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Published June 10, 2013, 10:17 AM

Markets stumble

By: Ray Grabanski, Agweek

Wheat: export pace falls short

Wheat gave back some of its gains last week, as improving weather forecasts combined with harvest activity to put pressure on wheat. For the week ending June 6, July Minneapolis gained 0.25 cents, September Minneapolis dropped 3.25 cents, July Chicago dropped 7.75 cents and July Kansas City slipped 12.5 cents.

Wheat started the week higher, as a general buying frenzy helped support all of the grains. But once the fund selling started to pick up in the corn pit, wheat started to lose its enthusiasm. Wheat was able to shake off the selling pressure and actually recovered to end with modest gains.

Wheat traded in a lackluster fashion June 4, as all three of the wheat exchanges traded on both sides of unchanged to start the day. Early support was from the U.S. Department of Agriculture’s crop progress report, which continues to show poor planting progress in the Northern Plains, especially North Dakota. North Dakota producers only have 64 percent of their 2013 spring wheat planted, which means 2.2 million acres of spring wheat are left to get planted. With the final planting date for crop insurance fast approaching, it seems unlikely that all of these acres will get planted.

The June 5 session traded with losses. Wheat did trade with small to modest gains at one point, but there was no follow-through buying to help keep the market on the plus side. Support continues to come from poor planting progress in the Northern Plains. The poor planting progress was overshadowed by spillover pressure from selling from the other grains, as well as from seasonal pressure, as wheat harvest is starting to speed up in the Southern Plains. So far, quality reports are good out of Texas, but yields are at the lower end of expectations.

Wheat traded mixed to lower June 6. The winter wheat exchanges were under pressure from reports of an advancing winter wheat harvest. A disappointing export sales report added pressure to the winter wheat exchanges, as it appears that wheat exports will fall short of USDA expectations. The winter wheat exchanges had losses limited by reports that U.S. wheat garnered 61,000 million tons of a 163,605-million-ton sale to Japan. Spring wheat was the best performer, with support coming from planting concerns.

As of June 2, 80 percent of the nation’s spring wheat crop was planted, compared with 79 percent the previous week and 92 percent for the five-year average. Sixty-one percent of the nation’s spring wheat was emerged, compared with 42 percent the previous week and 80 percent for the five-year average. North Dakota producers have 64 percent of their spring wheat in the ground (4 million of the 6.2 million intended). Spring wheat’s crop condition rating is at 64 percent good to excellent, 28 percent fair and 8 percent poor to very poor, 14 percent lower than last year’s rating. Seventy-three percent of the nation’s winter wheat was headed, compared with 60 percent the previous week and 80 percent for the five-year average. USDA estimated the nation’s winter wheat crop condition rating at 32 percent good to excellent, 25 percent fair and 43 percent poor to very poor, an improvement of 1 percent from the previous week.

Corn: tight supplies

New crop corn futures were under pressure last week, while old crop remained near unchanged. The weekly progress report showed 8.7 million acres of seed still in the bag, with about 4 million acres considered late planted. The majority of acres left are in Illinois, Iowa, Wisconsin and Minnesota. Weather forecasts are calling for rain in these areas as we approach the last big week for planting. For the week ending June 6, July gained 1 cent and December was down 19 cents.

New crop contracts closed lower the first three days of the week. Pressure came from an improvement in planting progress and news that China bought its first cargo of corn from Argentina since the two countries signed an import agreement in February 2012. Export demand has been poor and U.S. corn remains at a premium to foreign competition. The December contract did bounce back on June 6, with support coming from excessive moisture that continues to delay planting. Talk of acres being switched to soybeans and larger prevented planting numbers also were supportive.

The July contract held firm last week with tight stocks and bull spreading. The ethanol report was decent and also showed the highest weekly ethanol production number since June 1, 2012. Stocks remain tight and talk of the lack of an early harvested crop offered support.

Ethanol production for the week ending May 31 averaged 885,000 barrels per day, down 2.1 percent from last year. Total ethanol production for the week was 6.2 million barrels. Corn used in production is estimated at 92.9 million bushels and needs to average 94.82 million per week to meet this crop year’s USDA estimate of 4.6 billion bushels. Stocks as of May 31 were 16.4 million barrels, down 22.6 percent from last year.

