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Published August 05, 2013, 10:39 AM

Markets recover losses

By: Ray Grabanski, Agweek

Wheat

Wheat recovered slightly last week with most of the buying centered on improving world wheat demand. Egypt returned to the market, buying a lot of Black Sea wheat. For the week ending Aug. 1, September Minneapolis gained 5.25 cents, September Chicago gained 7.75 cents and September Kansas City picked up 15.25 cents. Minneapolis and Chicago both traded to new weekly lows.

Wheat started the week off with gains, but slowly slipped lower throughout the session. Early support was from an improving demand outlook as U.S. wheat exports have been able to hold their own against the other major exporting countries. But once corn extended its losses, wheat joined in. The winter wheat exchanges were the best performers, while Minneapolis continues to struggle. Crop conditions remain good and crop potential for wheat in the Northern Plains remains favorable. This kept the Minneapolis market on the defense.

The July 30 session saw wheat trading higher because of a lot of export news. Early support was from news that Japan was lifting its ban on white wheat (which was put in place soon after genetically modified wheat was found in Oregon). Soon after the ban was lifted, Japan bought 89,579 metric tons of white wheat and 31,721 metric tons of spring wheat from the U.S. (as well as 23,282 metric tons from Canada and 33,630 metric tons from Australia). Taiwan also stepped into the wheat market, buying 97,200 metric tons of U.S. wheat. Additional support was from reports that Egypt was again buying wheat. Granted, the wheat was not U.S. wheat, but it was another significant sale, and it all helps reduce bushels. Egypt bought 240,000 metric tons of wheat equally from Ukraine and Romania.

Wheat flip-flopped the next two sessions. The July 31 session was spent on the higher side, as wheat continued to see support from all of last week’s export news. The Aug. 1 session saw losses again, as the market followed corn and soybeans lower.

As of July 28, the winter wheat harvest was 81 percent complete, compared with 75 percent the previous week and 82 percent for the five-year average. Spring wheat heading is estimated at 94 percent, compared with 85 percent the previous week and 95 percent for the five-year average. Spring wheat’s condition rating was unchanged at 68 percent good to excellent, 26 percent fair and 6 percent poor to very poor.

Corn

The corn market chopped around last week, but lacked buying interest and again showed weekly losses. Ideal weather for pollination and the lack of export demand continue to pressure the futures. For the week ending Aug. 1, September lost 6 cents and December was down 10 cents.

Selling pressure continued on July 29, with the lack of fresh news. The weather is the main focus and the forecast calls for above-normal moisture and lower temperatures for most of the Corn Belt. Additional weakness came from the crash in basis the week ending July 26. Crop scouts are also seeing trend line yield potential in the eastern Corn Belt.

The futures rebounded the next two days and closed with small gains. Concerns have started to surface about the low temperatures delaying crop development and that an early frost would certainly hurt the quality and yield expectations. There are also some dry areas in the northern Midwest, and these areas continue to miss the rains. Short covering was also noted in this oversold market and the basis firmed up last week.

Corn traded sharply lower on Aug. 1, ending near session lows. Selling interest came back into the market with a weather run that showed an increased chance of rain for Nebraska, Missouri, Iowa and Illinois. The ethanol report was also disappointing. The International Grains Council estimated the world corn crop for 2013 and 2014 at 942 million tons, down 4 million tons from previous estimates, but still a record high. The current USDA estimate is at 959.84 million tons.

Ethanol production for the week ending July 26 averaged 832,000 barrels per day, down 2.5 percent from the previous week. Corn used in production the week ending July 26 is estimated at 87.4 million bushels and needs to average 100.5 million per week to meet this crop year’s USDA estimate of 4.6 billion bushels. This crop year’s cumulative usage for ethanol production is 4.08 billion bushels. Stocks were estimated at 16.45 million barrels, down 4.67 percent from the previous week and 15.2 percent from last year.

The crop progress report showed 71 percent of the corn is silking, versus 93 percent one year ago and a five-year average of 75 percent. Corn that is in the dough stage was at 8 percent, versus 35 percent one year ago and a five-year average of 17 percent. The condition is rated as 63 percent good to excellent, 26 percent fair and 11 percent poor to very poor.

Soybeans

Soybeans recovered some ground last week, as technical buying stepped in to correct an oversold market condition. New crop continues to be under pressure from good growing conditions. For the week ending Aug. 1, August was up 8 cents, while November was 36 cents lower.

Soybeans closed mostly lower July 29 and 30 with the August contract being the exception July 29. A bounce in old crop versus new crop spreads and the stabilizing cash market provided nearby support on July 29. The favorable forecast placed pressure on the market, with mild weather and beneficial rainfall expected. July 29 export inspections were seen as bearish. On July 30, USDA announced a sale of 290,000 metric tons of soybeans to unknown destinations for 2013 and 2014 delivery.

