Technical support as harvest slowsWheat started and ended this week with losses, but traded with small gains during the middle of the week.
By: Ray Grabanski, Agweek
Wheat started and ended last week with losses but traded with small gains during the middle of the week. For the week ending Oct. 24, December Minneapolis dropped 8.25 cents, December Chicago slipped 9.5 cents, and December Kansas City dropped 4.5 cents.
Wheat started the week on the defense with selling tied to reports out of Argentina. Weather reports had hinted of frost in Argentina, but the actual weekend temps never dropped below 39 degrees. Additional pressure came from reports that Argentina officials had dramatically underestimated the countries potential wheat production for 2014. Although it did not come with an estimate, the report had production likely being much higher than the 8.8 million metric tons first reported, with some reports having production as high at 10.6 million metric tons (the U.S. Department of Agriculture is at 12 million metric tons). Losses were kept in check by a stronger-than-expected export inspections estimate. Technically wheat was in need of a correction.
Oct. 22 and 23 brought a firmer tone to wheat. Support came from reports that all of the major exporting countries (U.S., Canada, Argentina, Australia, European Union, and Black Sea region) have only pipeline supplies of wheat. This has put all that much more emphasis on needing a better-than-average crop of wheat in 2014 from all regions of the world. Currently, the Black Sea region, Australia and Argentina are showing possible production concerns.
Wheat pushed higher Oct. 24, with support spilling over from a strong U.S. export sales estimate. But the gains were short lived, as wheat fell prey to selling early in the session. Traders have been expecting a friendly export sales estimate and that might have been part of the reason for the “buy the rumor sell the fact” type trading. Wheat has been able to trade up to current resistance levels, but has not been able to break through to the next level. This has wheat looking tired and ripe for a sell off.
USDA estimated wheat export shipments pace for the week ending Oct. 18 at 20.58 million bushels. This brings wheat’s export shipments pace to 572.9 million bushels, compared with 393.1 million last year. With 32 weeks left in wheat’s marketing year, shipments will need to average 16.47 million bushels to reach USDA’s export projection of 1.1 billion.
USDA estimated wheat export sales pace for the week ending Oct. 3 at 24 million bushels. This brings wheat’s export sales pace to 704.8 million bushels, compared with 490.9 million last year. With 34 weeks left in wheat’s marketing year, sales will need to average 11.6 million bushels to reach USDA’s export projection of 1.1 billion.
USDA’s first crop progress report since Sept. 30 was released Oct. 25 and it was bearish. USDA estimated winter wheat planted acreage at 79 percent complete, compared with 79 percent for the five-year average. Emergence was estimated at 53 percent, compared with 54 percent for the five-year average. Winter wheat’s crop condition was estimated at 65 percent good to excellent, 31 percent fair and 4 percent poor to very poor.
Corn traded sideways again last week. The market continues to search for fresh news and struggles to find buying interest as a result of poor demand and good yield reports. USDA cancelled the release of its October crop production estimate, but will release the next report on Nov. 8. Early estimates have yields increasing. For the week ending Oct. 24, December was down 1.25 cents.
Corn closed with small gains on Oct. 21 and 23, finding support from the soybean and wheat markets, along with short covering. The export inspections were good and created talk of increased demand. The ethanol report also offered support, with corn usage near USDA’s estimate for the week. There was some scattered moisture midweek that did delay harvest activity, but no major setback.
The futures were under pressure on Oct. 22 and 24. Selling came into the market with an improvement in the weekly crop conditions rating. USDA raised the good to excellent category 5 percent, to 60 percent, compared with the last report three weeks ago. News that South Korea and Taiwan bought corn from Brazil last week was negative to the market as they have been a major purchaser of U.S. corn. Talk that yields continue to be good and above USDA’s last report continues to limit buying interest.
Ethanol production for the week ending Oct. 18 averaged 897,000 barrels per day and up 3.22 percent versus the previous week. Corn used in production the week ending Oct. 18 is estimated at 94.19 million bushels and needs to average 94.509 million bushels per week to meet the USDA estimate of 4.9 billion bushels. The cumulative corn used for ethanol production is 620.12 million bushels. Stocks were 15.499 million barrels and up 0.52 percent.
The crop progress report showed corn that is mature was at 94 percent versus 100 percent one year ago and a five-year average of 95 percent. Corn that was harvested was at 39 percent versus 85 percent one year ago and a five-year average of 53 percent. The condition is rated as 60 percent good to excellent, 26 percent fair and 14 percent poor to very poor.
