Weather influences marketWheat started the week positive. Early support was from spillover buying from a stronger corn and soybean market. Additional support was from thoughts of improving fundamental news, as traders are looking for winter wheat crop conditions to decline.
By: Ray Grabanski, Agweek
Wheat: slips lower
Wheat started last week with gains, but slipped for the rest of the week. Early support was from poor planting progress in the Northern Plains, as well as from thoughts that there would be another drop in winter wheat’s crop condition rating.
Wheat struggled for the rest of the week, as technical selling combined with poor demand to push wheat lower. For the week ending May 16, July Minneapolis dropped 4.75 cents, September Minneapolis dropped 8.25 cents, July Wheat dropped 16.5 cents and July Kansas City lost 15.25 cents.
Wheat started the week positive. Early support was from spillover buying from a stronger corn and soybean market. Additional support was from thoughts of improving fundamental news, as traders are looking for winter wheat crop conditions to decline. Additional support came from concerns that not all of the projected spring wheat will get planted because of the late start in planting progress.
The rest of the week was not as friendly to wheat. The May 14 session ended with small losses, as the market was in a tug of war between poor planting progress and steady crop condition ratings and poor demand. The May 15 session experienced the worst losses of the week, as technical selling joined in with reports of strong planting progress in the Northern Plains.
Weather forecasts calling for rain in Russia added to wheat’s sell off, as this rain will help confirm world wheat supplies will be adequate to meet demand. The U.S. dollar has rallied sharply and that has made U.S. products less desirable in the world.
The May 16 session also brought negative numbers to wheat, but at least wheat was able to cut losses into the close.
Early selling was tied to pressure from another disappointing export sales report. With three weeks left in the marketing year, it appears wheat will not make the U.S. Department of Agriculture’s expectations.
Current weather reports have high temperatures moving into the Southern Plains (which should result in further deterioration of the winter wheat crop while rains are forecast for the Northern Plains (which will slow spring wheat planting progress). This helped trim session losses late, but in the end, the poor demand and spillover selling from a lower corn market proved to be too much for wheat to overcome.
USDA’s export inspections for wheat were estimated at 23.99 million bushels for the week ending May 10. This brings the year-to-date shipments pace for wheat to 944.99 million bushels, compared with 972.3 million for last year. Wheat export sales pace for the week ending May 10 was estimated at a combined total of 19.9 million bushels, with 4.6 million old crop and 15.3 million new crop.
This brings the year-to-date sales pace for wheat to 986.7 million bushels, compared with 1.02 billion for last year. With three weeks left in the marketing year, shipments need to average 26.7 million bushels and sales need to average 12.8 million to make USDA’s expectations of 1.025 billion.
USDA estimated the nation’s winter wheat crop condition rating at 32 percent good to excellent, 29 percent fair and 39 percent poor to very poor, unchanged from the previous week. This compares with 60 percent good to excellent for last year. Oklahoma crop condition rating improved 1 percent to 21 percent good to excellent, Texas’s crop condition rating improved 2 percent to 9 percent good to excellent, and Kansas’s crop condition rating improved 1 percent to 28 percent good to excellent.
Corn: late, slow planting
The corn futures traded in a sideways pattern last week, as the market searches for fresh news. Buying interest remained on the sideline with weather that allowed widespread planting. The month of April lacked any planting this year and it ended up being the 15th coolest and the wettest for the Corn Belt since 1895. For the week ending May 16, July gained 5 cents and December was down 6 cents.
Corn started the week sharply higher, with support coming from tight supplies, as well as from strength in the cash market. The new crop contracts also had a good day, finding support from late and slow planting progress. Traders were expecting another slow week for planting progress in USDA’s crop progress report.
The futures closed with small losses the next three days.
The lack of any follow-through buying from the May 13 move combined with a week of good weather for planting and the lack of any fresh export demand to pressure corn. The weather forecast looks good and expectations are that 50 percent will be planted in this week’s report, but there is a weather system moving in for the weekend.
The forecast calls for widespread rain throughout the country, which could slow planting progress.
