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Published May 06, 2013, 10:40 AM

Weather influences market

The May 1 session opened lower, but managed to hold mostly steady throughout most of the session. Early selling was tied to thoughts that last week’s gains have been a little overdone.

By: Ray Grabanski, Agweek

Wheat: Freeze damage, planting delay

Wheat traded with gains for most of the session last week, only trading with losses May 1. Wheat was supported by reports out of the Wheat Quality Tour, as well as planting delays for the Northern Plains. For the week ending May 2, July Minneapolis gained 24 cents, July Chicago gained 36 cents and July Kansas City added 40.25 cents. For the month of April, Minneapolis was up 41.25 cents, Chicago was 40 cents higher and Kansas City was 57.25 cents higher.

Wheat started the week with strength and continued to push throughout the start of the week. Early support spilled over from the higher corn market, but as the session proceeded, wheat developed a following of its own. The Wheat Quality Tour took place last week in the Southern Plains and it found a varied crop. The eastern regions of the winter wheat belt proved to have good wheat, but as the tour traveled west, the crop potential declined. This spring’s cold temps did result in some freeze damage.

The May 1 session opened lower, but managed to hold mostly steady throughout most of the session. Early selling was tied to thoughts that last week’s gains have been a little overdone. By the end of the session, wheat fell prey to spillover selling from the other grains, as soybeans and corn slipped toward their lows of the day.

Wheat opened steady May 2, but slipped lower with pressure slipping over from the May 1 lackluster session. But wheat was not to be held done. The market started the rally as fund buying slowly re-entered the session. By midsession, most exchanges were able to post double-digit gains. Support continued to come from the lack of planting progress in the Northern Plains, as conditions remain cold and wet across much of North Dakota, South Dakota and Minnesota.

The U.S. Department of Agriculture’s export inspections for wheat were estimated at 30.9 million bushels for the week ending April 26. This brings the year-to-date sales pace for wheat to 902.4 million bushels, compared with 917.1 million for last year. Wheat export sales pace for the week ending April 26 was estimated at a combined total of 26.4 million bushels, with 8.1 million old crop and 18.3 million new crop.

This brings the year-to-date sales pace for wheat to 974.7 million bushels, compared with 1 billion for last year. With five weeks left in the marketing year, shipments need to average 24.5 million bushels and sales need to average 10.1 million to make USDA’s expectations of 1.025 billion.

Corn: forecast creates interest

The corn futures traded limit up to start last week, with a wet forecast, but gave some of that move back the next couple of days. There was rain and even snow forecast for the first week of May and that created buying interest. Every day that goes by takes away some yield potential and a larger chance of corn acres switching. For the week ending May 2, July gained 42 cents and December was up 35 cents.

The corn market closed limit up in the old crop contracts on April 29. Short covering entered the market in the overnight, with the buying coming from forecasts for wet cool conditions for this week. Buying interest also resurfaced in the new crop contracts, as planting continues to be delayed and increases the chance of acres being switched to soybeans.

Traders also were looking ahead to the crop progress report (estimates are at 11 percent planted). The report stated only 5 percent of the crop is in the ground, a 1 percent increase from the previous week. For the week, Illinois and Indiana did not plant anything and remained at 1 percent, while Iowa and Ohio moved to 2 percent.

The futures softened up the next two days, with profit taking and fund rebalancing to start the month. Corn also was pressured from the negative tone in the outside markets and poor economic news out of China. Export demand has also been stagnant.

The futures rebounded on May 2, with wet weather throughout most of the country and up to 18 inches of snow falling in southern Minnesota, along with 28 degree temperatures in Nebraska and Iowa. Last week’s ethanol report was also friendly, with lower stocks and the largest weekly corn use since last June. The ethanol margins are also the best we have seen in years and more shuttered plants are coming back online.

Ethanol production for the week ending April 26 averaged 857,000 barrels per day, down 4.15 percent from last year. Corn used in production is estimated at 90 million bushels and needs to average 90.96 million per week to meet this crop year’s USDA estimate of 4.55 billion. Stocks as of April 26 were 17.04 million barrels, down from 17.6 million the previous week and down 23.3 percent from last year.

