Weather concerns continueWheat lost ground last week, losing ground every session of the short week. Wheat was under pressure from spillover selling from a negative corn market, as well as from better-than-expected yield results from the Northern Plains spring wheat.
By: Ray Grabanski, Agweek
Wheat: good yield reports
Wheat lost ground last week, losing ground every session of the short week. Wheat was under pressure from spillover selling from a negative corn market, as well as from better-than-expected yield results from the Northern Plains spring wheat. Losses were kept in check by strong export demand. For the week ending Sept. 5, December Minneapolis dropped 19 cents, Chicago December dropped 13.75 cents and December Kansas City declined 14.25 cents.
Wheat struggled to start the short week. Early selling was tied to pressure from a lower corn market. Additional selling came from thoughts that the U.S. Department of Agriculture’s crop progress report will show a rapidly advancing spring wheat harvest because of a hot, dry forecast. Losses were limited by a friendly export inspections estimate. USDA reported Japan is in tendering for 67,923 metric tons of U.S. wheat. Egypt was back in the wheat market, this time buying 355,000 metric tons from the Black Sea region.
The Sept. 4 session also saw wheat struggling. Selling pressure spilled over from a weaker corn market. Corn and wheat have been joined at the hip lately and it seems that one mirrors the movement of the other. Late in the session, wheat was able to recover some of its losses. Egypt was in again overnight buying 180,000 metric tons of wheat out of the Black Sea region. Overall, it is friendly to see wheat sales, even though the U.S. has not captured the sales. This shows how strong wheat demand is and it helps deplete wheat supplies in other countries.
The Sept. 5 session slipped lower, again following the weaker corn and soybean complex. But wheat remained on the defense and even extended losses late in the session when corn and soybeans recovered. Late session pressure came from continued reports of better-than-expected spring wheat yields.
Wheat export news continues to come in as Japan bought 67,923 metric tons of U.S. milling wheat. South Korea bought 22,500 metric tons of U.S. wheat, as well. Wheat export demand remains strong but with the increase in wheat yields, it somewhat offsets the good demand news. USDA’s export inspections for wheat were estimated at 36.4 million bushels for the week ending Aug. 30.
Export sales pace for the week ending Aug. 30 was estimated at a combined total of 27.5 million bushels with 24.6 million being old crop and 2.9 million new crop. With 39 weeks left in wheat’s export marketing year, shipments will need to average 19.5 million bushels and sales have to average 13.3 million to make USDA’s export expectations of 1.1 billion.
As of Sept. 1, spring wheat harvest is estimated at 64 percent, compared with 42 percent the previous week and 69 percent for the five-year average. Spring wheat’s condition rating increased 3 percent to 70 percent good to excellent, 24 percent fair and 6 percent poor to very poor.
Corn: harvest pressure
The corn market was under pressure last week and closed with red ink from Sept. 3 to 5. Selling interest increased with harvest moving into the southern areas of the Corn Belt and yields have been exceeding expectations. The basis also took a big hit last week, as new crop corn enters the pipeline. For the week ending Sept. 5, September lost 6 cents and December was down 22 cents.
Corn traded with decent gains Sept. 2 with support coming from the soybean market, but corn lacked any follow-through buying. Better-than-expected yields are being reported in the south and harvest will be moving into the southern Midwest. New crop supplies are entering the supply chain and are being shipped north to meet needs. Corn also closed lower Sept. 4 with follow-through selling coming from Sept. 3, as well as from the sharp losses seen in soybeans. Additional weakness came from the huge drop in the basis as new crop corn comes into the pipeline.
Selling interest continued to pressure the futures on Sept. 5. Harvest continues to move north and has now entered Illinois, Indiana and Nebraska with good yields being reported. The ethanol report was disappointing and it appears USDA will have to adjust ethanol use in its next crop production report.
Ethanol production for the week ending Aug. 30 averaged 819,000 barrels per day, down 0.12 percent from the previous week. Total ethanol production for the week was 5.73 million barrels. Corn used in production was estimated at 86 million bushels and this crop year’s cumulative corn used for ethanol production is 4.52 billion bushels. USDA had estimated 4.65 billion bushels of corn would be used for ethanol. Stocks as of Aug. 30 were 16.22 million barrels, down 0.21 percent from the previous week.
