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Published January 20, 2014, 10:04 AM

Soybean demand remains strong

Wheat: quiet trade continues Wheat contracts were narrowly mixed throughout last week. The lack of buying interest continues to come from disappointing exports, as well as from technical pressure. For the week ending Jan. 16, March Minneapolis gained 3.5 cents, March Chicago gained 3.75 cents, and March Kansas City gained 3.5 cents.

By: Ray Grabanski, Agweek

Wheat: quiet trade continues

Wheat contracts were narrowly mixed throughout last week. The lack of buying interest continues to come from disappointing exports, as well as from technical pressure. For the week ending Jan. 16, March Minneapolis gained 3.5 cents, March Chicago gained 3.75 cents, and March Kansas City gained 3.5 cents.

Wheat contracts were mixed Jan. 13 with losses in Minneapolis and Kansas City wheat, while Chicago wheat moved higher. An announced export sale provided support, as did softness in the U.S. dollar and gains in soybeans. Negative U.S. Department of Agriculture numbers on Jan. 10 continued to weigh on Minneapolis and Kansas City wheat. Weather could grow to be more of a concern with dryness across the Southern Plains. The morning of Jan. 17, USDA announced a sale of 55,000 metric tons of soft red winter wheat to Egypt.

Jan. 14 started narrowly mixed in slow trade. As the day wore on, commercial buying emerged in the Kansas City contracts, pushing wheat higher. Traders will continue to monitor growing conditions as forecasts are improving for the Southern Plains. The Southern Plains remain somewhat dry, but soil moisture is still better than a year ago.

Wheat contracts were lower Jan. 15, as the market was unable to sustain the Jan. 14 bounce from a lack of news. Additional pressure was tied to weakness in corn and a firm U.S. dollar.

Jan. 16 had wheat higher, recovering a portion of the Jan. 15 losses. Support was tied to a number of announced export sales. Japan purchased 105,000 metric tons of milling wheat from the U.S. and Canada, while Egypt bought a total of 295,000 metric tons of wheat with 60,000 coming from the U.S. In addition, Jordan bought 50,000 metric tons of optional origin wheat, while South Korea bought 65,000 metric tons.

USDA estimated wheat export shipments pace for the week ending Jan. 10 at 25.2 million bushels. This brings the year-to-date export shipments pace for wheat to 768.2 million bushels, compared with 539.8 million for last year. Wheat export sales pace for the week ending Jan. 10 was estimated at 11.8 million bushels for old crop wheat and 3 million for new crop. This brings wheat’s export sales pace for the year to 914.5 million bushels, compared with 729 million last year. With 20 weeks left in wheat’s export marketing year, shipments need to average 17.8 million bushels and sales need to average 10.5 million bushels to make USDA’s 1.125-billion-bushel projection.

Corn: friendly USDA report

Corn continued to trade in a sideways pattern last week, after double-digit gains on Jan. 10, report day. USDA surprised the traders with a friendly January crop production report. The report dropped production and ending stocks, while expectations were to see larger numbers. For the week ending Jan. 16, March was down 4.75 cents.

Corn found some follow-through support to start the week with the Jan. 10 report. USDA dropped corn’s yield 1.6 bushels per acre to 158.4 bushels per acre from last month, putting production at 13.93 billion bushels versus expectations of 14.07 billion bushels. Demand also increased for both feed and ethanol. These numbers cut the carryout down to 1.63 billion bushels, 229 million lower than expected. There was also a 137,000-metric-ton export sale announcement Jan. 13 to South Korea.

Pressure came back into the market by midweek with news that China rejected two cargos of dried distillers grains (DDGs). Traders are also looking at the Jan. 10 report and many are questioning the increase in demand and if they can be achieved, especially when we are dealing with a 60-year low in cattle numbers. USDA announced a 126,000-metric-ton cancellation of an old-crop sale to an unknown destination. There has been good rain in Brazil and a larger crop is being projected, but areas in Argentina need rain. Late week forecasts did put rain back in for the first part of this week for Argentina.

Ethanol production for the week ending Jan. 10 averaged 868,000 barrels per day, down 5.55 percent from the previous week. Total ethanol production for the week was 6.076 million barrels. Corn used in the production week ending Jan. 10 is estimated at 91.4 million bushels and needs to average 95.44 million bushels per week to meet this crop year’s USDA estimate of 4.95 billion bushels. This crop year’s cumulative corn used for ethanol production is 1.77 billion bushels. Stocks were 16.07 million barrels and down 0.37 percent from the previous week.

