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Published September 03, 2013, 09:57 AM

Soybeans trade to old highs

Wheat started last week with big gains, but struggled the rest of the week.

By: Ray Grabanski, Agweek

Wheat

Wheat started last week with big gains, but struggled the rest of the week. Wheat’s direction was somewhat in response to the activity in corn and soybeans, but demand added support. For the week ending Aug. 29, September Minneapolis gained 8 cents, September Chicago gained 6.75 cents and September Kansas City gained 5.5 cents.

Wheat started the week following corn. Hot, dry forecasts are helping push soybeans higher, as many think the recent weather conditions have hurt the 2013 crop potential. The winter wheat exchanges were the best performers as planting concerns start to surface. Traders are concerned winter wheat acres will not get planted because of the dry conditions. Spring wheat was the worst performer as harvest progress continues to advance at a good rate in the Northern Plains.

The Aug. 27 and 28 session brought a mixed performance to the wheat exchanges. The winter wheat exchanges just could not gain ground, as spring wheat rallied slightly. Winter wheat saw pressure spill over from the lower corn and soybean market, while Minneapolis saw support from forecasts calling for rain, which will delay harvest. Losses were limited by export demand news. The U.S. Department of Agriculture announced an 119,000-metric-ton sale of wheat to an unknown destination. Japan is in tendering for 120,000 metric tons of feed wheat. Egypt bought 295,000 metric tons of wheat last week, as well. Even though it was not U.S. wheat, it takes wheat off the world supply and demand numbers.

All three of the wheat exchanges struggled Aug. 29. Wheat did try to trade with gains, but once corn dropped into negative territory, wheat followed. Aug. 30 was first notice day for the September contracts and unlike corn and soybeans, it seems likely that there will be wheat deliveries. This added to the selling pressure, as traders holding long positions had to liquidate front month positions. Additional selling was tied to a sharply higher U.S. dollar, which was higher on concerns about Syria.

As of Aug. 25, spring wheat harvest is estimated at 42 percent, compared with 18 percent the previous week and 54 percent for the five-year average. Spring wheat’s condition rating increased 1 percent to 67 percent good to excellent, 26 percent fair and 7 percent poor to very poor.

Corn

The corn market was choppy again last week, with a sharply higher close on Aug. 26 and then a softer tone the rest of the week. Support came from the sharp jump in the soybean market to start the week, along with the hot and dry weather forecast. But the market lacked buying interest for the remainder of the week and expectations of a large crop added weakness. For the week ending Aug. 29, September lost 1 cent and December was up 12 cents.

Corn closed sharply higher Aug. 26 with spillover support from the soybeans and general buying interest in the grain commodities. Additional support was generated from the lack of rain over the weekend, along with a hot and dry forecast for the week. The market was expecting a reduction in the crop ratings Aug. 26 and they were not disappointed, as the good to excellent rating fell 2 percent.

A softer tone was seen the rest of the week, with larger losses on Aug. 27 from profit taking. Parts of Ohio and Michigan received light showers and some traders think the current heat is beneficial to the late-maturing crop. The lack of moisture could lead to yield losses, but with room in corn’s supply and demand estimates, traders are not as concerned. Additional weakness came from another poor ethanol report. News that harvest is progressing in the south added weakness on Aug. 29 and Arkansas is reporting large yields. Shipments have also started to bring the new crop north to help with immediate needs and take advantage of the basis.

Ethanol production for the week ending Aug. 23 averaged 820,000 barrels per day, down 2.8 percent from the previous week. Corn used in production the week ending Aug. 23 is estimated at 86.1 million bushels and needs to average 186.02 million bushels per week to meet this crop year’s USDA estimate of 4.65 billion bushels. Cumulative usage for this crop year is 4.44 billion bushels. Stocks as of Aug. 23 were 16.25 million barrels, down 1.4 percent from the previous week.

The crop progress report showed corn that is in the dough stage was at 70 percent, versus 94 percent one year ago and a five-year average of 79 percent. Corn that is dented was at 23 percent versus 73 percent one year ago and a five-year average of 45 percent. The condition is rated as 59 percent good to excellent, 27 percent fair and 14 percent poor to very poor.

Soybeans

Soybeans were the market of choice in August. Hot and dry weather forecasts helped propel soybeans back to their previous contract high, but a change in the weather forecast and technical selling prevented soybeans from closing at those levels. Technically, soybeans put in a key reversal, which should pressure soybeans. For the week ending Aug. 29, September was up 64.75 cents, while November was 40.5 cents higher.

