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Published January 27, 2014, 10:41 AM

Markets respond to weather in South America

As of the Jan. 23 close, March soybeans were 39.5 cents lower for the week, while the November contract fell 16.25 cents. Soybeans traded sharply lower Jan. 21, with commercial selling suggesting possible Chinese export cancellations.

By: Ray Grabanski, Agweek

Soybeans

As of the Jan. 23 close, March soybeans were 39.5 cents lower for the week, while the November contract fell 16.25 cents.

Soybeans traded sharply lower Jan. 21, with commercial selling suggesting possible Chinese export cancellations. Better growing conditions in South America provide additional pressure following beneficial rainfall over the weekend in dry areas of southern Brazil and Argentina. The Jan. 21 export inspections came in well above the amount needed to keep pace with the U.S. Department of Agriculture’s projection.

The soybean market was lower early Jan. 22 as improving Argentine weather and a lack of fresh export news continued to pressure the market. The market bounced into midday and closed mostly higher with some light noncommercial buying late in the session.

Soybeans traded with solid gains early and into midday Jan. 23 before commercial pressure re-asserted itself and the market slipped to close with small losses. South American weather is currently somewhat mixed with conditions improving in Argentina while they grow worse in Brazil. Talk of Chinese cancellations continues following the Jan. 21 sell-off, despite the lack of confirmations.

USDA reported soybean export inspections pace for the week ending Jan. 17 at 56.6 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.041 billion bushels, compared with 909.3 million for last year at this time. Soybean export sales pace for the week ending Jan. 17 was estimated at 25.8 million bushels. This brings soybean’s export sales pace for the year to 1.549 billion bushels, compared with 1.210 billion the previous marketing year.

Wheat

Wheat contracts were narrowly mixed throughout last week. For the week ending Jan. 23, March Minneapolis fell 0.5 cents, March Chicago was up 6.5 cents, and March Kansas City gained 9 cents.

Wheat closed lower in all months Jan. 21, as the downtrend continued. Sharp losses in soybeans spilled over to pressure wheat contracts while weather concerns grow for winter wheat. Wind and dryness in parts of the hard red winter wheat belt could be harmful to the crop, and another cold snap is possible. Jan. 21 export inspections were bearish, coming in below the amount needed to keep pace with USDA’s projection.

Wheat trade was fairly quiet Jan. 23, as most contracts stayed in a narrow range. A lack of fresh demand news pressured wheat as news out of Egypt has been mostly quiet. The strength in Minneapolis and Kansas City wheat was tied to deteriorating weather conditions for U.S. winter wheat. Additionally, wheat markets are oversold and could see a profit-taking bounce.

Solid commercial buying led to strong gains early in the session on Jan. 23. The market gave back a portion of the gains into the close, but still finished moderately higher. Support was tied to short covering, as well as a sharply weaker U.S. dollar. The market is starting to see better demand as the world export market grows more active. Concerns are growing over cold weather potentially harming U.S. winter wheat.

USDA estimated wheat export inspections pace for the week ending Jan. 17 at 15.6 million bushels. This brings the year-to-date export shipments pace for wheat to 784.2 million bushels, compared with 562 million the previous marketing year. Wheat export sales pace for the week ending Jan. 17 was estimated at 15.5 million bushels. This brings wheat’s export sales pace for the year to 930 million bushels, compared with 750 million the previous marketing year.

Corn

The corn market was able to close slightly higher each day last week, but continues to trade in a sideways pattern. Support came from smaller-than-expected stocks in this month’s USDA report and improvement in demand. The upside was limited as rain started to fall in the dry areas of Argentina over the weekend. As of the Jan. 23 close, the March contract was up 5 cents for the week.

The corn market did open on the defensive to start the week on Jan. 21. Early pressure came from the sharp losses in the soybean complex and the weather in South America. Rain is forecast in Argentina for the next two weeks, along with cooler temperatures. Additional weakness came from larger production estimates for Brazil where the weather has been close to ideal for the growing season. The futures did find some support into the close with the export inspections that came in above the previous week and at the high end of estimates.

Corn was able to close slightly higher again on Jan. 22 and 23. Follow-through support came from the Jan. 22 close and talk of fresh export demand. South Korea purchased another 60,000 metric tons and USDA announced a sale of 105,664 metric tons of new crop corn to Japan. Traders were also expecting a better ethanol report. It did improve from the previous week’s numbers and margins are good. There were also no ethanol imports for the third month in a row. Additional support came from the cold temperatures around the country that have created talk of increased feed usage and slowing movement of grain.

Ethanol production for the week ending Jan. 17 averaged 905,000 barrels per day, up 4.26 percent from the previous week. Total ethanol production for the week was 6.335 million barrels. Corn used in production the week ending Jan. 17 is estimated at 95.03 million bushels and needs to average 97 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 1.87 billion bushels. Stocks were 17.02 million barrels, up 5.85 percent from the previous week.

USDA’s export inspections report was friendly for corn at 29.8 million bushels, versus the 29 million USDA has estimated. Trader estimates ranged from 20 million to 28 million bushels. The corn export sales were estimated at 27.2 million bushels, which is above the 8.8 million needed to stay on pace with USDA’s estimate of 1.45 billion. The shipments came in at 26.7 million bushels, below the 28.9 million needed to meet USDA’s estimate.

Barley

USDA estimated barley export inspections pace for the week ending Jan. 17 at 707,000 bushels, all going to Columbia. This brings barley’s export shipments pace to 4.35 million bushels, compared with 5.58 million the previous marketing year.

USDA reported no barley export sales for the week ending Jan. 17.

For the week ending Jan. 23, cash feed barley bids in Minneapolis were up 5 cents to $3.70 per bushel, while malting barley bids increased to $5.70.

Durum

There were no durum export inspections reported the week ending Jan. 17.

Durum export sales pace for the week ending Jan. 17 was estimated at 400,000 bushels. This brings durum’s year-to-date export sales pace to 15.9 million bushels, compared with 15.7 million the previous marketing year.

As of the Jan. 23 close, cash bids for milling quality durum were unchanged for the week at $7 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was unchanged for the week at $6.80.

Canola

As of the Jan. 23 close, March canola futures on the Winnipeg, Manitoba, exchange were $5.80 (Canadian) lower on the week at $428.20. Weakness in Chicago Board of Trade soybean and soyoil futures was generally bearish toward canola last week. The large Canadian canola supply and logistic concerns around moving it pressured, as well. Some underlying support throughout the week came from weakness in the Canadian dollar.

As of the Jan. 23 close, cash canola bids in Velva, N.D., were 35 cents lower for the week at $16.81 per hundredweight.

Sunflowers

Soybean oil export sales pace for the week ending Jan. 17 was estimated at 20.2 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 433.3 thousand metric tons, compared with 713.2 thousand for the previous marketing year.

As of the Jan. 23 close, July soybean oil was up 12 cents for the week at $37.86 per hundredweight. Cash sunflower bids in Fargo, N.D., were 5 cents lower for the week at $19.

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