn crop also added strength. Additional market moves came from the expiration of the December options, as well as from a thinly traded market caused by the Thanksgiving holiday. For the week ending Nov. 21, December corn was up 14 cents.

Corn traded higher on Nov. 19 and 20 with follow-through buying coming from Nov. 16. The EPA made a statement Nov. 16 that the renewable fuel standard mandate would be left unchanged. This encouraged buying, as corn stocks are already tight. Traders are also optimistic that a deal will be reached on the fiscal cliff and that supported the outside markets. Some private analysts are estimating a smaller corn crop in Argentina as a result of excessive rain and corn acres switching to soybeans. The upside was limited with another poor export inspections report. Japan also reported that its corn usage fell for the ninth month in a row, as it is using more wheat in feed rations.

The Nov. 21 session had corn slightly lower as the futures saw some profit taking ahead of the Thanksgiving holiday. The December options expired on Nov. 23 and there are a large number of positions at the $7.50 strike price. Additional weakness came from news that the Russian Ag Ministry announced it will increase grain exports by 3 million to 5 million metric tons. Chinese officials also announced that the country will stockpile its domestically grown corn. The weekly ethanol report was also disappointing.

Ethanol production for the week ending Nov. 16 averaged 811,000 barrels per day, down 11.56 percent from last year. Total ethanol production for the week was 5.67 million barrels. Corn used in production is estimated at 85.2 million bushels, versus the 86.6 million needed per week to meet this crop year’s USDA estimate of 4.5 billion bushels. This crop year’s cumulative corn used for ethanol production is 937.6 million bushels. Ethanol stocks increased by 1.08 million barrels to 18.93 million barrels and stocks are up 8.5 percent from last year.

USDA’s export inspections report was bearish for corn. There were 14.4 million bushels of corn reported shipped, well below the 23.4 million needed to meet USDA’s projection of 1.15 billion. This was within the pre-report estimates of 8 million to 15 million bushels. The export sales report for corn was at 37.7 million bushels, above the 16.9 million needed to meet USDA’s projection of 1.15 billion. This was above the estimates of 9.8 million to 19.7 million bushels and friendly for corn.

Soybeans: exports drive market

Commercial buying fueled gains in the soybean complex last week. The continued rapid pace of soybean exports combined with technical support to create strength in soybeans. For the week ending Nov. 21, soybeans gained 25 cents.

Soybeans traded higher Nov. 19 on short covering and support from strong outside markets. The U.S. dollar was lower, while crude oil and the Dow Jones experienced sharp gains. The market was seen as oversold, as many traders thought the market has worked in most of its negative news for the near-term. The South American weather forecast remained favorable and limited gains. The Nov. 19 export inspections were strong again, coming in well above the amount needed to keep pace with USDA’s projection.

Soybeans traded higher again Nov. 20 on renewed commercial buying and short covering. A cut to production estimates in Brazil and Argentina by a market analyst provided some support. Firm cash markets and continued strong export demand provided additional support.

Soybeans traded on both sides of unchanged Nov. 21 in light trade before settling slightly lower. The forecast for southern Brazil has gotten dryer, but is not a concern yet. The forecast remains good for other growing areas of South America. USDA announced a sale of 120,000 metric tons of soybeans to China.

The shortened Nov. 23 trading day brought strength into the market again, as the grains found support from the sharply lower dollar and stability in other outside markets. The export report showed heavy shipments of soybeans again last week.

USDA reported soybean export inspections pace for the week ending Nov. 16 at 62 million bushels. This brings the year-to-date export shipments pace for soybeans to 496.8 million bushels, compared with 355.3 million bushels for last year at this time. Soybean export sales pace for the week ending Nov. 16 was estimated at 20 million bushels, bringing this year’s total to 993.7 million, compared with 764 million last year at this time.

Barley

USDA reported barley export inspections for the week ending Nov. 16 at 8,000 bushels. This brings year-to-date export shipments to 5.46 million bushels, compared with 5.59 million for last year at this time. There were no barley export sales reported, with the year-to-date export sales pace at 5.6 million bushels, compared with 3.8 million for last year at this time. Nov. 21 cash barley bids in Minneapolis had feed barley at $5.50 per bushel, while malting barley bids were at $7.20.

Durum

USDA reported durum export inspections for the week ending Nov. 16 at 6,000 bushels. There were no new export sales for durum, with the year-to-date export sales pace at 12.2 million bushels, compared with 12.3 million for last year. Nov. 21 cash bids for milling quality durum were $8.25 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $8.

Canola

Canola futures on the Winnipeg, Manitoba, exchange gained around $1 (Canadian) per ton for the week. Canola had support last week from strength in the soybean complex, while the stronger Canadian dollar limited gains. The supply and demand situation does remain tight for canola, with technical support at $570 (Canadian) per ton. Nov. 21 cash canola bids in Velva, N.D., were at $26.68 per hundredweight.

Sunflowers

Soybean oil export sales pace for the week ending Nov. 16 was estimated at 124.1 trillion metric tons, bringing the year-to-date total to 449.3 trillion metric tons, compared with last year’s 113 trillion. With 44 weeks left in the export marketing year, soybean oil exports need to average 2.1 trillion metric tons per week to make USDA’s projection of 540 trillion. Nov. 21 cash sunflower bids in Fargo, N.D., were at $22.95 per hundredweight.

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