Ethanol production for the week ending May 10 averaged 857,000 barrels per day, down 5.2 percent from last year. Corn used in production is estimated at 90 million bushels and needs to average 91.2 million bushels per week to meet this crop year’s USDA estimate of 4.55 billion bushels. This year’s cumulative corn used for ethanol production is 3.1 billion bushels. Stocks as of May 10 were 16.4 million barrels, down 20.4 percent from last year.
USDA’s export inspections report was bearish for corn, as there were 12.7 million bushels shipped. The export sales report for corn was at 12.4 million bushels. USDA is projecting corn exports at 750 million bushels for the year. Total shipments last week were at 12.7 million bushels.
Soybeans: commercial demand supports old crop
Soybeans continue to be the commodity leader. Soybeans pushed higher last week with much of the support coming from strong demand, as China reiterated its plans to continue to buy soybeans. For the week ending May 16, July gained 28.5 cents, while November ended 12 cents higher.
Soybeans closed with strong gains and near the day’s high on May 16. Old crop contracts led the way higher, as traders remain concerned about tight supplies. Bull-spreading was active with the July to November spread making a new high for the move. Export demand remains lackluster, as buyers move to South American soybeans. May 16 export inspections were bearish, coming in below the amount needed to keep pace with USDA’s projection.
Soybeans closed moderately lower May 14 and 15, with some profit taking noted in the July to November spread. Old crop contracts continue to receive support from strong commercial demand and slow shipping of soybeans out of South America. The May 15 National Oilseed Processors Association crush report pegged April crush at 120.1 million bushels, compared with 125.5 million expected. USDA announced a sale of 171,000 metric tons to China for 2013 and 2014 delivery.
Soybeans traded higher May 14, with support from strong commercial demand for old crop.
The outlook for new crop remains bearish, though faster corn planting last week was supportive. Expected delays in Brazil’s soybean shipments caused by rain in the forecast should provide further support to old crop. May 16 export sales were below the amount needed to keep pace with USDA’s projection.
USDA reported soybean export inspections pace for the week ending May 10 at 3.4 million bushels.
This brings the year-to-date export shipments pace for soybeans to 1.256 billion bushels, compared with 1.123 billion for last year at this time. Soybean export sales pace was estimated at 15.5 million bushels (-7.6 million for 2012 and 2013), bringing this year’s total to 1.341 billion bushels, compared with 1.29 billion last year at this time. Shipments were reported at 7 million bushels.
USDA estimated barley export shipments pace for the week ending May 10 at 96,000 bushels. All of the barley went to Canada. This brings barley’s shipments for the year to 6.46 million bushels, compared with 6.37 million for last year at this time. No barley export sales were reported for the week. 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 May 12, 55 percent of the nation’s barley was planted, compared with 44 percent the previous week and 63 percent for the five-year average. Twenty-five percent of the nation’s barley has emerged, compared with 14 percent the previous week and 31 percent for the five-year average.
May 16 cash feed barley bids in Minneapolis were at $5 per bushel, while malting barley bids were $6.70.
USDA reported durum export shipments pace for the week ending May 10 at 815,000 bushels, with 359,000 bushels going to Italy. Durum export sales pace for the week ending May 10 was estimated at 100,000 bushels. This brings the year-to-date export sales pace for durum to 20.2 million bushels, compared with 18.3 million for last year at this time.
May 16 cash bids for milling quality durum were at $8 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $8.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending May 16 with $2.80 (Canadian) gains. Canola traded back and forth last week. Early support came from continued concerns about tight old crop supplies, as well as from concerns about slow planting progress from the late spring. Technical selling kept gains in check last week.
As of May 12, 12 percent of North Dakota’s canola crop was planted, compared with 78 percent last year and 36 percent for the five-year average.
May 16 cash canola bids in Velva, N.D., were at $27.76 per hundredweight.
USDA estimated soybean oil export sales pace for the week ending May 10 at a negative 5.3 trillion metric tons (cancellation from Mexico, Canada and Columbia).
This brings the year-to-date export sales pace for soybean oil to 827.5 trillion metric tons, compared with 411 trillion last year. May 16 cash sunflower bids in Fargo, N.D., were at $22.75 per hundredweight.