USDA reported corn export shipments pace for the week ending Jan. 10 at 20.9 million bushels. This brings the year-to-date export shipments pace for corn to 493.8 million bushels, compared with 272.7 million last year. Corn export sales pace for the week ending Jan. 10 was estimated at 32.3 million bushels. This brings corn’s export sales pace for the year to 1.16 billion bushels, compared with 518.1 million last year. With 33 weeks left in the export marketing year, shipments need to average 29 million bushels and sales need to average 8.8 million to make USDA’s export projection of 1.45 billion bushels.

Soybeans: strong export demand supports

The soybean complex continues to amaze and dazzle all. Not even a negative USDA January crop production report and bearish South America weather forecasts can stop this market from trading higher. China’s appetite for soybeans cannot seem to be satisfied. For the week ending Jan. 16, March soybeans were 36.5 cents higher, while November gained 22.5 cents.

Soybeans were higher Jan. 13 amid renewed concerns about tight old-crop supplies. They extended the rally Jan. 14 as the market picked up buy-stops above $13. There was less precipitation than expected over the weekend in Argentina, which provided some support. USDA announced an export sale Jan. 13, the fifth such sale in as many days, this one for 140,000 metric tons of soybeans to unknown destinations.

Old-crop soybeans were higher again on Jan. 15, with support tied to bullish National Oilseed Processors Association crush numbers. NOPA crush came in at 165.4 million bushels for December, up from 160.15 million crushed in November and above trade expectations of 160 million to 163 million bushels. Tight supplies continue to support nearby contracts, while export demand continues at a strong pace for both old and new crop. USDA announced a sale of 106,000 metric tons of new-crop soybeans to China. This was the sixth export sale in seven days. Prospects for a record South American crop and increased U.S. planting are keeping the outlook for new crop bearish.

The Jan. 16 session started off with gains, following the Jan. 15 strong NOPA crush numbers. Another round of strong export numbers also provided support. Strong demand continues to support the market with USDA announcing another export sale, bringing the total to seven sales in eight days. This sale was to China for 465,500 metric tons of soybeans, 405,500 of which are to be new crop.

USDA reported soybean export inspections pace for the week ending Jan. 10 at 59.4 million bushels. This brings the year-to-date export shipments pace for soybeans to 984.3 million bushels, compared with 861 million for last year at this time. Soybean export sales pace was estimated at 28.8 million bushels old crop and 19.3 million new crop. This brings soybean’s export sales pace for the year to 1.523 billion bushels, compared with 1.199 billion last year. With 33 weeks left in soybean’s export marketing year, shipments need to average 15.5 million bushels and sales are above USDA’s projection of 1.495 billion.

Barley

USDA estimated barley export inspections pace for the week ending Jan. 10 at 16,000 bushels, all going to Mexico. This brings barley’s export shipments pace to 3.65 million bushels, compared with 5.58 million last year. No barley export sales were reported. This brings the year-to-date export sales pace to 5.8 million bushels, compared with 5.6 million last year. Jan. 16 cash feed barley bids in Minneapolis, Minn., were at $3.65 per bushel, while malting barley bids remained at $5.70.

Durum

No durum export inspections were reported for the week ending Jan. 10. Durum export sales pace was estimated at 300,000 bushels. This brings durum’s year-to-date export sales pace to 15.5 million bushels, compared with 15.6 million last year. Jan. 16 cash bids for milling quality durum were at $7 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $6.80.

Canola

As of the Jan. 16 close, March canola futures on the Winnipeg, Manitoba, exchange were $3.30 (Canadian) lower on the week at $424.80 (Canadian). Canola futures set a number of new contract lows early in the week as Canada’s record large crop and a lack of significant end-user demand pressures the market. Support later in the week was tied, in part, to ideas the market is oversold and some strength in Chicago Board of Trade soybean futures. Jan. 16 cash canola bids in Velva, N.D., were at $17.15 per hundredweight.

Sunflowers

Soybean oil export sales pace for the week ending Jan. 10 was estimated at 16.9 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 413.1 thousand metric tons, compared with 686.9 thousand for last year. Jan. 16 cash sunflower bids in Fargo, N.D., were at $19.15 per hundredweight.

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