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Published April 22, 2013, 11:22 AM

Weather concerns drive market

Weather and planting delays had a strong influence on wheat prices during the week of April 15.

By: Ray Grabanski, Agweek

Wheat: Planting delays offer support

Wheat started last week with heavy losses and then spent the rest of the week trying to dig itself out of a hole. By the close of the market April 18, May Minneapolis gained 10 cents, May Chicago lost 12 cents and May Kansas City gave back 9.25 cents.

Wheat started the week on the defense and added to losses throughout the session. Early selling was tied to reports of improving weather conditions, but it seemed that most of the selling pressure was tied to the major sell-off in gold. All commodities came under pressure as traders liquidate positions in an attempt to make margin calls against their losing gold position. News that China’s economy did not grow as much as expected added to the pressure.

The April 16 session had cooler heads prevailing, as wheat recovered some of its April 15 losses. Traders focused on the April 15 crop progress report, which showed a slower-than-expected planting progress, as well as an unchanged crop rating for the U.S. winter wheat crop. Minneapolis was the best performer, as this market starts to price in a weather premium.

Weather issues continued to be the story in the wheat April 17. Kansas received light rain early April 19, but sees little moisture in the forecast after that. Below freezing temperatures were expected over the weekend in Kansas, bringing concerns of crop damage. Snow continues to fall in North Dakota, South Dakota and Minnesota, likely leading to planting delays.

Wheat opened and traded with decent strength early April 18. Early support was from a better-than-expected export sales estimate for wheat, thanks to China. But wheat started to lose gains as the session proceeded through the day. Selling was tied to spill over selling from a lower corn market. The Chicago market remained weak, but Kansas City and Minneapolis pushed back to end the session with gains. Chicago was under the influence of the weaker corn market, while Kansas City and Minneapolis were supported by weather issues.

The U.S. Department of Agriculture’s export inspections for wheat were estimated at 23.5 million bushels for the week ending April 12. This brings the year-to-date sales pace for wheat to 844.97 million bushels, compared with 872.1 million for last year. Wheat export sales pace for the week ending April 12 was estimated at a combined total of 61.5 million bushels, with 20.3 million old crop and 41.2 million new. This brings the year-to-date sales pace for wheat to 964 million bushels, compared with 978.8 million for last year. With eight weeks left in the marketing year, shipments need to average 22.5 million bushels and sales need to average 7.7 million to make USDA’s expectations of 1.025 billion.

Corn: weather dampens market

Corn traded choppy last week with the lack of fresh news, along with a wet and cool weather forecast. Talk continues that planting has been delayed because of the low soil temperatures and excessive moisture. For the week ending April 18, May corn dropped 14 cents, while December dropped only 9 cents.

All commodities, including corn, were under pressure on April 15. Most of the selling spilled over from a sharply lower U.S. gold complex, which dropped as much as $150 per ounce. The export inspections report was also disappointing and below USDA’s estimate. The lack of exports could lead to another reduction in USDA’s corn export sales pace, which is currently estimated at 800 million bushels (lowest since 1971 to ’72).

Corn rebounded on April 16 from a supportive crop progress report. The first weekly report for corn this year showed only 2 percent of the crop planted and off to the slowest start in four years. The new crop months traded with decent gains on April 17 and found support from the weather that remains cool and wet. There were also thunderstorms from Texas to Michigan, along with flooding in Iowa and Illinois. The delay in planting creates more talk of corn acres being switched to soybeans. Corn used for ethanol continues to run below USDA’s expectations, but margins have improved and are now 57 cents per bushel in Iowa, which is the highest level since late 2011.

Profit taking came into play on April 18, as the May contract closed 16 cents lower. Additional pressure came from a weaker basis seen last week in the eastern Corn Belt and a softer cash market. The export sales report was decent, but shipments were below estimates.

The crop progress report showed 2 percent of the corn is planted, compared with 16 percent one year ago and a five-year average of 7 percent.

The ethanol production report for the week ending April 12 averaged 832,000 barrels per day, which is down 2.6 percent from the previous week and down 5.9 percent from last year. Corn used in production the week ending April 12 is estimated at 87.3 million bushels and needs to average 88.36 million bushels per week to meet this crop year’s USDA estimate of 4.55 billion bushels. Stocks as of April 12 were 17.51 million barrels, which is down 1.6 percent from the previous week and down 20.3 percent from last year.

