Oilseeds post gainsThe wheat markets lost 12 to 18 cents last week. Technical pressure combined with a lack of fresh news to push the market lower.
By: Ray Grabanski, Agweek
Wheat: lower on technical signals
The wheat markets lost 12 to 18 cents last week. Technical pressure combined with a lack of fresh news to push the market lower. Minneapolis had the lightest losses, as the fund presence is not as large in that market.
After consolidating just under $8 the week ending Jan. 18 in the March Chicago contract and trading within 1/4 cent of that level Jan. 22, wheat came under heavy selling pressure. The failure of the contract to attract buying at $8 attracted technical selling, despite the support from outside markets. Word that Russia will not be buying back any wheat to replenish supplies also pressured wheat.
Wheat markets finished with light losses of up to 4.75 cents on Jan. 23. The failure of the Chicago market to trade above $8 put technical pressure on the market again, even though losses may have been overdone. Global wheat values have been strengthening, making the U.S. the low-cost leader, so usage should begin to pick up in the future.
Wheat markets drifted lower throughout the day again on Jan. 24, failing to attract any significant buying interest. Soybeans and corn recovered their losses by the end of the day, but wheat failed to follow. The dollar index climbed back above 80 points, and there is light rain forecast for parts of the winter wheat belt. Traders are aware of the fragility of the winter wheat crop in the plains states, but are unwilling to build any more weather premium in until we get closer to spring. Jan. 25 trade brought gains of 4 to 8 cents by midday, as traders became willing buyers again to finish the week. Export sales came in above expectations, which had not happened for quite some time in the wheat market.
The U.S. Department of Agriculture reported wheat export inspections pace for the week ending Jan. 18 at 21.9 million bushels. This brings the year-to-date export inspections pace to 561.7 million bushels, compared with 638.8 million at this time last year. With 19 weeks left in wheat’s marketing year, shipments need to average 25.5 million bushels to make USDA’s projection of 1.05 billion. Wheat export sales pace for the week ending Jan. 18 was estimated at 21 million bushels. This brings the year-to-date export sales pace for wheat to 750 million bushels, compared with 777 million for last year. With 19 weeks left in wheat’s marketing year, sales need to average 16 million bushels to make USDA’s projection of 1.05 billion.
Corn: lack of fresh news
The corn market was down 5 cents in the March contract for last week, as of morning trade Jan. 25. Corn traded sideways last week as it awaited fresh news. The latest USDA report offers support with a tighter stocks number, but buying interest has been limited as the bears continue to talk about the lack of export demand and sluggish numbers for ethanol.
Support last week came from talk of dry weather in parts of South America as its crop enters its pollination growth stage. Stocks are also tight and the cold weather could increase feed consumption. Corn is in competition for acres for the upcoming growing season and the weather will be watched closely as we move into spring. Weather models show drought concerns continue with land west of the Mississippi. The bull side of the market is that corn stocks remain tight and are at 16-year lows.
The upside movement in the corn futures last week was limited with the lack of fresh news. Cheaper priced corn on the global market also adds weakness as South America continues to attract business. The export inspections were again disappointing to add additional pressure. The cumulative shipment pace is now 30 percent of the export estimate versus the five-year average of 36 percent. The ethanol report was also disappointing and below USDA’s estimates. Sluggish export sales and ethanol production is limiting buying interest as we trade at the high end of the recent trading range.
Ethanol production for the week ending Jan. 18 averaged 792,000 barrels per day, down 15.2 percent versus last year. Total ethanol production for the week was 5.55 million barrels. Corn used in production is estimated at 83.2 million bushels. Corn use needs to average 86.9 million bushels per week to meet this crop year’s USDA estimate of 4.5 billion bushels. This year’s cumulative corn used for ethanol production is 1.7 billion bushels. Stocks as of Jan. 18 were 20.1 million barrels, down 1.4 percent from the previous week, but up 1.4 percent versus last year.
USDA’s export inspection report was bearish for corn. There were 11 million bushels of corn reported shipped, well below the 20.5 million needed to meet USDA’s projection of 950 million for the 2012 to ’13 marketing year. This was at the low end of the pre-report estimates of 8 million to 15 million bushels. The export sales report for corn was at 7.5 million bushels, below the 13.1 million needed to meet USDA’s projection of 950 million. This was at the low end of the estimates of 5.9 million to 13.8 million bushels and bearish for corn. Total shipments last week were at 14.5 million bushels, below the 20.5 million needed for the 2012 to ’13 marketing year.
Soybeans: small gains
As of the Jan. 24 close, March soybeans were up 6 cents on the week, while November 2013 soybeans were 13.5 cents higher. South American weather continues to have a strong impact on the market.
The market was higher throughout the day Jan. 22, closing near the day’s highs. The outside markets were supportive with crude oil higher and the U.S. dollar lower. Delays to the early soybean harvest in northern Brazil are shifting some demand to the U.S. in the near-term, while a dryer forecast for southern Brazil and Argentina limits selling. Strong export demand remains supportive, as USDA announced a sale of 120,000 metric tons to China. Jan. 22 export inspections came in above expectations and well above the amount needed to keep pace with USDA’s projection.
Soybeans were lower Jan. 23 on commercial pressure, giving back much of Jan. 21 gains. Liquidation throughout the session coupled with profit taking sparked by improved chances of rain for Argentina pressured the market. Demand is expected to remain strong in the near-term because of continued Chinese imports and potential for a slow start to Brazil’s harvest.
Soybeans closed near unchanged Jan. 24 after trading with double-digit losses for much of the day. Pressure came from rain in the extended forecast for South America, though it remains dry in the near-term. Strong crush margins both in China and domestically provide support to the market. USDA announced sales of 513,000 metric tons to China and 113,000 metric tons to undisclosed destinations the morning of Jan. 25. The full 623,000 metric tons were for 2013 and 2014 delivery.
USDA reported soybean export inspections pace for the week ending Jan. 18 at 48.1 million bushels. This brings the year-to-date export shipments pace for soybeans to 908.7 million bushels, compared with 676.6 million for last year at this time. Soybean export sales pace for the week ending Jan. 18 was estimated at 14.1 million bushels, bringing this year’s total to 1,213.1 million, compared with 955.7 million last year at this time.
USDA reported no new export inspections for barley for the week ending Jan. 18. There were no new export sales, but 14,000 bushels were shipped to Taiwan. Jan. 24 cash barley bids in Minneapolis had feed barley at $5.10 per bushel, while malting barley bids were at $7.10.
USDA reported no durum export inspections for the week ending Jan. 18. Export sales of 100,000 bushels were reported, but no shipments yet. Year-to-date sales are at 15.7 million bushels, up from 14.9 million at this time last year. Jan. 24 cash bids for milling quality durum were at $8 per bushel in Berthold, N.D., and $7.95 in Dickinson, N.D.
Canola futures on the Winnipeg, Manitoba, exchange traded higher every day last week to post net gains of up to $16 (Canadian) per ton for the week. Canola pushed through the $600 (Canadian) per ton level on Jan. 22 and by Jan. 25, was testing resistance at the 50 percent retracement level of $613 (Canadian) per ton. The cash markets continue to strengthen across the Canadian prairies, keeping support under the futures market. Cash canola bids in Velva, N.D., were at $28.23 per hundredweight on Jan. 25.
Soybean oil export sales pace for the week ending Jan. 18 was estimated at 26.3 trillion metric tons. This brings the year-to-date total to 713.2 trillion metric tons, compared with last year’s 192.7 trillion. Cash sunflower bids in Fargo, N.D., were at $22.50 per hundredweight on Jan. 25.