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Published January 14, 2013, 11:11 AM

USDA report surprises wheat market

The wheat markets had gains of 10 to 25 cents last week, with all of that gain coming after 11 a.m. Jan. 11. The market was quiet all week before the U.S. Department of Agriculture brought some much-needed positive news to the wheat markets.

By: Ray Grabanski, Agweek

Wheat: USDA report gives big boost

The wheat markets had gains of 10 to 25 cents last week, with all of that gain coming after 11 a.m. Jan. 11. The market was quiet all week before the U.S. Department of Agriculture brought some much-needed positive news to the wheat markets.

Wheat markets traded on both sides of unchanged Jan. 7 before settling with gains of 3 to 5 cents. There was little movement in the market, but the strong gains in the soybean market spilled over to support wheat at the end. Export inspections came in behind pace again last week. The U.S. is competitive on the global market for wheat exports, but that activity has not increased as much as we need to see.

On Jan. 8, wheat markets traded with gains for most of the day before the buying interest died out at the end of the day. Wheat markets traded with light losses for most of the day again Jan. 9, slipping lower during the day to finish 4 to 7 cents lower. Gains in the dollar index and forecasts for moisture pressured the wheat markets. Rain fell in Texas, and snow was forecast for the weekend on the Northern Plains.

Wheat markets started the day with decent gains Jan. 10, but slipped to light losses by the end of the day. A sharp selloff in the dollar index and an export sale to Egypt failed to sustain gains in the market, as another disappointing weekly export sales report was released.

The Jan. 11 USDA report brought much-anticipated new data to the market, and the market responded with gains of up to 25 cents within an hour. U.S. winter wheat plantings came in at 41.8 million acres, up slightly from last year, but well below average expectations of 42.6 million acres. U.S. ending stocks were cut by 38 million bushels to be at 716 million bushels, which was in the low end of expectations. This cut came from a 35-million-bushel increase in feed and industrial use. Global stocks were cut slightly, as well, at 176.64 million metric tons versus 176.95 last month and 195.78 last year. No adjustments were made to wheat crop estimates in Australia or Canada.

USDA reported wheat export inspections pace for the week ending Jan. 4 at 13.4 million bushels. This brings the year-to-date export inspections pace to 528.7 million bushels, compared with 607.6 million at this time last year. With 21 weeks left in wheat’s marketing year, shipments need to average 24.3 million bushels to make USDA’s projection of 1.05 billion. Wheat export sales pace for the week ending Jan. 4 was estimated at 8.6 million bushels. This brings the year-to-date export sales pace for wheat to 709.5 million bushels, compared with 733.2 million for last year. With 21 weeks left in wheat’s marketing year, sales need to average 15.9 million bushels to make USDA’s projection of 1.05 billion.

Corn: friendly USDA report

Corn found some footing last week ahead of one of the largest USDA crop reports of the year and gained 32 cents in the March contract as of noon on Jan. 11. Short covering entered the market last week, as traders looked for a smaller production and harvested acreage number in the Jan. 11 report. The weather in South America has been near ideal and most private estimates for its production continues to climb. Conab, a firm from Brazil, raised its production estimate last week to 72.19 million metric tons and corn exports to 21.5 million metric tons.

Corn found some footing early last week after enduring losses for the past month and closed with small gains for the first four days of the week. Support came from short covering in this oversold market and traders looking ahead to the Jan. 11 USDA report. USDA also announced an export sale of 102,200 metric tons of corn to an unknown destination, and that created talk that demand is shifting to the U.S. The lack of farmer selling also is supportive, but there’s talk that attitudes have switched to selling cash on the rallies. Traders evened up positions, as we have traded with a limit move in each of the past six years and closed limit in five out of six years with this report.

The USDA report on Jan. 11 was considered friendly. Dec. 1 grain stocks came in at 8.03 billion bushels, 253 million bushels below trade expectations. Final corn production came in at 10.78 billion bushels and above the average trade estimate of 10.665 billion. Last month’s USDA estimate was 10.725 billion. The yield was raised to123.4 bushels per acre, but the harvested acres were lowered to 87.4 million. The U.S. ending stocks are now estimated at 602 million bushels, down from 647 million bushels last month. Total usage was raised by 100 million bushels, led by a 300-million-bushel increase in feed usage, while exports were decreased by 200 million. World ending stocks were reduced for 2012 to ’13, coming in at 115.99 million metric tons versus 117.61 million last month.