USDA’s corn export inspections for the week ending Oct. 18 were estimated at 32.3 million bushels. This brings the year-to-date shipments pace for corn to 148 million bushels, compared with 128 million for last year. Oct. 3 corn export sales were estimated at 52.8 million bushels. This brings the year-to-date sales pace for corn to 629 million bushels, compared with 411 million for last year. Shipments came in at 24.3 million bushels and at the 24 million that is needed to meet USDA’s estimate.
A slowdown in harvest activity combined with export news helped stabilize the soybean complex last week. Strong soybean meal demand added support to soybeans. Technically soybeans are at a cross roads, as most months are sitting up at resistance. For the week ending Oct. 24, November was up 18.5 cents while January gained 14 cents.
Soybeans traded higher throughout the session Oct. 21, with support from strong commercial buying as solid demand news offset harvest talk. Talk of high yields continued as the crop progress report showed the harvest was 63 percent complete. Favorable weather in South America provides additional pressure. Support was tied to demand news with private exporters announcing a sale of 250,000 metric tons to unknown destinations. Oct. 21 export inspections were bullish, coming in more than double the amount needed to keep pace with USDA’s projection.
Soybeans closed with small losses and well off the day’s lows on Oct. 22. The trading range was narrow as the market tested above $13, but found little buying interest. Spillover selling from corn and the active soybean harvest provided pressure. The outside markets were supportive as gold moved higher and the U.S. dollar was sharply lower.
Soybeans traded higher throughout the day Oct. 23, but slipped late in the session. Still, the November contract closed above resistance at $13.05 and at the highest level since Sept. 27. The firming basis and spillover strength from wheat provided support. Demand continues to support soybeans, with private exporters announcing a sale of 120,000 metric tons of soybeans to Russia Oct. 23.
Commercial buying supported soybeans through much of the day Oct. 24, but late-session noncommercial selling pulled the market lower on the close. Strong demand is shown by firmness in spreads while the basis continues to firm as the harvest advances. Oct. 24 export sales were bullish.
USDA reported soybean export inspections pace for the week ending Oct. 18 at 59.3 million bushels. This brings the year-to-date export shipments pace for soybeans to 173.7 million bushels, compared with 246.3 million for last year at this time. The soybean export sales pace for the week ending Oct. 3 was estimated at 34.2 million bushels, bringing this year’s total to 1.01 billion, compared with 880.6 million last year at this time. Shipments were reported at 31.3 million bushels.
As of Oct. 20, soybeans dropping leaves were at 94 percent, compared with 97 percent for the five-year average. Soybeans harvested were at 63 percent, compared with 69 percent for the five-year average. Soybean’s crop condition rating was at 57 percent good to excellent, 29 percent fair and 14 percent poor to very poor.
USDA estimated barley export shipments pace for the week ending Oct. 18 at 36,000 bushels, all going to Mexico. This brings barley’s export shipments pace to 2.99 million bushels, compared with 4.47 million last year.
USDA estimated no barley export sales for the week ending Oct 3. This brings barley’s export sales pace to 4.7 million bushels compared with 5.5 million last year.
Cash feed barley bids in Minneapolis were at $3.40 per bushel, while malting barley bids were at $5.50.
North Dakota’s durum crop was estimated to be 96 percent harvested, compared with 100 percent for the five-year average.
USDA reported no durum export shipments for the week ending Oct. 18.
USDA estimated durum export sales pace for the week ending Oct. 3 at 800,000 bushels. This brings durum’s export sales pace to 8.3 million bushels, compared with 11.3 million last year.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Oct. 24 with $4.50 (Canadian) gains. Canola traded with solid gains the first three sessions of the week. A slowdown in farmer selling combined with spillover support from a stronger U.S. soybean complex helped support canola. Additional support came from technical buying and thoughts that canola export demand would pick up. Technical pressure stepped into the market late in the week to trim gains.
North Dakota’s canola crop was 94 percent harvested, compared with 100 percent for the five-year average.
Oct. 24 cash canola bids in Velva, N.D., were at $20.62 per hundredweight.
As of Oct. 20, North Dakota’s (29 percent of the nation’s production) dry bean harvest was estimated at 88 percent complete, compared with 87 percent for the five-year average. Minnesota’s (11 percent of the nation’s production) dry bean harvest was estimated at 90 percent complete, compared with 97 percent for the five-year average. Michigan’s (14 percent of the nation’s production) dry bean harvest was estimated at 91 percent complete, compared with 93 percent for the five-year average.
As of Oct. 20, 12 percent of the nation’s sunflower crop was harvested, compared with 32 percent for the five-year average.
USDA estimated soybean oil export sales for the week ending Oct. 3 at 27.5 trillion metric tons. This brings soybean oil’s export sales pace to 64.7 trillion metric tons, compared with 202.4 trillion last year.
Oct. 24 cash sunflower bids in Fargo, N.D., were at $19.35 per hundredweight.