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Published October 21, 2013, 11:38 AM

Government shutdown ends

Wheat started and ended last week with gains, but lost enough ground during the middle of the week to have its first down week in three weeks.

By: Ray Grabanski, Agweek

Wheat

Wheat started and ended last week with gains, but lost enough ground during the middle of the week to have its first down week in three weeks. For the week ending Oct. 17, December Minneapolis dropped 9.75 cents, December Chicago dropped 6.25 cents, and December Kansas City gave back 11.25 cents.

Wheat started the week higher, following the other grains. Additional support came from continued concerns toward Russia’s wheat crop. But now that wheat is up against resistance, it seems a little harder for wheat to go to the next level. The market also saw selling pressure from improving weather conditions, as recent rains should give recently seeded wheat a good soaking. Minneapolis saw the most strength, as recent rain is resulting in a slowdown in harvest progress in the Northern Plains.

The Oct. 15 and 16 sessions opened and traded with losses. Technical selling pressure and a stronger U.S. dollar caused most of the selling pressure. All three of the wheat exchanges traded up to resistance and found willing sellers. Adding pressure was news that India was considering releasing more wheat out of its reserves. The market will soon have news to help give it direction, as it was reported Oct. 16 that Congress has reached an agreement to end the shutdown.

Wheat opened and traded with gains throughout the session as traders that have been sitting on the sidelines returned to the market now that the government shutdown has ended. Traders are looking for the slew of government reports (that have been held up from the government shutdown) to help give wheat strength to rally above recent resistance. Traders are expecting the U.S. Department of Agriculture to show a stronger export sales estimate as U.S. wheat demand has been very strong because of world wheat production concerns in Russia, Ukraine and Argentina. Another supporting factor was a sharply lower U.S. dollar.

USDA estimated the past two weeks’ wheat export shipments pace at 53.734 million bushels (28.447 million for Oct. 3 and 25.287 million for Oct. 10). This brings wheat’s export shipments pace to 550.4 million bushels, compared with 376.7 million last year. With 33 weeks left in wheat’s marketing year, shipments will need to average 16.7 million bushels to reach USDA’s export projection of 1.1 billion.

Corn

Corn continued to trade in a range ($4.47 high and $4.32 low) last week because of the lack of fresh news and government shutdown. The Senate did reach a deal on Oct. 16 and USDA started to release export reports late in the week. For the week ending Oct. 17, December was up 9.75 cents.

Corn was able to close slightly higher on Oct. 14 and 15. The futures moved lower in the Oct. 13 night trade and made a new recent low at $4.32 in the December contract. The lower overnight trade created short covering during the day session as traders corrected an oversold market condition. Support also came from weekend rains that are delaying harvest. Additional support came from rumors that China, Mexico and Japan were buying U.S. corn, but no confirmations with the USDA shutdown.

The corn market traded lower on Oct. 16. Buying interest remained limited with news that China is projecting a record corn crop at 215 million metric tons versus USDA at 211 million. Additional weakness came from rumors that Mexico was banning GMO corn immediately. Also, talk continues that actual yields are coming in well above USDA’s numbers.

The corn market traded in a very narrow range Oct. 17, as the government shutdown came to an end. Sharp losses in the U.S. dollar had little impact on corn prices. Traders expect strong numbers when export sales are reported in the coming days. Export inspections reported Oct. 17 were strong. Pressure is tied to good yield reports and favorable harvest weather in the five-day forecast. The October World Agricultural Supply and Demand Estimates report was cancelled with the next report slated for Nov. 8.

USDA’s export inspections for corn were estimated at 25.3 million bushels for the week ending Oct 3. Export inspections were estimated at 21.7 million bushels for the week ending Oct 10. This brings the year-to-date shipments pace for corn to 115.4 million bushels, compared with 117.3 million for last year.

Soybeans

Soybeans traded with decent strength last week as traders start to return to the market now that the government shutdown is over. Yields continue to come in better than expected, but this news is being offset by thoughts of strong export demand. For the week ending Oct. 17, November was up 26.5 cents while January was 23.25 cents higher.

Soybeans closed higher Oct. 14 and near the middle of the day’s trading range as recent rains have slowed harvest progress. But the forecast turns drier for the next few weeks, allowing the harvest to accelerate again. There was no crop progress report Oct. 14 because of the government shutdown, but the harvest is estimated to be 40 to 50 percent complete. Favorable weather for planting in Brazil is seen as a limiting factor. Additional support was tied to talk of improving Chinese demand and rumored export sales to China late in the previous week.

On Oct. 15, soybeans closed near the day’s lows, as favorable weather in the U.S. and South America pressured the market. Weekend rains in Brazil encourage planting progress in South America, while the forecast turns drier in the U.S., allowing the harvest to continue to progress. Chinese demand appears stronger than expected, leading to weekly export inspections reported by the Federal Grain Inspection Service of 47.4 million bushels. National Oilseed Processors Association crush for September is expected to be around 105 million bushels.

Soybeans traded higher Oct. 16 and 17 as the government shutdown came to an end. Gains in the stock market and sharp losses in the U.S. dollar provided support. Traders believe unconfirmed export sales to China are partially responsible for the support seen in the market. Export inspections were released Oct. 17 for the first time since Sept. 30, providing additional support.

USDA reported soybean export inspections pace for the week ending Oct. 3 at 30.6 million bushels. Export inspections were estimated at 47.4 million bushels for the week ending Oct 10. This brings the year-to-date shipments pace for soybeans to 114.4 million bushels, compared with 180.8 million for last year.

Barley

USDA estimated the past two weeks’ barley export shipments pace at 505,000 bushels (4,000 bushels for Oct. 3 and 501,000 bushels for Oct. 10). This brings barley’s export shipments pace to 2.95 million bushels, compared with 4.47 million last year. Cash feed barley bids in Minneapolis were $3.30 per bushel, while malting barley bids were at $5.50.

Durum

USDA estimated the past two weeks’ durum export shipments pace at 2.659 million bushels (665,000 bushels for Oct. 10 and 1.994 million for Oct. 3). The major destinations were Venezuela (Oct. 10: 423,000 bushels) and Italy (Oct. 3: 331,000 bushels). Cash bids for milling quality durum were at $7 per bushel in Berthold, N.D., and Dickinson, N.D.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Oct. 17 $1.60 (Canadian) higher. Canola had a short week of trading, but managed to trade with small gains. Canola started and ended the week with losses but posted strong gains Oct. 16. Selling pressure was tied to spillover pressure from a sloppy U.S. soybean complex, as well as from heavy farmer selling because of a larger-than-expected crop. Strong commercial demand kept the canola market on the plus side for the week. Cash canola bids in Velva, N.D., were unchanged at $20.57 per hundredweight.

Sunflowers

Cash sunflower bids in Fargo, N.D., were unchanged at $19.20 per hundredweight.

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