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Published March 18, 2013, 12:20 PM

Wheat sparked by fresh demand

The wheat markets had gains of up to 24 cents last week. The Chicago market was the leader of the grain markets with fresh demand news. The Minneapolis market struggled to follow along with much smaller gains, as spring wheat is not competing with corn in feed and ethanol rations.

By: Ray Grabanski, Agweek

Wheat: market leader from renewed demand

The wheat markets had gains of up to 24 cents last week. The Chicago market was the leader of the grain markets with fresh demand news. The Minneapolis market struggled to follow along with much smaller gains, as spring wheat is not competing with corn in feed and ethanol rations.

The wheat markets quietly followed the corn market March 11 to post single-digit gains. A look at the wheat markets will show that the commercial outlook has become less bearish, where the May to July spread is now inverted. The Chicago wheat market continued to find support from gains in the corn market on March 12. While commercial selling pressured the row crop markets on March 13, the wheat markets attracted buying interest from the recent attention that wheat has received as a replacement for corn in some feed and ethanol uses. May Chicago wheat finished on par with May corn, but there is 7 percent more weight in a bushel of wheat.

The wheat markets found strong buying interest March 14 following the weekly export sales report. Exports came in above expectations, and with wheat moving into feed and ethanol rations, the wheat markets finally have some bullish demand news to trade on. The Minneapolis market had smaller gains. The Northern Plains are expected to receive more cold and wet weather in the next two weeks. While this will be welcome moisture, it will reduce the chances for early planting.

Light losses returned to the market on March 15 with a lack of fresh news and weakness in the corn market. The lower dollar index was supportive, but that market has built so much strength in the past couple of weeks that its value is still substantially higher than it has been in some time. The recent uptick in wheat demand has happened despite the strength in the dollar.

The U.S. Department of Agriculture’s export inspections for wheat for the week ending March 8 was estimated at 27.9 million bushels, with the year-to-date pace at 721.2 million bushels, compared with 775.4 million for last year at this time. With 12 weeks left in the marketing year, shipments need to average 25.6 million bushels to make the revised USDA expectations of 1.025 billion. USDA reported export sales of 32.6 million bushels, above the 12.9 million needed to keep pace with projections. Shipments of 28.9 million bushels were also above the 28 million needed.

Corn: early planting not likely in 2013

The corn market was up 13 cents in the May contract last week, as of noon on March 15. Support comes from tight stocks and delayed planting in the eastern U.S. The upside is limited with larger production estimates for the 2013 crop.

Corn futures inched higher last week with follow-through fund buying from the March 8 USDA report. Estimated ending stocks for corn remained unchanged at a 17-year low. The market also found support from wet and cool weather in the eastern Corn Belt and dry conditions west of the Mississippi, which could delay planting in the east and hurt production in the west. The temperatures are 10 to 15 degrees lower than normal throughout the country and are forecast to remain that way for the next two weeks. The weather has created talk that some corn acres may get switched to soybeans because of late planting.

The only day that corn had a setback was March 13, with losses of 4 cents. The futures traded lower with nearby spread action and possible export sales cancellations. If the rumored cancellations are true, they would reinforce current demand concerns. Profit taking and commercial selling also contributed to the lower trade. March 15 trade was mixed, with no change to corn prices at midday.

Ethanol production for the week ending March 8 averaged 797,000 barrels per day, which is down 1 percent from the previous week and down 10.7 percent from last year. Corn used in production for the week ending March 8 is estimated at 83.7 million bushels and needs to average 87.9 million bushels per week to meet this crop year’s USDA estimate. Stocks as of March 8 were 18.7 million barrels, down 3.4 percent from the previous week and down 15.2 percent from last year.

USDA’s export inspections report was bearish for corn. There were 14.4 million bushels shipped. Shipments needed each week to hit the USDA export estimate are 17.7 million bushels. The export sales report for corn was at 11.1 million bushels, above the 9.8 million needed to meet USDA’s projection of 825 million. Total shipments last week were at 16.1 million bushels, below the 17.4 million needed for the 2012 to ’13 marketing year.

Soybeans: lower on harvest pressure

May soybeans were down 44 cents as of midday on March 15, while November 2013 soybeans were 10 cents lower. The South American harvest weighs on soybean futures, as Brazil’s harvest is near half complete.

May soybeans closed near the day’s high on March 11, as logistical problems in Brazil continue to shift demand back to the U.S. in the near-term. Commercial traders continue to support the market, while noncommercial traders show little buying interest. The March 8 export inspections were on the low end of market estimates, but above the amount needed to keep pace with USDA’s projection.

May soybeans closed near the March 12 low, as commercial selling and light profit-taking brought pressure into the market. The Brazilian harvest continues to move along, with one Brazilian consultant estimating the harvest at half complete. Argentina is battling dryness, but could see some light rainfall in the next two weeks.

May soybeans closed lower March 13, 14 and 15 under commercial selling pressure, as the South American harvest continues. The heavy selling may have been indicative of export cancellations, though no announcement has been made yet. Talks continue of swollen soybean stocks in Chinese ports, creating questions for short-term export business. The March 14 export sales were well above the amount needed to keep pace with USDA’s demand projection.

USDA reported soybean export inspections pace for the week ending March 8 at 17.1 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.164 billion bushels, compared with 934.8 million for last year at this time. Soybean export sales pace for the week ending March 8 was estimated at 24.2 million bushels, bringing this year’s total to 1.304 billion, compared with 1.12 billion last year at this time. Shipments were reported at 28.1 million bushels.

Barley

USDA reported export inspections of 413,000 bushels of barley last week. Year-to-date export inspections for barley stand at 6.06 million bushels, compared with 6.02 million last year. USDA reported export sales of 415,000 bushels of barley to Japan, with all of those bushels shipped, as well. March 14 cash feed barley bids in Minneapolis were at $5.25 per bushel, with malting barley bids at $6.50.

Durum

USDA reported no export inspections for durum last week. USDA reported export cancellations of 500,000 bushels of durum last week, with year-to-date sales at 16.9 million bushels, up from 15.9 million at this time last year. Cash bids for milling quality durum on March 14 were at $7.75 per bushel in Berthold, N.D., and $7.85 in Dickinson, N.D.

Canola

Canola futures on the Winnipeg, Manitoba, exchange had losses of up to $6.50 (Canadian) per ton last week. The new crop November contract had the larger losses, with pressure coming from losses in new crop soybeans and projections for larger acreages in 2013. The old crop May contract held light losses of $2.50 (Canadian) per ton, as commercial support continues in the cash market for old crop canola. The market remains near the middle of its rangebound winter trade. Cash canola bids in Velva, N.D., were at $27.54 per hundredweight on March 14.

Sunflowers

USDA reported export sales of 6 trillion metric tons of soybean oil, with shipments of 9.6 trillion metric tons. Total sales so far this year are at 795.4 trillion metric tons, up from 293.2 trillion last year. Cash bids for NuSun sunflowers in Fargo, N.D., were at $22.35 per hundredweight on March 14.

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