The crop progress report showed 5 percent of the corn is planted, compared with 49 percent last year and 31 percent for the five-year average. Emergence is estimated at 2 percent, compared with 14 percent last year and 6 percent for the five-year average.

USDA’s export inspections report was bearish for corn, as 11.6 million bushels were shipped. Shipments needed each week to hit the USDA export estimate are 17.1 million bushels. The export sales report for corn was at 13 million bushels, above the 8.1 million needed to meet USDA’s projection of 800 million. Total shipments last week were at 15.9 million bushels, below the 17 million needed for the 2012 to ’13 marketing year.

Soybeans: questionable demand pressures

Soybeans traded under pressure for most of last week as a result of thoughts that producers will soon start to switch corn acres for soybeans, especially if weather continues to keep producers out of the field. For the week ending May 2, July soybeans dropped 8.75 cents, while November dropped 6.25 cents.

Soybeans closed with sharp gains and near the day’s high on April 29. The change in the forecast to cooler, wetter weather led to strong gains in corn and wheat, which provided spillover support to soybeans. Processor demand for tight old-crop soybeans remained strong, while Chinese demand has been somewhat sluggish because of concerns over bird flu.

The April 29 export inspections were bullish, coming in above market expectations and the amount needed to keep pace with USDA’s projection.

Continued planting delays in corn and concern over Chinese demand led to lower closes on April 30 and May 1. Questions about Chinese demand are tied to poor economic data released May 1 in addition to ongoing bird flu concerns. Soybean shipments are picking up out of Brazil, as well, limiting demand for U.S. beans.

Soybeans traded slightly lower May 2, as concerns about Chinese demand remain. The bird flu outbreak continues to cause concern. Total export sales were good, despite a cancellation of 4 million bushels of old-crop soybeans, indicating that demand is shifting toward lower priced new-crop beans. Despite the cancellations, old-crop supply is still tight.

The May 2 export sales were below the amount needed to keep pace with USDA’s projection.

USDA reported soybean export inspections pace for the week ending April 26 at 8.9 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.246 billion bushels, compared with 1.09 billion for last year at this time.

Soybean export sales pace for the week ending April 26 was estimated at 45.2 million bushels (-4 million for 2012 and 2013), bringing this year’s total to 1.333 billion bushels, compared with 1.25 billion last year at this time. Shipments were reported at 13.1 million bushels.

Barley

USDA estimated no barley export shipments for the week ending April 26. This brings barley shipments for the year to 6.34 million bushels, compared with 6.36 million for last year at this time. Barley export sales estimate for the week ending April 26 was a negative 100,000 bushels (cancellation from South Korea). This brings the year-to-date export sales pace for barley to 6.1 million bushels, compared with 3.9 million for last year at this time.

As of April 28, 30 percent of the nation’s barley was planted, compared with 23 percent the previous week and 37 percent for the five-year average. North Dakota and Minnesota did not report any planting progress. Eight percent of the nation’s barley has emerged, compared with none the previous week and 9 percent for the five-year average.

May 2 cash feed barley bids in Minneapolis were at $5.10 per bushel, while malting barley bids were $6.75.

Durum

USDA reported durum export shipments pace for the week ending April 26 at 535,000 bushels. No durum export sales were reported for the week. This brings the year-to-date export sales pace for durum to 20.1 million bushels, compared with 17.3 million for last year at this time.

May 2 cash bids for milling quality durum were at $8 per bushel in Berthold, N.D., and Dickinson, N.D.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed with more than $19.20 (Canadian) losses for the week ending May 2. Canola started the week off with modest gains, but that was quickly erased, as the rest of the week experienced losses. The biggest influence to canola came from the U.S. soybean complex, as canola almost mirrored soybeans’ performance. Profit taking and the evening up of positions added to the selling pressure.

Losses were somewhat kept in check by continued planting delays in the Northern Plains, as it appears that canola acres could decrease even further.

May 2 cash canola bids in Velva, N.D., were at $26.82 per hundredweight.

Sunflowers

USDA estimated soybean oil export sales pace for the week ending April 26 at 1.1 trillion metric tons. This brings the year-to-date export sales pace for soybean oil to 831.8 trillion metric tons, compared with 372.9 trillion for last year at this time.

May 2 cash sunflower bids in Fargo, N.D., were at $22.50 per hundredweight.

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