Grabanski: Soybeans lead grainsJanuary soybeans gained 40 cents last week. Export demand for soybeans has continued to be exceptionally strong, and the South American weather forecasts also continue to impact soybean futures.
By: Ray Grabanski,
Wheat: narrow trading range
The wheat markets lost 4 to 8 cents last week in quiet trade. Export sales continue to fall behind pace, while the dry weather in the U.S. plains has prevented the market from slipping lower. The U.S. dollar put in an upside reversal week, which could potentially put more pressure on wheat exports.
The wheat markets started the week Dec. 3 with gains of more than 10 cents before drifting during the later part of the session to close with losses of 3 to 7 cents. Continued rains in Argentina raised concerns about wheat quality there, and forecasts remained dry for the U.S. plains. A sale of U.S. wheat to Egypt also was seen as supportive, but another week of disappointing export inspections weighed on the market later in the day. Dec. 4 trade had light losses, with range-bound trade being the name of the game all week. Noncommercial money was exiting commodities, but wheat was actually able to hold small losses because of support from the lower dollar index and ongoing concerns about the winter wheat crop.
The wheat markets traded with light gains on Dec. 5. Gains in the U.S. dollar and the new Statistics Canada report kept the lid on wheat prices. Statistics Canada pegged 2012 Canadian wheat production at 27.2 million metric tons, which was up from the last estimate and at the high end of expectations. Despite the larger wheat stocks in Canada, wheat was able to trade with gains as firming world wheat prices have traders hoping for better U.S. export business down the road. Dec. 6 trade brought in small gains, as well, while Dec. 7 brought 3 to 5 cent losses, as the continued rally in the dollar index and weakness across the commodity sector put pressure on the wheat market.
The U.S. Department of Agriculture reported export inspections of 14.2 million bushels of wheat for the week ending Nov. 30. This brings the year-to-date export inspections pace to 461 million bushels, down from 533.6 million at this time last year. Wheat export sales pace for the week ending Nov. 30 was estimated at 13 million bushels. This brings the year-to-date export sales pace for wheat to 606.1 million bushels, compared with 673.9 million for last year. Shipments of 14.2 million bushels were reported. With 26 weeks left in wheat’s marketing year, shipments need to average 24.9 million bushels and sales need to average 18.8 million bushels to make USDA’s projection of 1.1 billion.
Corn: lack of demand
Corn traded sideways for the week ending Dec. 7 near the upper end of the range. Poor demand continues to pressure the futures, while wet weather in Argentina offers support. Traders are looking to the Dec. 11 USDA supply and demand report for direction. For the week ending Dec. 6, corn was unchanged.
Corn closed 1 cent higher Dec. 3. Early support came from the positive outside markets and the strength in the soybean market. Wet weather also was forecast last week for Argentina and that created talk of corn acres being switched to soybeans. As the pit opened, corn worked lower and additional weakness came from another disappointing export inspections report. The cumulative sales are 18 percent of the USDA export estimate versus the five-year average of 24 percent. The Dec. 3 softer trade carried over to Dec. 4, as the corn market traded with red ink for the session, finishing 3 cents lower. Poor export demand continues to limit the upside. The Ukraine has exported 4.5 million metric tons of corn this year, compared with 2.4 million last year. Expectations have more shipments going to China as a result of its recent financial agreement.
Corn rebounded Dec. 6 to close higher. Support came from the soybean trade, as well as from a friendly corn ethanol report. South Korea purchased 50,000 metric tons of U.S. corn, but Japan purchased 60,000 metric tons of corn from Brazil. The poor export sales report and a cancellation of a new crop contract pressured the futures. As of Nov. 29, cumulative sales stand at 42 percent of the USDA estimate versus the five-year average of 50.5 percent. Ideal weather in Brazil and the U.S. premium to South American prices also added pressure.
Ethanol production report for the week ending Nov. 30 averaged 835,000 barrels per day, down 12.5 percent from last year. Total ethanol production for the week was 5.85 million barrels. Corn used in production the week ending Nov. 30 is estimated at 87.7 million bushels and needs to average 86.62 million 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 1.1 billion bushels. Stocks as of Nov. 30 were 19.3 million barrels, which is up 5.4 percent versus the previous week and up 7.9 percent versus last year.
