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Published August 26, 2013, 10:09 AM

Hot, dry forecast propels soybeans

Wheat traded with strength to start and end the week. Support spilled over from a sharply higher soybean market and higher corn market.

By: Ray Grabanski, Agweek

Wheat

Wheat traded back and forth last week, but ended the week Aug. 22 on the negative side. By the Aug. 23 close, Minneapolis September was off 18 cents, September Chicago dropped 0.5 cents and September Kansas City dropped 4 cents.

Wheat traded with strength to start and end the week. Support spilled over from a sharply higher soybean market and higher corn market. Corn and soybeans were supported by weather concerns, as forecasts are calling for little to no rain and heat in much of the Corn Belt. This is expected to continue to cause the corn and soybean crop ratings to decline and reduce the potential yield. Wheat also saw support from impressive exports, both shipments and sales.

Wheat did struggle mid-week, as technical selling stepped in to push wheat lower. Adding selling pressure was reports of a better-than-expected spring wheat harvest. So far, early harvest results have the Northern Plains spring wheat crop coming in with impressive gains and good quality.

The Statistics Canada August crop production report was released Aug. 23 and it was bearish for wheat. Statistics Canada estimated the 2013 Canadian wheat crop at 30.6 million metric tons, compared with expectations for 29.5 million and 27.2 million metric tons for last year. Spring wheat production is estimated at 21.8 million metric tons, compared with 18.8 million last year. Winter wheat production is estimated at 3.6 million metric tons, compared with 3.7 million last year. If realized, this will be the largest Canadian wheat harvest in 22 years.

The U.S. Department of Agriculture reported Japan was buying U.S. wheat. Japan has been reported to have bought 129,055 metric tons of U.S. wheat and 24,035 metric tons of Canadian wheat. Also, reports have China capturing about 50 percent of last week’s export sales pace.

As of Aug. 18, winter wheat harvest was 96 percent complete, compared with 92 percent the previous week and 94 percent for the five-year average. Spring wheat harvest is estimated at 18 percent, compared with 6 percent the previous week and 38 percent for the five-year average. Spring wheat’s condition rating was unchanged at 66 percent good to excellent, 27 percent fair and 7 percent poor to very poor.

Corn

Corn traded with sharp gains and losses, depending on the day, last week. News out of the Pro Farmer tour showed larger yield potential for most of the states included, while support came from the near-term forecast calling for hot, dry weather. One has to remember that if the numbers are realized in the last USDA report, the corn crop will be the largest ever produced in the U.S. and the Pro Farmer tour showed larger yield potential in just about every state compared with USDA. For the week ending Aug. 22, September gained 13 cents and December was unchanged.

Corn traded sharply higher on Aug. 19 and 21. Support came from dry weather over the weekend and high temperatures last week. The corn crop is filling and moisture is needed, especially in the Midwest.

Corn traded under pressure on Aug. 20 and 22 as a result of larger yield estimates from the Pro Farmer tour. The tour estimated Ohio’s yield at 171.6 bushels per acre versus 144 bushels per acre for the three-year average. South Dakota was 161 bushels per acre versus the three-year average of 119 bushels per acre. Indiana yield was estimated at 167.36 bushels per acre versus a three-year average of 141.14 bushels per acre. Nebraska was estimated at 154.93 bushels per acre versus a three-year average of 147.93 bushels per acre and Illinois was at 170.48 bushels per acre versus a three-year average of 148.04 bushels per acre.

Ethanol production for the week ending Aug. 16 averaged 844,000 barrels per day, down 1.5 percent from the previous week. Corn used in production the week ending Aug. 16 was estimated at 88.6 million bushels and needs to average 116.1 million bushels per week to meet this crop year’s USDA estimate of 4.6 billion bushels. Cumulative corn used for ethanol production is 4.35 billion bushels. Stocks as of Aug. 16 were 16.5 million barrels, up 0.35 percent from the previous week. Ethanol imports were also reported for the seventh consecutive week.

The crop progress report showed 97 percent of the corn is silking versus 100 percent one year ago and a five-year average of 99 percent. Corn that is in the dough stage was at 52 percent versus 87 percent one year ago and a five-year average of 65 percent. Corn that is dented was at 11 percent versus 57 percent one year ago and a five-year average of 30 percent. The condition is rated as 61 percent good to excellent, 26 percent fair and 13 percent poor to very poor.

Soybeans

Traders were aggressive buyers of soybeans last week because of a hot, dry weather forecast for this week. This forecast, if realized, could result in lower soybean yields. For the week ending Aug. 22, September was up 38.75 cents while November was 27.5 cents higher.