Soybeans were sharply higher Aug. 26 with support coming from weather concerns. Temperatures have been high and rain has been scarce, and that is not expected to change according to the 14-day forecast. The high temperatures should help the maturity of late-planted beans, but the lack of moisture raises the risks of damage to the crop. Crop ratings were 4 percent lower the afternoon of Aug. 26, which was expected. Aug. 26 export inspections were seen as disappointing.

November soybeans traded to within a quarter of a cent of their contract high Aug. 27 before slipping to close with moderate losses near the day’s lows.

Soybeans closed higher Aug. 28 as demand for new crop remains strong. USDA announced a sale of 120,000 metric tons of soybeans to China for 2013 and 2014 delivery. The current prices for soybeans are likely securing additional acreage in South America for their upcoming growing season.

Soybeans were trading higher at midday Aug. 29 before slipping to close with small losses. The lower close was despite hot and dry weather that continues to stress soybeans during the critical pod-filling stage. Aug. 29 export sales were seen as bullish.

As of Aug. 25, 96 percent of the nation’s soybean crop was in bloom, compared with 92 percent the previous week and 98 percent for the five-year average. Soybeans setting pods were at 84 percent, compared with 72 percent the previous week and 90 percent for the five-year average. Soybean’s crop condition rating was down 4 percent at 58 percent good to excellent, 29 percent fair and 13 percent poor to very poor.

Barley

USDA reported barley export shipment pace for the week ending Aug. 23 at 944,000 bushels, all going to Libya. Barley export sales pace was estimated at 200,000 bushels, with most of the bushels (3,000 metric tons) going to Japan and South Korea (1,500 metric tons).

As of Aug. 25, barley harvest was estimated at 58 percent complete, compared with 35 percent the prevoius week and 55 percent for the five-year average. Barley’s crop condition rating increased 1 percent to 66 percent good to excellent, 29 percent fair and 5 percent poor to very poor.

Aug. 29 cash feed barley bids in Minneapolis dropped to $3.95 per bushel, while malting barley bids dropped to $5.45.

Durum

USDA reported durum export shipments pace for the week ending Aug. 23 at 658,000 bushels, with a majority (482,000 bushels) going to Italy. Durum export sales pace for the week ending Aug. 23 was estimated at 500,000 bushels.

As of Aug. 25, North Dakota’s durum crop was 90 percent turning color, compared with 75 percent for the previous week and 88 percent for the five-year average. North Dakota’s durum harvest progress was estimated at 12 percent, compared with 2 percent the previous week and 34 percent for the five-year average. Durum’s crop condition rating increased 2 percent to 76 percent good to excellent, 23 percent fair and 1 percent poor.

Aug. 29 cash bids for milling quality durum were at $7.30 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $6.85.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Aug. 29 $10.40 (Canadian) higher. Canola started the week with sharp gains, but slipped the rest of the week. Early support spilled over from a stronger U.S. soybean complex, which continued to rally from hot, dry conditions. Late week pressure was a result of technical selling and from a pickup in farmer selling.

As of Aug. 25, North Dakota’s canola was 90 percent turning color, compared with 70 percent the previous week and 93 percent for the five-year average. Canola harvest was estimated at 13 percent complete, compared with 29 percent for the five-year average. North Dakota’s canola crop rating dropped 3 percent to 72 percent good to excellent, 25 percent fair and 3 percent poor.

Aug. 29 cash canola bids in Velva, N.D., were at $22.50 per hundredweight.

Dry beans

As of Aug. 25, 91 percent of North Dakota’s dry bean crop (29 percent of nation’s production) was setting pods, compared with 79 percent for the previous week and 99 percent for the five-year average. North Dakota’s crop condition rating declined 8 percent to 40 percent good to excellent, 45 percent fair and 15 percent poor to very poor. Minnesota’s dry beans (11 percent of the nation’s production) are 72 percent fully podded, compared with 26 percent the previous week. Minnesota’s dry bean crop condition rating decreased 14 percent to 42 percent good to excellent, 38 percent fair and 18 percent poor. Michigan’s dry bean producers (14 percent of nation’s production) are 96 percent setting pods, compared with 80 percent the previous week and 94 percent for the five-year average. Michigan’s crop condition rating decreased 8 percent to 56 percent good to excellent, 28 percent fair and 16 percent poor to very poor.

Sunflowers

As of Aug. 25, 88 percent of North Dakota’s sunflower crop was in bloom, compared with 71 percent the previous week and 96 percent for the five-year average. North Dakota’s sunflower crop condition rating decreased 4 percent to 73 percent good to excellent, 23 percent fair and 4 percent poor.

Aug. 29 cash old crop sunflower bids in Fargo, N.D., were at $20.60 per hundredweight, while new crop bids were $21.15.

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