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Published May 13, 2013, 10:48 AM

Weather influences market

U.S. ending stocks for old-crop wheat was at 731 million bushels, unchanged from last month. Global ending stocks were 180.17 metric tons, down from 182.26 million metric tons last month.

By: Ray Grabanski, Agweek

Wheat: report and weather concerns drive market

After opening last week with a lower close May 6, all wheat contracts moved higher to close May 9, with small gains for the week. For the week ending May 9, July Minneapolis gained 6.5 cents, September Minneapolis was up 2 cents, July Chicago was up 2.5 cents and July Kansas City gained 1.25 cents.

Wheat followed corn lower May 6 as improved weather for planting pressured grains.

The forecast is warmer with some rain for dry areas. Concerns about damage to wheat caused by low temperatures should limit the downside, though the extent of the damage is not yet known. The May 6 export inspections were bearish, coming in below expectations and the amount needed to keep pace with the U.S. Department of Agriculture’s projection.

Wheat traded mixed on May 7 and 8 with sparse news ahead of the May 10 USDA World Agricultural Supply and Demand Estimates report. Slow planting and a decline in the May 6 crop conditions provided support, while expected rains pressured the market. Rain for winter wheat growing areas will be beneficial, but more is needed. Dry conditions in Russia and Australia will be monitored going forward, as well.

Wheat markets traded higher May 9 as traders positioned ahead of the WASDE report May 10. Weather concerns added support as dry conditions persist in parts of the U.S. Wheat growing regions of the Ukraine and Russia are dryer than normal, as well. The May 9 export sales were below the amount needed to keep pace with USDA’s projection.

U.S. ending stocks for old-crop wheat was at 731 million bushels, unchanged from last month. Global ending stocks were 180.17 metric tons, down from 182.26 million metric tons last month. New-crop ending stocks were pegged at 670 million bushels for the U.S. and 186.38 million metric tons globally.

USDA reported wheat export inspections pace for the week ending May 3 at 16.6 million bushels. This brings the year-to-date export shipments pace for wheat to 919 million bushels, compared with 944.1 million for last year. Wheat export sales pace was estimated at a combined total of 17.1 million bushels, with 8.8 million old crop and 8.3 million new. This brings the year-to-date sales pace for wheat to 983.5 million bushels, compared with 1.011 billion for last year.

USDA’s weekly crop condition rating report estimated the U.S. winter wheat crop at 32 percent good to excellent, 29 percent fair and 39 percent poor to very poor, unchanged from the previous week. Winter wheat heading was estimated at 20 percent complete as of May 5, compared with 14 percent for the previous week and 39 percent for the five-year average.

Corn: larger stocks

The corn futures traded under pressure last week with planters in the fields and traders positioning ahead of the WASDE report. The upside was also limited, with poor exports and expectations of larger U.S. and world stocks numbers, which were realized in the report. As of noon on May 10, the July contract lost 26 cents and December was down 25 cents.

Selling pressure came into the futures the night of May 5 and carried over to the May 6 session, with an improved forecast. The export inspections were also disappointing and below USDA’s estimate. The slow export pace may cause USDA to reduce its export estimate from 800 million bushels, which would be the lowest estimate since 1971 and 1972. The futures traded slightly higher on May 7, with the lack of planting progress.

The weekly report stated that only 12 percent of the corn is planted and slightly more than the old record of 10 percent for this date back in 1984, but the crop in 1984 also produced a trend line yield.

The corn market traded with red ink again on May 8, as favorable weather is allowing planting to take place. The ethanol report was also disappointing and added selling pressure, while crude oil inventories are at a record 395.5 million barrels and surpassed the previous record set in July of 1990.

Traders also are looking ahead to the USDA supply and demand and production report, along with its first look at new crop carryout. Expectations are that the corn yield will be cut from the Ag Outlook Conference number of 163.6 bushels per acre, but stocks will be increased. Traders also are looking for a number close to 2 billion bushels for 2013 to ’14 carryout. Corn traded slightly higher on May 9, as traders positioned ahead of the report.

The USDA report was bearish, as stocks were increased. U.S. ending stocks for 2012 to ’13 were estimated at 759 million bushels versus 757 million in April. The 2013 to ’14 ending stocks were estimated at 2.004 billion bushels, compared with trade estimates of 1.993 billion.

