Crops continue to improveWheat traded with losses in three out of the four sessions last week as the market searched for direction. Corn chopped around last week, but ended up losing ground. The market lacks any fresh news and talk of ideal weather and large yield potential continue to pressure the futures.
By: Ray Grabanski, Agweek
Wheat traded with losses in three out of the four sessions last week as the market searched for direction. For the week ending Aug. 8, September Minneapolis dropped 7.75 cents (another new weekly low), September Chicago dropped 19.25 cents (another new weekly low), and September Kansas City dropped 4.75 cents.
Wheat started the week on the defense. Early selling pressure spilled over from the lower corn market, as both wheat and corn continue to be in stiff completion for their share of the feed ration. Additional selling came from export demand concerns, as many traders expect export demand to switch back to corn if the spread between corn and wheat continues to widen.
Wheat found support Aug. 6, but only after trading to a 13-month low. And it did not hurt to have Egypt announce another wheat purchase. Egypt bought 120,000 metric tons of wheat, splitting the bushels equally between Romania and Ukraine. Additional support came from the funds, as they covered short positions and took profits on earlier trades. A weaker U.S. dollar helped encourage the rally in wheat.
Wheat struggled Aug. 7 and 8, with selling tied to another U.S. missed export sale. The past week, there has been a lot of wheat export sales reported, but most of the sales have been going to other countries. Iraq bought 150,000 metric tons of wheat with 100,000 metric tons coming from Australia and 50,000 from Canada. The U.S. did get a decent wheat sale last week, as Japan was in and bought more than 52,000 metric tons of U.S. wheat.
Additional selling came from reports of a potentially large U.S. spring wheat crop. The recent cool weather conditions have allowed for the U.S. spring wheat crop to finish with as close to ideal weather conditions as possible. Position squaring ahead of the Aug. 5 U.S. Department of Agriculture August crop production report was also seen. The average trade estimate shows little change in USDA’s July estimate for wheat production or for the 2013 ending stocks estimate, at 576 million bushels.
As of Aug. 4, winter wheat harvest was 87 percent complete, compared with 81 percent the previous week and 86 percent for the five-year average. Spring wheat heading is estimated at 97 percent, compared with 94 percent the previous week and 98 percent for the five-year average. Spring wheat’s condition rating was unchanged at 68 percent good to excellent, 25 percent fair and 7 percent poor to very poor.
Corn chopped around last week, but ended up losing ground. The market lacks any fresh news and talk of ideal weather and large yield potential continue to pressure the futures. Traders were also positioning ahead of the USDA August crop production report. As of the Aug. 8 close, September lost 3 cents and December was down 4 cents.
Corn traded with red ink for the first three days of the week. Selling pressure came from a wet and cool forecast for the next two weeks, but development remains slow and an early frost would hurt the crop. Additional weakness came from talk that crop scouts are estimating near record yield potential in the eastern Corn Belt.
Yield estimates continue to climb and the crop conditions report also showed a 1 percent uptick in the excellent category last week. The U.S. corn crop is now rated at 64 percent good to excellent, while the 10-year average is 60 percent. Demand has been slow and one of the larger ethanol companies in the U.S. said it will shut down nine out of its 10 plants through the end of September for maintenance.
The futures closed slightly higher on Aug. 8, with pre-report short covering coming into play, as short positions took their money to the sidelines ahead of the USDA report. Soybeans traded sharply higher, which spilled over to the corn. The export sales report was supportive and above estimates with three weeks left in this marketing year. The grain markets also found additional strength from better economic news out of China.
Ethanol production for the week ending Aug. 2 averaged 853,000 barrels per day, up 2.5 percent from the previous week. Corn used in production the week ending Aug. 2 was estimated at 89.6 million bushels and needs to average 103.14 million per week to meet the USDA estimate of 4.6 billion. Cumulative corn used for this crop year is 4.2 billion. Stocks were 16.72 million barrels, up 1.6 percent from the previous week. Imports were reported for the fifth consecutive week.
The crop progress report showed 86 percent of the corn is silking, versus 98 percent one year ago and a five-year average of 89 percent. Corn that is in the dough stage was at 18 percent, versus 58 percent one year ago and a five-year average of 31 percent. The condition is rated 64 percent good to excellent, 25 percent fair and 11 percent poor to very poor.
Soybeans broke the mold of the grains, as it was the only grain to end the week with gains. News out of China of an improving economy and reports of a record amount of soybeans imported for the month of July helped support the soybean complex. For the week ending Aug. 8, September gained 14.5 cents, while November gained 2.75 cents.