Ethanol production for the week ending Jan. 4 averaged 826,000 barrels per day, which is up 2.4 percent from the previous week and down 12.5 percent versus last year. Total ethanol production for the week was 5.78 million barrels. Corn used in production the week ending Jan. 4 is estimated at 86.7 million bushels, which is what corn needs to average 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 1.54 billion bushels. Stocks were 19.9 million barrels, which is down 1.8 percent from the previous week, but up 5.8 percent from last year.

USDA’s export inspections report was bearish for corn. There were 7.2 million bushels of corn reported shipped, well below the 25.6 million needed to meet USDA’s projection of 1.15 billion for the 2012 to ’13 marketing year. This was below the pre-report estimates of 8 million to 14 million bushels. The export sales report for corn was at 500,000 bushels, below the 18.6 million needed to meet USDA’s projection of 1.15 billion. This was below the estimates of 3.9 million to 11.8 million bushels and bearish for corn. Total shipments last week were at 4.2 million bushels, below the 25.5 million needed for the 2012 to ’13 marketing year.

Soybeans: lightly negative USDA report

As of the Jan. 11 close, March soybeans were up 12.5 cents on the week, while November 2013 soybeans were 5 cents higher. Export demand for soybeans remains strong.

Soybeans closed near the day’s highs Jan. 7 on support from renewed commercial buying interest. Short covering after sharp losses the week ending Jan. 4 and ahead of the Jan. 11 USDA report provided additional support. Some negativity was attributed to South American weather that remains mostly favorable in the near term. Jan. 7 export inspections were bullish, coming in well above the amount needed to keep pace with USDA’s projection.

Soybeans closed near unchanged on Jan. 8 and 9 in low volume, pre-report trade. Positioning ahead of the Jan. 11 USDA report continued, as traders anticipated an increase in South American production. Some negativity on Jan. 9 was attributed to a report on Jan. 8 that China had purchased soybeans from South America. USDA announced a sale of 120,000 metric tons of soybeans to China for 2013 and 2014 delivery Jan. 9.

Late commercial selling caused soybeans to trade lower into the close on Jan. 10. USDA reported sales of 587,500 metric tons to China and unknown destinations Jan. 10, with 246,000 metric tons slated for 2013 and 2014 delivery. Jan. 10 export sales were well above the amount needed to keep pace with USDA’s projection.

USDA’s World Agriculture Supply and Demand Estimates report on Jan. 11 pegged U.S. soybean production at 3.014 billion bushels, up from 2.971 billion. U.S. ending stocks were at 135 million bushels, up from 130 million last month. World ending stocks were at 59.46 million metric tons, down from 59.93 in December. Soybean production in Brazil was up to 82.5 million metric tons from 81 million metric tons, while estimated Argentine production was lowered to 54 million metric tons from 55 million last month. Soybeans traded lightly lower after the report on Jan. 11, despite the large gains seen in corn and wheat. USDA did not raise export projections, even though the pace has been torrid.

USDA reported soybean export inspections pace for the week ending Jan. 4 at 39.7 million bushels. This brings the year-to-date export shipments pace for soybeans to 814 million bushels, compared with 599.1 million for last year at this time. Soybean export sales pace for the week ending Jan. 4 was estimated at 11.8 million bushels, bringing this year’s total to 1,142.3 million, compared with 902.1 million last year at this time.

Barley

USDA reported no barley export inspections for the week ending Jan. 4. Year-to-date export shipments are at 5.58 million bushels, compared with 5.62 million for last year at this time. There were no new barley export sales reported. Jan. 10 cash barley bids in Minneapolis had feed barley at $5 per bushel, while malting barley bids were at $7.10.

Durum

USDA reported no durum export inspections for the week ending Jan. 4. There were no new export sales either, with the year-to-date export sales pace at 15.6 million bushels, compared with 15.2 million for last year. Jan. 10 cash bids for milling quality durum were at $7.75 per bushel in Berthold, N.D., and $7.90 in Dickinson, N.D.

Canola

Canola futures on the Winnipeg, Manitoba, exchange had net gains of $4 to $6 (Canadian) per ton for last week. Choppy trade in other oilseed markets resulted in mixed influences on the canola trade, as did back-and-forth action in the Canadian dollar. Slow farmer selling is supporting this canola market, with some locations on the Canadian prairies reporting a positive basis of up to $20 per ton. Cash canola bids in Velva, N.D., were at $27.40 per hundredweight on Jan. 10.

Sunflowers

Soybean oil export sales pace for the week ending Jan. 4 was estimated at 10.9 trillion metric tons. This brings the year-to-date total to 674 trillion metric tons, compared with last year’s 171.5 trillion. Cash sunflower bids in Fargo, N.D., were at $22.05 per hundredweight on Jan. 10.

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