Ethanol production for the week ending May 3 averaged 843,000 barrels per day, down 6 percent from last year. Total ethanol production for the week was 5.9 million barrels. Corn used in production for the week ending May 3 is estimated at 88.5 million bushels and needs to average 91.1 million bushels per week to meet this crop year’s USDA estimate of 4.55 billion bushels. Stocks as of May 3 were 16.85 million barrels, down 21.2 percent from last year.

USDA’s export inspections report was bearish for corn, as there were 6.5 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 4.6 million bushels, below the 7.8 million needed to meet USDA’s projection of 800 million. Total shipments last week were at 7.6 million bushels, below the 17.1 million needed for the 2012 to ’13 marketing year.

Soybeans: planting conditions drive market

As of the May 8 close, July soybeans were up 21.5 cents on the week, while November soybeans were 2.25 cents lower. The weather forecast and the WASDE report were the driving forces behind trade last week.

July soybeans closed sharply lower on spillover pressure from corn and wheat on May 13. Pressure in the other grains came from the improved weather outlook for planting in the coming weeks. While lower corn futures pressured soybeans, improved corn planting actually provides some support, as it calls into question how many acres will switch from corn to soybeans. The processor basis remains strong with old-crop supplies tight, though the outlook for new-crop is more bearish, with favorable harvest conditions in Brazil. May 13 export inspections were bullish, coming in above the amount needed to keep pace with USDA’s projection.

Soybeans were trading higher May 7 and 8 before a midday setback on May 8 tied to news that the U.S. is set to import soybeans from Brazil or Paraguay. Steady crush demand and the firm cash market continue to provide support. Favorable planting weather provided pressure, offset in part by the strong basis and slow development in wheat crops. Traders were seen to be positioning ahead of the WASDE report.

USDA announced a sale of 115,000 metric tons of soybeans to China for 2013 and 2014 delivery May 8.

Soybeans traded with sharp gains on May 9 on old-crop support and positioning ahead of the WASDE report. Old-crop supplies remain tight and the basis has stayed strong. USDA announced a sale of 110,000 metric tons of soybeans to China for 2013 and 2014 delivery May 9. May 9 export sales were above the amount needed to keep pace with USDA’s projection.

U.S. ending stocks for old-crop soybeans in the WASDE report were 125 million bushels, unchanged from last month. Global ending stocks were 62.46 million metric tons, down from 62.63 million last month. Brazilian production was unchanged from April at 83.5 million metric tons, while Argentinean production decreased from 51.5 million metric tons in April to 51 million in May.

New-crop ending stocks were pegged at 265 million bushels for the U.S. and 74.96 million metric tons globally.

USDA reported soybean export inspections pace for the week ending May 3 at 6.4 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.252 billion bushels, compared with 1.103 billion for last year at this time.

Soybean export sales pace was estimated at 21.5 million bushels (7.1 million for 2012 and 2013), bringing this year’s total to 1.34 billion bushels, compared with 1.267 billion last year at this time. Shipments were reported at 6.3 million bushels.

Barley

USDA reported barley export inspections pace for the week ending May 3 at 24,000 bushels. This brings barley’s year-to-date export shipments pace to 6.36 million bushels, compared with 6.36 million last year. There were no reported barley export sales for the week.

Cash barley bids in Minneapolis decreased slightly last week, putting feed barley bids at $5.05 per bushel, while malting barley bids remained at $6.75.

Durum

USDA reported durum export shipments pace for the week ending May 3 at 1.551 million bushels shipped. There were no reported durum export sales for the week.

As of the May 9 close, cash bids for milling quality durum were unchanged on the week at $7.75 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was unchanged on the week at $8.

Canola

Canola futures on the Winnipeg, Manitoba, exchange were $2.40 (Canadian) higher on the week as of the close on May 9. Tight old-crop supplies supported nearby contracts, while improved weather and planting progress pressured the deferred contracts. Strength in Chicago Board of Trade soybean futures provided underlying support.

As of May 5, 1 percent of North Dakota’s canola crop had been planted, compared with 19 percent for the five-year average.

As of the May 9 close, cash canola old crop bids in Velva, N.D., were 25 cents higher on the week at $27.13 per hundredweight, while new crop bids were 21 cents lower at $23.60.

Sunflowers

Soybean oil export sales pace was estimated at 0.9 trillion metric tons, bringing the year-to-date total to 832.7 trillion metric tons, compared with last year’s 402.9 trillion.

As of the May 9 close, July soybean oil was 5 cents lower on the week at $49.22. Cash sunflower bids in Fargo, N.D., were 5 cents higher on the week at $22.90 per hundredweight.

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