August soybeans led the market higher again July 31, closing with sharp 24 cent gains as the old crop basis stabilized after the previous week’s big drop. New crop contracts followed moderately higher, but were limited as chart momentum remains down. Crop conditions remain good and the weather forecast is nonthreatening. USDA announced a sale of 120,000 metric tons of soybeans to unknown destinations for 2013 and 2014 delivery July 31.

Soybean contracts closed near the day’s lows Aug. 1 as nonthreatening weather continues to pressure the market. The weather remains mild, and rain in the forecast should arrive at a critical time for soybeans filling pods. Additional pressure came from outside markets, as the U.S. dollar was sharply higher. Aug. 1 export sales were seen as neutral to bullish.

As of July 28, 65 percent of the nation’s soybean crop was in bloom, compared with 46 percent the previous week and 74 percent for the five-year average. Soybeans setting pods were at 20 percent, compared with 8 percent the previous week and 34 percent for the five-year average. Soybean’s crop condition rating was down 1 percent at 63 percent good to excellent, 28 percent fair and 9 percent poor to very poor.

Barley

USDA reported barley export shipments pace for the week ending July 26 at 12,000 bushels, all going to Canada. This brings barley’s export shipment pace to 239,000 bushels, compared with 72,000 bushels for last year. Barley export sales pace for the week ending July 26 was estimated at a negative 400,000 bushels (Japan cancellation of 8,900 metric tons). This brings barley’s export sales pace to 2.4 million bushels, compared with 6.2 million for last year.

As of July 28, barley heading was estimated at 98 percent complete, compared with 91 percent the previous week and 95 percent for the five-year average. Barley’s crop condition rating improved 3 percent to 68 percent good to excellent, 28 percent fair and 4 percent poor to very poor.

Aug. 1 cash feed barley bids in Minneapolis dropped to $4.25 per bushel, while malting barley bids dropped to $6.15.

Durum

USDA reported no durum export shipments or sales for the week ending July 26. This brings durum’s export sales pace to 4.3 million bushels, compared with 6.6 million for last year.

As of July 28, North Dakota’s durum crop was 91 percent headed, compared with 77 percent the previous week and 84 percent for the five-year average. Durum’s crop condition rating declined 1 percent to 79 percent good to excellent, 19 percent fair and 2 percent poor.

Aug. 1 cash bids for milling quality durum were at $7.60 per bushel in Berthold, N.D., while Dickinson, N.D., bids were $6.95.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Aug. 1 with $7.50 (Canadian) losses and at a new weekly low. Canola started the week on the defense, with selling tied to spill over selling from a lower U.S. soybean complex. Technical selling was also seen as canola remains below support. Ideal weather conditions in much of the Northern Plains added selling pressure. Late week strength was from technical buying, as most markets have traded down to major support levels and needed a corrective bounce.

As of July 28, North Dakota’s canola was 97 percent in bloom, compared with 92 percent the previous week and 99 percent for the five-year average. Canola turning color was estimated at 15 percent, compared with 7 percent the previous week and 36 percent for the five-year average. North Dakota’s canola crop condition rating increased 4 percent to 80 percent good to excellent, 16 percent fair and 4 percent poor to very poor.

Aug. 1 cash canola bids in Velva, N.D., were at $21.67 per hundredweight.

Dry beans

As of July 28, 62 percent of North Dakota’s dry bean crop (35 percent of nation’s acreage) was blooming, compared with 38 percent the previous week and 78 percent for the five-year average. North Dakota’s crop condition rating increased 1 percent to 58 percent good to excellent, 35 percent fair and 7 percent poor to very poor. Minnesota’s dry beans (9 percent of the nation’s acreage) are 68 percent bloomed, compared with 42 percent the previous week. Minnesota’s dry bean crop condition rating declined 5 percent to 59 percent good to excellent, 32 percent fair and 9 percent poor.

Sunflowers

As of July 28, 5 percent of North Dakota’s sunflower crop was in bloom, compared with 2 percent the previous week and 17 percent for the five-year average. North Dakota’s sunflower crop condition rating improved 12 percent to 83 percent good to excellent, 13 percent fair, and 4 percent poor to very poor.

USDA estimated the soybean oil export sales pace for the week ending July 26 at 11.5 trillion metric tons (11.3 million old crop, 200,000 new crop), with a majority of the soybean oil (6,000 metric tons) going to Germany and Norway (5,000 metric tons). This brings the year-to-date export sales pace for soybean oil to 911.6 trillion metric tons, compared with 554.1 trillion last year.

Aug. 1 cash sunflower bids in Fargo, N.D., were at $20.95 per hundredweight.

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