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Published October 14, 2013, 11:11 AM

Markets Mixed

Wheat traded stronger to start last week, but lost ground late.

By: Ray Grabanski, Agweek

Wheat: strength continues

Wheat traded stronger to start last week, but lost ground late. Early support came from continued strong export demand, as well as from reports of less planted acreage in Russia. Late week pressure was from technical pressure, as wheat has traded to resistance, and with corn and soybeans struggling and no news coming out of the U.S. Department of Agriculture, wheat traders took to the sidelines. For the week, December Minneapolis gained 4.75 cents, December Chicago dropped 1.5 cents, and December Kansas City gained 5.25 cents.

Wheat started the week off with decent gains as a result of support from news that planting progress in Russia and the Ukraine is being delayed because of rain. Reports out of Russia have acreage possibly dropping 19 percent from the rain. U.S. wheat exports have been strong. Additional support for wheat spilled over from a stronger corn market, which also helped firm soybeans late in the session.

The Oct. 8 session had wheat opening with gains, but it seems that wheat is starting to trade a little more sluggish. Technically wheat has made a good run and now appears to be bumping its head up against resistance. Reports have Japan tendering for 100,000 metric tons of wheat with 38,939 metric tons being U.S. origin. The hard wheat contracts (Kansas City and Minneapolis) were able to hold onto their gains, but pressure from a lower corn and soybean market pushed Chicago lower into the close.

Sloppy trading was the main feature of trading Oct. 9, with the market looking for news to give traders direction. Early support continues to come from better-than-expected exports as U.S. wheat remains the wheat of choice. Wheat slipped late in the session as recent rains have resulted in a slowdown in winter wheat plantings, which has helped add strength to wheat, but now that the forecasts are calling for a slight warm up and dry conditions, seeders will get rolling again. This pressured the winter wheat contracts. The lack of news is starting to affect market activity as traders are heading to the sidelines.

The Oct. 10 session had wheat higher. Strong export demand and expectations of smaller wheat stocks has helped push wheat higher the past month. Now that wheat is sitting at a strong resistance level, it’s struggling to continue its rally. Traders are still seeing good export demand for U.S. wheat from reports of Russia having quantity not quality. The U.S. has quality wheat, which is in demand.

There was no USDA reports released Oct. 11 (export inspections, export sales and crop progress) because of the government shutdown.

Corn: USDA shutdown

The corn futures continue to trade in a tight trading range. The market lacks any fresh news and the larger-than-expected stocks in USDA’s quarterly grain stocks report continue to limit any buying interest. Harvest has picked up after recent rain and better-than-expected yields continue to be reported. For the week ending Oct. 10, December was off 5.25 cents.

Corn traded with small gains on Oct. 7 and 9. Support on Oct. 7 came from rumors that China was buying 800,000 to 900,000 metric tons of U.S. corn. This was confirmed by Reuters on Oct. 9 in the amount of 420,000 metric tons. The wheat market remains strong and that continues to spill over to the corn trade.

Selling came back into the market on Oct. 8 and 10. The weather has been dry in South America, but the delay in planting corn in Argentina should be over. Additional weakness came from the disappointing ethanol report, but stocks were lower and there were no imports for the first time since June. The European Union is estimating its crop at 65.3 million metric tons versus 57.3 million last year. Ukraine also announced that it is estimating an increase in corn acreage by 15 percent for its upcoming year of production, as a result of fewer wheat acres. Oct. 10 trade felt pressure from talk that the EPA will lower the mandate for ethanol by 6 percent for 2014 and 10 percent for 2015. China is also estimating its corn crop at 215 million metric tons for 2013, which would be a record.

Ethanol production for the week ending Oct. 4 averaged 868,000 barrels per day. Total ethanol production for the week was 6.076 million barrels. Corn used in production the week ending Oct. 4 is estimated at 91.14 million bushels versus the 94.4 million bushels needed each week to reach the USDA projection for the year. Stocks were 15.39 million barrels, down 0.77 percent from the previous week.

There are no USDA reports because of the government shutdown.

Soybeans: choppy trade

Soybeans continued to struggle last week, as the lack of news because of the government shutdown combined with continued reports of better-than-expected yields pressured soybeans. For the week ending Oct. 10, November was down 7 cents, while January was 9.5 cents lower.

Soybeans traded choppy Oct. 7, closing slightly higher and near the middle of the day’s trading range. Firm nearby spreads indicated good demand that provided support. The mostly dry forecast benefits the harvest while planting weather in South America improves. Official harvest progress numbers are unavailable, but traders believe the harvest to be 20 to 22 percent done. Export inspections should be picking up as well, but will not be released with the government shutdown.

Soybeans traded slightly lower Oct. 8 and 9 because of pressure from favorable weather forecasts. Good harvest weather allowed the harvest to pick up pace, while favorable planting weather in South America added to the pressure. Unwinding of corn and soy spreads was seen as a negative factor as well, along with negative outside markets. On Oct. 8, the Federal Grain Inspection Service released export inspections of 30.6 million bushels, above the amount needed to reach USDA’s projection.

Soybeans traded with strong gains early in the session Oct. 10 on rumors that a substantial export sale had been made, though confirmation is impossible at the moment with the government shutdown. Prices slipped throughout the day as weakness in the other grains and talk of the continuing harvest placed pressure on the soybeans. The weather forecast remains favorable for the harvest until this week, when we could see some rain.

USDA’s export inspections, export sales and crop progress reports were not available because of the government shutdown.

Barley

USDA’s export inspections, export sales, crop progress reports and Minneapolis cash barley bids were not reported because of the government shutdown.

Durum

USDA’s export inspections, export sales estimate and crop progress reports were not released because of the government shutdown. Cash bids for milling quality durum were at $7 per bushel in Berthold, N.D., and Dickinson, N.D., bids were $7.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Oct. 10 with $9.40 (Canadian) gains. Canola traded with gains in all sessions except for Oct. 9. Strong end user demand and a softer Canadian dollar helped support canola. Light support came from an overall stronger performance seen in the world vegetable oil market. Gains were kept in check by advancing harvest activity with yields still being reported as better than expected.

Cash canola bids in Velva, N.D., were not reported because of the government shutdown.

Sunflowers

USDA’s export sales estimate, crop progress and cash sunflower bids in Fargo, N.D., were not reported because of the government shutdown.

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