USDA’s export inspections report was bearish for corn. There were 9.6 million bushels of corn reported shipped, well below the 23.8 million needed to meet USDA’s projection of 1.15 billion. This was below the pre-report estimates of 23 million to 26 million bushels. The export sales report for corn was at 2 million bushels, below the 16.6 million needed to meet USDA’s projection. This was below the estimates of 11.8 million to 19.7 million bushels and bearish for corn.
Soybeans: strong demand continues
January soybeans gained 40 cents last week. Export demand for soybeans has continued to be exceptionally strong, and the South American weather forecasts also continue to impact soybean futures.
Soybeans were higher Dec. 3 on renewed noncommercial buying. Strong demand and another good round of weekly export inspections supported the higher move. The outside markets were somewhat supportive, with the U.S. dollar lower. The Dec. 3 export inspections were well above the amount needed to keep pace with USDA’s projection. There was mixed trade on Dec. 4 before renewed commercial buying in soybean meal combined with noncommercial short covering to spark a rally into the end of the session and a slightly higher close.
Commercial buying led to higher trade on Dec. 5 and 6. Strong demand continues to support the market, as unconfirmed rumors of a sale to China provided support on Dec. 5, followed by the Dec. 6 bullish export sales report. South America’s 10- to 14-day weather forecast looks increasingly favorable, as rain is expected for dry areas, but not for the regions that are too wet. The Dec. 6 export sales of 42 million bushels were well above the 8.5 million needed to keep pace with USDA’s projection.
Dec. 7 trade brought losses of up to 15 cents as pressure from outside markets brought about profit taking and end-of-week short covering in the grain markets. Even with Dec. 7 losses, soybeans had strong gains for the week.
USDA reported soybean export inspections pace for the week ending Nov. 30 at 51.1 million bushels. This brings the year-to-date export shipments pace for soybeans to 600.3 million bushels, compared with 429.1 million for last year at this time. Soybean export sales pace for the week ending Nov. 30 was estimated at 42 million bushels, bringing this year’s total to 1,043.6 million, compared with 810.3 million bushels last year at this time.
Statistics Canada pegged Canadian 2012 barley production at 8.012 million metric tons, which was below expectations, and up just 1.5 percent from last year. USDA reported export inspections of 12,000 bushels of barley last week. This brings year-to-date export shipments to 5.57 million bushels, compared with 5.61 million for last year at this time. Dec. 6 cash bids in Minneapolis had feed barley bids at $5.55 per bushel, while malting barley bids were at $7.25.
Statistics Canada pegged Canadian 2012 durum production at 4.6 million metric tons, which was above expectations, and up 10.9 percent from last year. USDA reported export sales of 300,000 bushels of durum, with the year-to-date export sales pace at 12.5 million bushels, compared with 13.1 million for last year. Dec. 6 cash bids for milling quality durum were $8.25 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $8.15.
Canola futures on the Winnipeg, Manitoba, exchange gained around $3 (Canadian) per ton last week. The new Statistics Canada report pegged 2012 production at 13.3 million metric tons, down 8.9 percent from last year and at the low end of expectations. Confirmation of the lower canola production combined with strong disappearance to propel the market to blow through psychological resistance at $600, but the market was back below that level by the end of the week. Dec. 7 brought pressure from the lower soybean complex, with canola trading around $597.40 (Canadian) per ton. Dec. 6 cash canola bids in Velva, N.D., were $28 per hundredweight.
Soybean oil export sales pace for the week ending Nov. 30 was estimated at 19 trillion metric tons, bringing the year-to-date total to 589.8 trillion, compared with last year’s 140.5 trillion. With 42 weeks left in the soybean oil export marketing year, we have already surpassed USDA’s projection of 540 trillion metric tons. Dec. 6 cash sunflower bids in Fargo, N.D., were at $23.75 per hundredweight.
Statistics Canada pegged Canadian 2012 dry bean production at 274,000 tons, up 68.9 percent from 2011. While Canadian production would only amount to about 18 percent of the U.S. production, it is reflective of the large crop the U.S. had this year, as well. Grower prices are mostly steady around $32 in this region.