Soybeans traded mixed Aug. 5, with new crop closing slightly higher, despite early pressure. Favorable growing conditions continue to pressure the market as weather has been nonthreatening. Weekend rains were seen as disappointing, as dry conditions grow more concerning. Mild temperatures have helped make up for dry conditions thus far, though the northwest portion of the growing region could use some warmer temperatures for crops that are behind schedule.
Aug. 6 and 7 was a little tough on soybeans, as the market traded to new lows as the forecast remained nonthreatening. Aug. 6 rains, which ran across portions of the Midwest, were seen as beneficial, while a 1 percent improvement in soybean conditions on the crop progress report provided additional pressure.
USDA announced sales of 110,000 metric tons Aug. 6 and 220,000 Aug. 7. Both sales were for 2013 and 2014 delivery to China.
Soybeans closed with strong gains Aug. 8 on short-covering ahead of the USDA World Agriculture Supply and Demand report. Trade expects an acreage decline in the report, which would be bullish for prices.
Nonthreatening weather continues to limit gains, while the crop is in good shape on the whole. Gains in calendar spreads and the firm interior basis provided support, as did the lower U.S. dollar.
As of Aug. 4, 79 percent of the nation’s soybean crop was in bloom, compared with 65 percent the previous week and 85 percent for the five-year average. Soybeans setting pods were at 39 percent, compared with 20 percent the previous week and 51 percent for the five-year average. Soybean’s crop condition rating was up 1 percent at 64 percent good to excellent, 27 percent fair and 9 percent poor to very poor.
USDA reported barley export shipments pace for the week ending Aug. 2 at 41,000 bushels, with 32,000 bushels going to Canada and 9,000 to South Korea. There were no barley export sales reported.
As of Aug. 4, barley harvest was estimated at 4 percent complete, compared with zero the previous week and 11 percent for the five-year average. Barley’s crop condition rating dropped 3 percent to 65 percent good to excellent, 30 percent fair and 5 percent poor to very poor.
Aug. 8 cash feed barley bids in Minneapolis dropped to $4.15 per bushel, while malting barley bids were at $6.15.
As of Aug. 4, North Dakota’s durum crop was 99 percent headed, compared with 91 percent for the previous week and 93 percent for the five-year average. Durum’s crop condition rating was unchanged at 79 percent good to excellent, 19 percent fair and 2 percent poor.
Aug. 5 cash bids for milling quality durum were at $7.40 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $7.25.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Aug. 8 off $8.10, putting in another week of new lows. Canola traded with gains in more sessions than losses this week, but the one down day was enough to leave the market lower for the week. Canola was pressured to a new recent low from improving weather and crop conditions. Additional selling was from an uptick in farmer selling, as new crop harvest draws near.
Technical selling developed once canola traded through strong support lines. Bottom picking tried to limit the week’s losses. Position squaring ahead of the USDA report was also seen.
As of Aug. 4, North Dakota’s canola was 40 percent turning color, compared with 15 percent the previous week and 54 percent for the five-year average. North Dakota’s canola crop condition rating decreased 3 percent to 77 percent good to excellent, 19 fair and 4 percent poor to very poor.
Aug. 8 cash canola bids in Velva, N.D., were at $21.74 per hundredweight.
As of Aug. 5, 79 percent of North Dakota’s dry bean crop (35 percent of nation’s acreage) was blooming, compared with 62 percent the previous week and 91 percent for the five-year average. North Dakota’s crop condition rating decreased 4 percent to 54 percent good to excellent, 38 percent fair and 8 percent poor to very poor.
Minnesota’s dry beans (9 percent of the nation’s acreage) are 85 percent bloomed, compared with 68 percent the previous week. Minnesota’s dry bean crop condition rating declined 3 percent to 56 percent good to excellent, 33 percent fair and 11 percent poor.
As of Aug. 4, 16 percent of North Dakota’s sunflower crop was in bloom, compared with 5 percent the previous week and 40 percent for the five-year average. North Dakota’s sunflower crop condition rating declined 6 percent to 77 percent good to excellent, 20 percent fair and 3 percent poor.
USDA estimated soybean oil export sales pace for the week ending Aug. 2 at 2.5 trillion metric tons (300,000 old crop, 2.2 million new crop), with a majority of the soybean oil (1,000 metric tons) going to South Korea and Nicaragua (600 metric tons). This brings the year-to-date export sales pace for soybean oil to 911.9 trillion metric tons, compared with 567.1 trillion last year.
Aug. 8 cash sunflower bids in Fargo, N.D., had old crop bids at $20.50 per hundredweight, while new crop bids were $20.55.