Nonthreatening weather pressure
By: Ray Grabanski, Agweek
Wheat lost ground last week as the market played a follow to corn. All of the grains struggled, as the weather forecast became more favorable for crop development. For the week ending July 18, September Minneapolis dropped 16.25 cents, September Chicago dropped 20.5 cents and September Kansas City slipped 6.25 cents. The Minneapolis and Chicago exchanges ended at or near weekly contract lows, while Kansas City remains off of its lows.
Wheat struggled to start the week. Early selling was tied to spillover selling from the lower corn market, with additional selling tied to weather reports that are calling for improving weather conditions. This will allow for harvest progress to continue and give producers a chance to get double crop soybeans planted. The U.S. Department of Agriculture’s export inspections report was friendly for wheat and it helped limit early losses.
Wheat took a back seat to the corn and soybean markets July 16. Wheat did not have the enthusiasm corn and soybeans did, but wheat did trade with modest gains throughout the session. The winter wheat harvest is on the back side, so harvest pressure should be about complete. Spring wheat did have a little extra push from a friendly USDA crop progress report, which showed spring wheat conditions off 2 percent for the week. In all, trading was thin and lackluster with attention focusing on conditions.
Wheat traded on both sides of the fence July 17. Wheat saw early gains from buying tied to thoughts of continued strong wheat export demand. But corn and wheat have been tied at the hip lately, and when corn slipped, wheat slipped, as well. Besides being pressured from the lower corn market, wheat was under pressure from technical fund selling. Winter wheat harvest pressure has started to decrease, but spring wheat continues to see pressure from improving crop conditions.
The July 18 session continued to see wheat struggling. Wheat did manage to trade with gains early, as a result of a friendly export sales estimate. But wheat lost its gains as pressure spilled over from a lower corn and soybean complex. Improving weather forecasts continued to pressure, as well. Technical pressure was seen, as most contracts trade down to major support lines, which are contract lows. Reports that the Black Sea region is on track to produce a record wheat crop this year added to the selling pressure. Egypt was back in the export market for the first time since October, but this time, it was buying Black Sea wheat.
As of July 14, winter wheat harvest was 67 percent complete, compared with 57 percent the previous week and 71 percent for the five-year average. Spring wheat heading is estimated at 71 percent, compared with 45 percent the previous week and 73 percent for the five-year average. Spring wheat’s condition rating declined 2 percent to 70 percent good to excellent, 25 percent fair and 5 percent poor to very poor.
Corn traded in a choppy fashion last week, as daily changes to the weather forecast gave the market direction. Weather is driving the market, as corn enters pollination. For the week ending July 18, September dropped 5 cents and December was down 9 cents.
The futures were under pressure last week, except for July 16. Traders remained focused on the weather forecast, as this year’s crop will pollinate from now into the first week of August. Weather runs on July 17 and 18 showed a cooler, wetter forecast for this week. The extended forecast shows a lack of threatening weather for 80 percent of the corn-growing area to the end of July. The ethanol report was also disappointing. There is also talk of ethanol plants buying wheat to blend up to 10 percent without any plant modifications. U.S. corn continues to carry a premium to foreign competition, and South Korea bought 60,000 metric tons from the Black Sea on July 17.
July 16 was the only day last week that corn traded with green numbers. Support came from a drop in corn’s crop condition rating and a change in the weather forecast. Traders expected conditions to remain unchanged from the previous week, but the good to excellent category dropped 2 percent. Weather the evening of July 15 also turned drier and hotter in the six- to 10-day forecast, and that created buying interest. Drier conditions do exist in Iowa and Missouri and states to the west, and the next three weeks will be critical for pollinating the crop.
Ethanol production for the week ending July 12 averaged 876,000 barrels per day, which is down 0.57 percent from the previous week and up 9.2 percent from last year. Corn use for ethanol for the week ending July 12 was estimated at 91.98 million bushels, compared with 97.13 million bushels per week to meet USDA’s estimate of 4.6 billion. Stocks were 16.6 million barrels, which is up 5.5 percent from the previous week and down 15.2 percent from last year. Imports for the week were also up 350,000 barrels.
The crop progress report showed 16 percent of the corn is silking versus 67 percent one year ago and a five-year average of 35 percent. The condition is rated as 66 percent good to excellent, 25 percent fair and 9 percent poor to very poor.
Soybeans were the exception to the rule last week. As the other grains slipped lower for the week, soybeans gained ground. Continued strong demand and a surprising lower crop condition rating helped support soybeans last week. For the week ending July 18, August closed 40.25 cents higher, while November was 8.5 cents higher.