USDA’s export inspections report was bearish corn as there were 14.7 million bushels shipped. Shipments needed each week to hit the USDA export estimate are 17 million bushels. The export sales report for corn was at 15.8 million bushels, above the 8.7 million needed to meet USDA’s projection of 800 million. Total shipments last week were at 11.9 million bushels and below the 16.5 million needed for the 2012 to ’13 marketing year.

Soybeans: Old crop supplies tight

Soybeans, just like the other grains, started last week on the defense because of the major sell off in the U.S. gold complex and then spent the rest of the week trying to trade out of the hole. For the week ending April 18, May soybeans increased 17.5 cents while November dropped 8.25.

Soybeans started the week on the defense, as did all of the grains. The April 15 session saw widespread liquidation in all commodities, led by sharp losses in gold and crude oil. The weakness in outside markets spilled over to pressure soybeans. China’s gross domestic product was reported as worse than anticipated, adding to the negative tone. Bull spreading continued with good buying support seen tied to the tight old-crop supply outlook. The National Oilseed Producers Association crush was released at 137.08 million bushels. The April 15 export inspections were below the amount needed to keep pace with USDA’s projection.

Soybeans closed higher April 16 on supportive Chinese prices and calmer outside markets. Crude oil was near unchanged, while the Dow Jones was sharply higher. Tight old crop supplies support the market as the seasonal slowing of exports continues.

Trade was slightly lower at midday before a late surge higher on April 17. New crop contracts closed slightly lower, as expected corn planting delays could switch more acres to soybeans. The outside markets were bearish with the U.S. dollar sharply higher, while crude oil fell roughly $2. Commercial demand remains strong for old crop soybeans.

Soybeans traded higher and closed near the middle of the day’s trading range April 18 with continued support from tight old crop supplies. The basis remains strong and the cash market provided additional support. USDA announced a sale of 252,000 metric tons of soybeans to China for 2013 and 2014 delivery April 15. April 15 export sales were in line with trade expectations and well above the amount needed to keep pace with USDA’s projection.

USDA reported soybean export inspections pace for the week ending April 12 at 4.8 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.232 billion bushels, compared with 1.061 billion for last year at this time. Soybean export sales pace for the week ending April 12 was estimated at 20.8 million bushels (12.5 million for 2012 and 2013), bringing this year’s total to 1.346 billion bushels, compared with 1.194 billion last year at this time. Shipments were reported at 6.7 million bushels.

Barley

USDA estimated barley export shipments pace for the week ending April 12 at 4,000 bushels, all going to Mexico. This brings barley’s shipments for the year to 6.23 million bushels, compared with 6.35 million for last year at this time. Barley export sales pace for the week ending April 12 was estimated at 100,000 bushels going to South Korea. This brings the year-to-date export sales pace for barley to 6.2 million bushels, compared with 3.9 million for last year at this time.

As of April 14, 18 percent of the nation’s barley was planted, compared with none the previous week and 15 percent for the five-year average. North Dakota and Minnesota did not report any planting progress.

April 18 cash feed barley bids in Minneapolis were at $5.05 per bushel, while malting barley bids were at $6.75.

Durum

USDA reported durum export shipments pace for the week ending April 12 at 820,000 bushels, all going to Algeria. Durum export sales pace for the week ending April 12 was estimated at 3.3 million bushels. This brings the year-to-date export sales pace for durum to 20.1 million bushels, compared with 17 million for last year at this time.

April 18 cash bids for milling quality durum were at $8 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $7.70.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending April 18 with $6 (Canadian) gains. Canola started the week off on the defense with selling tied to concerns about China’s economy (reported slower economic growth than expected). This has many traders concerned that China’s demand for U.S. commodities will slow. But those concerns gave way to supply concerns as old crop supplies remain tight from strong demand and light farmer selling. Additional support late in the week was from continued planting delays, as winter keeps its grips on the Northern Plains. Planting delays are inevitable in the Northern Plains and Canada, as at this rate, it appears canola acres could drop even lower as producers reevaluate rotations. April 18 cash canola bids in Velva, N.D., were at $27.52 per hundredweight.

Sunflowers

USDA estimated soybean oil export sales pace for the week ending April 12 at 8.2 trillion metric tons. This brings the year-to-date export sales pace for soybean oil to 829 trillion metric tons, compared with 357.2 trillion for last year at this time. April 18 cash sunflower bids in Fargo, N.D., were at $22.50 per hundredweight.

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