The crop progress report showed planting progress at 91 percent complete, compared with 100 percent last year and 95 percent for the five-year average. Emergence is at 74 percent, versus 96 percent last year and 82 percent for the five-year average. The condition is rated as 63 percent good to excellent, 30 percent fair and 7 percent poor.

Soybeans: planting forecast improves

Tight old crop supplies and planting concerns continue to support soybeans. Tight old crop supplies still warrant rationing of old crop supplies, while traders are starting to show concerns about planting progress, as wet conditions continue to delay timely planting. For the week ending June 6, July soybeans were up 17.25 cents, while November was 1.5 cents higher.

Soybeans closed near the day’s highs on June 3, with strong gains in both old and new crop contracts. Tight supplies and strong crush demand provided support for old crop, while strong export sales and planting uncertainty the week ending May 31 supported new crop. Some unplanted corn acres are likely to switch to soybeans, but it is unclear how many acres at this time.

Soybeans closed lower June 4, though at the higher end of the trading range. Pressure was tied to a dryer forecast in the next two weeks that is seen as favorable for planting. The softening basis and unconfirmed rumors of Chinese import cancellations limited the upside.

Soybeans closed mixed on June 5 and 6 as the drier forecast should permit more planting in the coming weeks. Soybean acreage is expected to increase with acres switching from corn, but it remains difficult to predict how many acres will be planted. Strong crush and tight supplies continue to support old crop contracts. The June 6 export sales were considered neutral, coming in above the amount needed to keep pace with the USDA’s projection.

USDA reported soybean export inspections pace for the week ending May 31 at 4.4 million bushels. Soybean export sales pace for the week ending May 31 was estimated at 23.5 million bushels (1.8 million for 2012 and 2013).

Barley

USDA reported barley export shipments pace for the week ending May 31 at 30,000 bushels (all to China). No barley export sales were reported for the week.

As of June 2, 83 percent of the nation’s barley had been planted, compared with 78 percent the previous week and 93 percent for the five-year average. North Dakota producers have 58 percent of their barley planted, compared with 49 percent the previous week and 87 percent for the five-year average. This means 400,000 acres still are left to plant. Barley emergence was estimated at 62 percent, compared with 46 percent the previous week and 77 percent for the five-year average. Barley’s crop condition rating is estimated at 66 percent good to excellent, 29 percent fair and 2 percent poor.

June 6 cash feed barley bids in Minneapolis were at $5 per bushel, while malting barley bids were at $6.75.

Durum

USDA reported durum export shipments pace for the week ending May 31 at 881,000 bushels, with 804,000 bushels going to Algeria. Durum export sales pace was estimated at 400,000 bushels.

As of June 2, 54 percent of North Dakota’s durum crop was planted, compared with 53 percent the previous week and 78 percent for the five-year average. Durum emergence was at 30 percent, compared with 19 percent the previous week and 62 percent for the five-year average. Durum’s crop condition rating was estimated at 85 percent good to excellent, 14 percent fair and 1 percent poor.

June 6 cash bids for milling quality durum were at $8.25 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $8.

Dry beans

As of June 2, 22 percent of North Dakota’s dry bean crop had been planted, compared with 8 percent the previous week and 63 percent for the five-year average. Minnesota producers reported planting progress at 44 percent complete, compared with 26 percent the previous week and 75 percent for the five-year average.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending June 6 with almost $21 (Canadian) losses. Canola started the week with small gains spilling over from an overall stronger performance in the vegetable oil complex. But this was to be the only session that canola traded with gains. For the rest of the week, canola played a follower to the U.S. soybean complex, which traded lower. Reports calling for favorable planting weather added pressure.

As of June 2, 50 percent of North Dakota’s canola crop had been planted, compared with 41 percent for the previous week and 83 percent for the five-year average. Emergence was at 18 percent, compared with 9 percent for the previous week and 59 percent for the five-year average. Canola’s crop condition rating was estimated at 54 percent good to excellent, 24 percent fair and 22 percent poor to very poor.

June 6 old crop cash canola bids in Velva, N.D., were at $27.62 per hundredweight, while new crop canola bids were at $24.32.

Sunflowers

As of June 2, 15 percent of the nation’s sunflower crop had been planted, compared with 9 percent the previous week and 43 percent for the five-year average.

June 6 old crop cash sunflower bids in Fargo, N.D., were at $22.60 per hundredweight, while new crop bids were $23.60.

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