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Published September 16, 2013, 09:54 AM

USDA gives market direction

Wheat started last week with loss, but recovered to end the week with small gains.

By: Ray Grabanski, Agweek

Wheat

Wheat started last week with loss, but recovered to end the week with small gains. Strong demand and a neutral U.S. Department of Agriculture September crop production report helped stabilize wheat. For the week ending Sept. 12, December Minneapolis gained 2 cents, December Chicago gained 5.25 cents and December Kansas City was up 6.25 cents.

Wheat struggled to start the week, even after opening with modest gains. Wheat traded with decent gains early in the session as a result of a friendly export inspections report. Additional support came from weekend rains in North Dakota, which should delay harvest activity. By mid-session, wheat started to sell off, playing a follower to corn and soybeans. Additional selling was tied to thoughts that the crop progress report will show wheat harvest is close to completion in the Northern Plains.

Wheat traded with modest gains Sept. 10. Early support came from technical strength as traders position themselves ahead of the September crop production report. Additional support came from export news, as another round of tenders hit the market. Reports have Japan in tendering for 40,819 metric tons of U.S. wheat. Egypt is also in tendering for more wheat, which could put its wheat purchase for the year well over 2 million metric tons. To add to the buying strength, Australia cut its wheat production estimates 900,000 metric tons to 24.5 million metric tons.

The Sept. 11 session traded narrowly mixed before closing mostly higher ahead of the USDA report. Average trade expectations for the World Agricultural Supply and Demand report have wheat steady at 551 million bushels for carryover and 172.9 million metric tons for the world ending stocks. Recent rain in Colorado and Nebraska should be beneficial to soil moisture levels as winter wheat planting begins. The forecast remains dry for northern states as the spring wheat harvest nears completion. USDA announced a sale of 120,000 metric tons of hard red winter wheat to Nigeria.

Wheat traded mostly lower in quiet trade ahead of USDA’s WASDE report. After the report was released, wheat was able to follow soybeans higher. The only change to wheat was a 10 million bushel increase in imports. This resulted in an increase in U.S. ending stocks from 551 million bushels to 561 million, which was close to expectations. World ending stocks were increased from 172.99 million metric tons to 176.28 million metric tons. USDA left Australia’s numbers unchanged.

As of Sept. 8, spring wheat harvest is estimated at 80 percent, compared with 64 percent the previous week and 79 percent for the five-year average. Winter wheat planting progress is estimated at 5 percent complete, compared with zero the previous week and 5 percent for the five-year average.

Corn

The corn market held steady last week, mainly because of a bearish USDA report. Yields continue to exceed expectations as the combines move north and the basis has been hit with new crop in the pipeline. Additional downside pressure comes from talk that there is no shortage of corn even at the low end of stocks estimates. For the week ending Sept. 12, December was up 2 cents.

Corn was thinly traded the first three days of the week, remaining close to unchanged. Buying interest was limited with harvest activity that continues to move north with yields exceeding expectations. Basis levels also continue to slip as new crop enters the supply chain. The weather forecast shows no threat of frost and the extra heat is helping push this late-planted crop to maturity. Traders were also looking ahead to the USDA crop production report. Expectations have corn yields declining slightly.

The corn futures were under pressure on Sept. 12 from a surprisingly bearish USDA report. USDA raised corn yields 900,000 bushels per acre to 155.3 million. Acres were left unchanged. The yield increase resulted in total production of 13.8 billion bushels versus 13.7 billion in August. U.S. ending stocks increased to 1.86 billion bushels, up from 1.84 billion in August, also up from trader estimates of 1.7 billion. World ending stocks were raised to 151.42 million metric tons, up from the August estimate of 150.17 million metric tons.

Ethanol production for the week ending Sept. 6 averaged 848,000 barrels per day, up 3.5 percent from the previous week. Total ethanol production for the week was 5.936 million barrels. Corn used in production was estimated at 76.32 million bushels, below the 80.6 million bushels needed each week to hit the 2013 and 2014 current estimate of 4.9 billion bushels. Stocks as of Sept. 6 were 16.3 million barrels, up 0.33 percent from the previous week. This was the first reporting week for the 2013 to ’14 crop year.

The crop progress report showed corn that is in the dough stage was at 92 percent versus 99 percent one year ago and a five-year average of 94 percent. Corn that is dented was at 64 percent versus 92 percent one year ago and a five-year average of 75 percent. Corn that is mature was at 9 percent versus 55 percent one year ago and a five-year average of 28 percent. The condition is rated as 54 percent good to excellent, 29 percent fair and 17 percent poor to very poor.