Soybeans closed higher July 15 on support from tight old crop supplies and strong basis levels, while July 16 sharp gains were attributed in part to a 2 percent decrease in crop conditions and only 26 percent of the crop blooming in last week’s crop progress report. The weather forecast appears favorable for the next two weeks, but slow development remains a concern. Delays in the wheat harvest are supporting soybeans, as it prevents planting double-crop soybean acres. The National Oilseed Processors Association crush report released July 15 was seen as supportive, as it came in at 119.05 million bushels, at the upper end of the 105 million to 125 million expected. The July 15 export inspections were seen as bearish, coming in below the amount needed to keep pace with USDA’s projection.
On July 16, soybeans were slightly lower and near the middle of the day’s trading range in choppy trade. The market gave back a small portion of the early week’s gains, as production estimates for new crop remain bearish. But tight old crop supplies and strong demand for new crop continue to provide support. USDA announced a sale July 17 of 165,000 metric tons of soybeans to China for 2013 and 2014 delivery.
Soybeans were lower July 18, as the weather forecast improved going into the weekend. Questions remain about soybean production, as predictions are particularly difficult this year because of late planting and delays in the winter wheat harvest hindering double-crop planting. Further pressure was tied to unconfirmed talk of soybeans being shipped to the U.S. from Brazil. July 18 export sales were bullish, coming in above the amount needed to reach USDA’s projection.
As of July 14, 26 percent of the nation’s soybean crop was in bloom, compared with 10 percent the previous week and 40 percent for the five-year average. Soybean’s crop condition rating was down 2 percent at 65 percent good to excellent, 27 percent fair and 8 percent poor to very poor.
The barley export sales pace was estimated at 1.3 million bushels, with 20,000 metric tons going to Libya and 9,000 to Japan.
As of July 14, barley heading was estimated at 76 percent complete, compared with 51 percent the previous week and 72 percent for the five-year average. Barley’s crop condition rating declined 1 percent to 65 percent good to excellent, 31 percent fair and 4 percent poor to very poor.
July 18 cash feed barley bids in Minneapolis were at $4.60 per bushel, while malting barley bids were $6.90.
USDA reported the durum export shipment pace for the week ending July 12 at 131,000 bushels. Durum export sales pace was estimated at 100,000 bushels.
As of July 14, North Dakota’s durum crop was 85 percent jointed, compared with 61 percent the previous week and 87 percent for the five-year average. Heading was estimated at 54 percent, compared with 16 percent for the previous week and 55 percent for the five-year average. Durum’s crop condition rating declined 2 percent to 80 percent good to excellent, 17 percent fair and 3 percent poor.
July 18 cash bids for milling quality durum were at $7.80 per bushel in Berthold, N.D., while Dickinson, N.D., bids were $7.65.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending July 18 with close to $11 (Canadian) losses. Canola started the week on the defense, with most of the selling tied to technical pressure. The middle of the week had canola trying to trim losses. Support spilled over from a stronger U.S. soybean complex. Canola finished the week on the defense, as once the U.S. soybean complex turned lower, so did canola.
As of July 14, canola emergence was at 95 percent, compared with 88 percent the previous week and 100 percent for the five-year average. Blooming was estimated at 69 percent, compared with 39 percent the previous week and 79 percent for the five-year average. Canola’s crop condition rating was unchanged at 75 percent good to excellent, 21 percent fair and 4 percent poor to very poor.
July 18 cash canola bids in Velva, N.D., were at $22.60 per hundredweight.
As of July 14, 95 percent of North Dakota’s dry bean crop (35 percent of the nation’s acreage) was emerged, compared with 88 percent the previous week and 100 percent for the five-year average. North Dakota’s crop condition rating declined 2 percent to 55 percent good to excellent, 36 percent fair and 9 percent poor to very poor. Minnesota’s dry beans (9 percent of the nation’s acreage) are 12 percent bloomed, compared with 2 percent the previous week. Minnesota’s dry bean crop condition rating improved 1 percent to 64 percent good to excellent, 29 percent fair and 7 percent poor.
As of July 14, 97 percent of the nation’s sunflower crop had been planted, compared with 94 percent the previous week and 100 percent for the five-year average.
USDA estimated the soybean oil export sales pace for the week ending July 12 at 10.6 trillion metric tons, with a majority (9,500 metric tons) going to Mexico. This brings the year-to-date export sales pace for soybean oil to 897 trillion metric tons, compared with 537.3 trillion last year.
July 18 old crop cash sunflower bids in Fargo, N.D., were at $22.90 per hundredweight, while new crop bids were $22.90.