The crop progress report showed corn that is in the dough stage was at 84 percent, compared with 97 percent one year ago and a five-year average of 89 percent. Corn that is dented was at 42 percent, compared with 84 percent one year ago and a five-year average of 61 percent. Corn that is mature was at 4 percent, compared with 38 percent one year ago and a five-year average of 17 percent. The condition is rated as 59 percent good to excellent, 28 percent fair and 16 percent poor to very poor.
Soybeans: weather concerns remain
Soybeans put in another higher week with most of the strength continuing to come from weather concerns. Hot, dry conditions remain over much of the major growing regions of the U.S. and that has many cutting soybeans potential production estimate. For the week ending Sept. 5, September was up 1 cent, while November was 10 cents higher.
Dry weather continued to provide support to soybeans following disappointing moisture reports over the long weekend. Traders expected a 3 to 5 percent decrease in soybean crop conditions in the crop progress report and were not disappointed, as ratings fell 4 percent. Sept. 3 export inspections were bearish, coming in below expectations.
Soybeans traded sharply lower Sept. 4, giving back Sept. 3 gains. Heavy technical selling pressured the market as the November contract has failed to take out the contract high of $14.0975 over the past two weeks. The situation in Syria causes uncertainty in the markets that could lead to choppy trade until it becomes clearer.
Soybeans traded lower overnight before recovering to close with strong gains and at or near the session’s highs. Strong bull spreading provided support. The forecast remains mostly dry. Additional support was tied to the expectation for tight 2013 and 2014 supplies. China sold 417,448 metric tons of soybeans from its reserves Sept. 5.
USDA reported soybean export inspections pace for the week ending Aug. 30 at 1.4 million bushels. Soybean export sales pace was estimated at 31 million bushels. Shipments were reported at 2.2 million bushels.
As of Sept. 1, soybeans setting pods were at 92 percent, compared with 84 percent the previous week and 96 percent for the five-year average.
USDA reported barley export shipment pace for the week ending Aug. 10 at 8,000 bushels, all going to Mexico. No barley export sales were reported.
As of Sept. 1, barley harvest was estimated at 76 percent complete, compared with 58 percent the previous week and 71 percent for the five-year average. North Dakota’s barley crop condition rating increased 2 percent to 74 percent good to excellent, 21 percent fair and 5 percent poor to very poor.
USDA reported durum export shipments for the week ending Aug. 30 at 1.45 million bushels. Export sales pace was estimated at 700,000 bushels.
As of Sept. 1, North Dakota’s durum crop was 95 percent turning color, compared with 90 percent for the previous week and 94 percent for the five-year average. North Dakota’s durum harvest progress was estimated at 18 percent, compared with 12 percent the previous week and 48 percent for the five-year average. Durum’s crop condition rating increased 1 percent to 77 percent good, 21 percent fair and 2 percent poor.
Sept. 5 cash bids for milling quality durum were at $7.30 per bushel in Berthold, N.D., while Dickinson, N.D., bids were $6.85.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Sept. 5 with $13.50 (Canadian) losses. Canola traded lower in every session with selling tied to better-than-expected yield reports from the earlier harvest results, as well as from thoughts that this year’s canola crop will likely be a record.
As of Sept. 1, North Dakota’s canola was 92 percent turning color, compared with 90 percent the previous week and 98 percent for the five-year average. Canola harvest was estimated at 39 percent complete, compared with 13 percent for the previous week and 47 percent for the five-year average. North Dakota’s canola crop rating increased 8 percent to 80 percent good to excellent, 17 percent fair and 3 percent poor.
Sept. 5 cash canola bids in Velva, N.D., were at $21.09 per hundredweight.
As of Sept. 1, 98 percent of North Dakota’s dry bean crop (29 percent of nation’s production) was setting pods, compared with 91 percent for the previous week and 100 percent for the five-year average. North Dakota’s crop condition rating declined 3 percent to 37 percent good to excellent, 48 percent fair and 15 percent poor to very poor. Minnesota’s dry beans (11 percent of the nation’s production) are 87 percent fully podded, compared with 72 percent the previous week. Minnesota’s dry bean crop condition rating decreased 1 percent to 41 percent good to excellent, 41 percent fair and 18 percent poor.
As of Sept. 1, 98 percent of North Dakota’s sunflower crop was in bloom, compared with 88 percent the previous week and 99 percent for the five-year average. North Dakota’s sunflower crop condition rating was unchanged at 73 percent good to excellent, 23 percent fair and 4 percent poor.
Sept. 5 cash sunflower bids in Fargo, N.D., for old crop were at $20.45 per hundredweight, while new crop bids were $21.