Soybeans

Soybeans continue to be the bright spot in the commodities, as position squaring ahead of the USDA September crop production report pushed the market higher. For the week ending Sept. 12, November and January soybeans were up 28.25 cents.

Soybeans closed near the day’s lows Sept. 9, despite another weekend of high temperatures and disappointing rains. The forecast was less bullish with milder temperatures, a better chance of rain, and no chance of frost in the forecast. There was some profit taking noted as traders positioned ahead of the crop production report. Sept. 9 export inspections were bearish, coming in well below the amount needed to keep pace with USDA’s projection.

Soybeans closed with small changes Sept. 10 and 11 as traders positioned ahead of the crop production report. The smaller reduction than expected in crop conditions and milder forecast led to a slightly lower close on Sept. 10. Trade was higher Sept. 11, as traders expected a reduction in yield on the report. USDA announced a sale of 121,000 metric tons of soybeans to undisclosed destinations.

Soybeans traded lower early in the session Sept. 12, as traders took profits ahead of USDA’s report. The report was bullish, leading to a sharply higher close. USDA kept planted acreage steady in the September crop production report, while lowering yield 1.4 bushels to 41.2 bushels. As a result, production fell from 3.255 billion bushels in August to 3.149 billion in September, compared with expectations of 3.14 million. Ending stocks were reduced 70 million bushels to 150 million, compared with expectations of 165 million. World ending stocks dropped to 71.54 million metric tons from 72.27 million in August.

As of Sept. 8, soybeans setting pods were at 97 percent, compared with 92 percent the previous week and 98 percent for the five-year average. Soybeans dropping leaves were at 11 percent, compared with 19 percent for the five-year average. Soybeans’ crop condition rating was down 2 percent at 52 percent good to excellent, 32 percent fair and 16 percent poor to very poor.

Barley

USDA reported barley export shipment pace for the week ending Sept. 6 at 8,000 bushels, all going to Mexico. No barley exports were reported for the week.

As of Sept. 8, barley harvest was estimated at 89 percent complete, compared with 76 percent the previous week and 82 percent for the five-year average.

Sept. 12 cash feed barley bids in Minneapolis were at $3.40 per bushel, while malting barley bids were $5.35.

Durum

USDA reported durum export shipments for the week ending Sept. 12 at 1.2 million bushels, with 709,000 going to the Netherlands and 535,000 bushels going to Italy. No durum exports were reported.

As of Sept. 8, North Dakota’s durum harvest progress was estimated at 49 percent, compared with 18 percent the previous week and 61 percent for the five-year average. Durum’s crop condition rating increased 4 percent to 81 percent good to excellent, 17 percent fair and 2 percent poor.

Sept. 12 cash bids for milling quality durum were at $7 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $6.75.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Sept. 12 $5.80 (Canadian) higher. Canola only traded lower one session last week, as most of the week’s attention was focused on position squaring ahead of USDA’s crop production report. In the end, a friendly soybean estimate from that report helped keep canola firm for the week.

As of Sept. 8, North Dakota’s canola harvest was estimated at 55 percent complete, compared with 39 percent for the previous week and 61 percent for the five-year average. North Dakota’s canola crop rating increased 4 percent to 84 percent good to excellent, 13 percent fair and 3 percent poor.

Sept. 12 cash canola bids in Velva, N.D., were at $21.15 per hundredweight.

Dry beans

As of Sept. 8, 10 percent of North Dakota’s dry bean crop (29 percent of nation’s production) was harvested, compared with zero for the previous week and 12 percent for the five-year average. North Dakota’s crop condition rating increased 5 percent to 42 percent good to excellent, 46 percent fair and 12 percent poor to very poor. Minnesota’s dry beans (11 percent of the nation’s production) are 37 percent dropping leaves, compared with 9 percent the previous week. Minnesota’s dry bean crop condition rating increased 1 percent to 42 percent good to excellent, 43 percent fair and 15 percent poor. Michigan’s (14 percent of nation’s production) dry bean crop is 76 percent turning leaves, compared with 27 percent the previous week and 78 percent for the five-year average. Michigan’s dry bean crop condition rating increased 9 percent to 60 percent good to excellent, 27 percent fair and 13 percent poor to very poor.

Sunflowers

As of Sept. 8, 11 percent of North Dakota’s sunflower crop had bracts turning yellow, compared with zero the previous week and 37 percent for the five-year average. North Dakota’s sunflower crop condition rating decreased 1 percent to 72 percent good to excellent, 24 percent fair and 4 percent poor.

October soybean oil increased 6 cents Sept. 13, ending at $42.78 per hundredweight. Old crop cash sunflower bids in Fargo, N.D., were unchanged at $20.45 per hundredweight, while new crop bids were up 5 cents at $20.95.

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