Soybeans traded with strong gains on Aug. 19 and 21, as the weather forecast remained supportive. We are in a critical time period for pod-filling soybeans and the weather remains hot and dry with too little moisture. A 2 percent reduction in crop condition ratings in the crop progress report was bullish, as were export inspections that came in above the amount needed to reach USDA’s projection. Bull spreading in the September to November spread provided additional front-month support on Aug. 21.

Trade was lower on Aug. 20 and 22, with profit taking after strong gains the preceding days. Some talk indicated the market was overbought and due for a correction, as well. Additional pressure Aug. 22 came from overnight rain through the northern portion of the Corn Belt. The rain comes at a critical time for pod-filling soybeans, but more is needed, with temperatures set to increase again into the weekend. The Pro Farmer crop tour wrapped up Aug. 22, having seen mixed conditions.

As of Aug. 18, 92 percent of the nation’s soybean crop was in bloom, compared with 88 percent the previous week and 96 percent for the five-year average. Soybeans setting pods were at 72 percent, compared with 58 percent the previous week and 81 percent for the five-year average. Soybean’s crop condition rating was down 2 percent at 62 percent good to excellent, 28 percent fair and 10 percent poor to very poor.

Barley

USDA reported no barley export shipments or sales for the week ending Aug. 16.

As of Aug. 18, barley harvest was estimated at 35 percent complete, compared with 17 percent the previous week and 36 percent for the five-year average. Barley’s crop condition rating decreased 1 percent to 65 percent good to excellent, 28 percent fair and 7 percent poor to very poor.

Statistics Canada estimated Canada’s 2013 barley crop production at 8.8 million metric tons, compared with estimates of 8.6 million metric tons and 8 million metric tons for last year. Cash feed barley bids in Minneapolis decreased 15 cents to $3.75 per bushel, while malting barley bids declined 50 cents to $5.50.

Aug. 22 cash feed barley bids in Minneapolis decreased to $3.80 per bushel, while malting barley bids declined to $5.40.

Durum

USDA reported no durum export shipments or sales for the week ending Aug. 16.

As of Aug. 18, North Dakota’s durum crop was 75 percent turning color, compared with 56 percent for the previous week and 75 percent for the five-year average. North Dakota’s durum harvest progress was estimated at 2 percent, compared with zero the previous week and 20 percent for the five-year average. Durum’s crop condition rating increased 2 percent to 74 percent good to excellent, 25 percent fair and 1 percent poor.

Statistics Canada estimated Canada’s 2013 durum production at 5.1 million metric tons, compared with estimates of 4.95 million and 4.6 million metric tons for last year.

Aug. 22 cash bids for milling quality durum were at $7.30 per bushel in Berthold, N.D., while Dickinson, N.D., bids were $7.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Aug. 22 with $9 (Canadian) gains. Canola started the week with solid gains with support spilling over from a stronger U.S. soybean complex. Weather concerns were the main driver, as dry conditions are starting to stress the U.S. vegetable oil crop. Canola was pressured late in the week by a neutral Statistics Canada report. Statistics Canada estimated Canada’s 2013 canola production at 14.7 million metric tons, compared with estimates of 15 million metric tons and 13.3 million metric tons for last year. If realized, this would be an all-time record production for canola in Canada, but the estimate was less than traders had expected.

As of Aug. 18, North Dakota’s canola was 70 percent turning color, compared with 59 percent the previous week and 87 percent for the five-year average. North Dakota’s canola crop rating dropped 4 percent to 75 percent good to excellent, 22 percent fair and 3 percent poor.

Aug. 22 cash canola bids in Velva, N.D., are at $22.23 per hundredweight.

Dry beans

As of Aug. 18, 97 percent of North Dakota’s dry bean crop (29 percent of nation’s production) was blooming, compared with 87 percent the previous week and 100 percent for the five-year average. Pod setting was estimated at 79 percent complete, compared with 59 percent for the previous week and 95 percent for the five-year average. North Dakota’s crop condition rating declined 6 percent to 48 percent good to excellent, 42 percent fair and 10 percent poor to very poor. Minnesota’s dry beans (11 percent of the nation’s production) are 96 percent bloomed, compared with 93 percent the previous week. Minnesota’s dry bean crop condition rating decreased 5 percent to 56 percent good to excellent, 33 percent fair and 11 percent poor.

Sunflowers

As of Aug. 18, 71 percent of North Dakota’s sunflower crop was in bloom, compared with 37 percent the previous week and 86 percent for the five-year average. North Dakota’s sunflower crop condition rating increased 1 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. 16 at 8.4 trillion metric tons, with a majority of the soybean oil (4,000 metric tons) going to Germany and Colombia (3,000 metric tons). This brings the year-to-date export sales pace for soybean oil to 922.2 trillion metric tons, compared with 571.4 trillion last year.

Aug. 22 cash sunflower bids in Fargo, N.D., had old crop at $20.65 per hundredweight, while new crop bids were at $20.80.

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