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Published February 03, 2014, 10:11 AM

Lower prices spur demand

Wheat contracts were lower last week. March Minneapolis fell 15.75 cents, March Chicago was down 11.75 cents, and March Kansas City fell 16.5 cents.

By: Ray Grabanski, Agweek

Wheat

Wheat contracts were lower last week. March Minneapolis fell 15.75 cents, March Chicago was down 11.75 cents, and March Kansas City fell 16.5 cents.

Wheat traded mostly lower with losses across the board Jan. 27. Bitterly cold temperatures led to concerns about potential damage to soft red winter wheat, resulting in gains in the Chicago market on Jan. 28. The Jan. 27 export inspections were bearish, coming in below the amount needed to keep pace with the U.S. Department of Agriculture’s projection. Underlying support was provided by more active world demand as Saudi Arabia bought 715,000 metric tons of wheat with 595,000 metric tons of hard wheat and 120,000 metric tons of soft wheat on Jan. 27. Egypt bought 180,000 metric tons of wheat from Russia and 60,000 metric tons of soft red winter wheat from the U.S. on Jan. 28.

Heavy volume selling pushed wheat lower early in the session on Jan. 29 as a lack of supportive news hindered the market. Soft trade in the row crops provided spillover pressure while a lack of fresh export news limited the market’s upside. Reports of soft winter wheat export cancellations provided additional pressure.

Wheat contracts were higher in most months on Jan. 30 with profit-taking providing some support. Firmer corn trade and bullish export sales provided additional support. The Jan. 30 export sales came in well above the amount needed to keep pace with USDA’s projection. Dow Jones announced a sale of 91,200 metric tons of U.S. milling wheat to Japan Jan. 30, providing more support. Pressure was tied to milder temperatures in the Midwest as well as favorable precipitation in the five-day forecast.

USDA estimated the export inspections pace for wheat for the week ending Jan. 24 at 14 million bushels. This brings the year-to-date export shipments pace for wheat to 798.2 million bushels compared with 584.4 million bushels for the previous marketing year. Wheat export sales pace for the week ending Jan. 24 was estimated at 29.2 million bushels. This brings wheat’s export sales pace for the year to 959.2 million bushels compared with 760.8 million bushels the previous marketing year.

Corn

The corn market remained firm last week with a strong export sales report, but not all of the news was positive. The weather in South America is near ideal and traders remain concerned over demand from China. Talk has also started about the U.S. corn acres for 2014 and the reduction may not be cut as much as some early estimates. As of the Jan. 30 close, the March contract was up 4 cents for the week.

Jan. 29 was the only day last week that the futures closed lower. Early pressure came from the sharp losses in the soybean complex. The ethanol report was also disappointing and below estimates, along with deteriorating margins. Traders are watching the weather in South America and it is favorable, while corn harvest has begun in Brazil with excellent early yields reported. Traders are also talking about China and there has been no progress made for a solution to the nonapproved GMO variety.

The corn futures were able to close with green ink during the rest of the week with export news. USDA announced an 119,800 metric ton sale of old crop corn to an unknown destination on Jan. 27. Jan. 28 brought another sale announcement that Spain purchased 110,000 metric tons of U.S. corn and on Jan. 30 there was a 127,000 metric ton sale to an unknown destination. The export sales were also huge on Jan. 30 and were the largest weekly total so far this year, while the big buyer was Japan. The futures have also found support from the cold weather that is increasing feed demand and limiting transportation to the elevators. Technically, the futures moved above the 10- and 20-day moving average this week.

Ethanol production for the week ending Jan. 24 averaged 900,000 barrels per day, down 0.55 percent versus the previous week. Total ethanol production for the week was 6.3 million barrels. Corn used in production for the week ending Jan. 24 was estimated at 94.5 million bushels and needs to average 97.08 million bushels per week to meet this crop year’s USDA estimate of 5 billion bushels. This crop year’s cumulative corn used for ethanol production for this crop year is 1.96 billion bushels. Stocks were 16.93 million barrels, down 0.51 percent versus the previous week.

USDA’s export inspections report was neutral for corn at 28.7 million bushels versus the 29 million bushels needed to meet USDA projections. Trader estimates ranged from 22 million to 31 million bushels. The corn export sales were estimated at 76.5 million bushels, well above the 8.3 million bushels needed to stay on pace with USDA’s estimate of 1.45 billion bushels. The shipments came in at 39.5 million bushels, above the 28.9 million bushels needed each week to meet USDA’s estimate.

Soybeans

As of the Jan. 30 close, March soybeans were 9.75 cents lower for the week while the November contract fell 12 cents.

Soybeans traded mixed on Jan. 27 with nearby contracts moving higher, while the deferred closed with losses. Commercial buying and another round of bullish export inspections were supportive while favorable South American growing conditions provided pressure. Some support was tied to ideas that inflation in Argentina could slow farmer selling. The Jan. 27 export inspections came in well above the amount needed to keep pace with USDA’s projection.

The soybean market saw profit-taking in bull spreads Jan. 28 as November moved higher while March dipped lower. Outside markets were mixed with gains in both the U.S. dollar and crude oil. Traders continue to monitor South American weather and saw Argentina receive better than expected rain overnight. Brazil’s harvest continues to progress and the crop remains in excellent condition.

Soybean futures traded lower Jan. 29 with long liquidation tied to continued expectations for a record large South American crop. USDA’s attaché in Brazil has raised the production estimate to 89.5 million metric tons and the export estimate to 46 million metric tons, which would be a record.

Commercial buying moved soybeans higher Jan. 30. The Jan. 30 export sales were bullish despite confirmed cancellations of 4.4 million bushels of soybeans, with most coming from China. The Chinese New Year began Jan. 31 and was expected to lead to struggles for old-crop beans without Chinese business during that time.

USDA reported soybean export inspections pace for the week ending Jan. 24 at 73.8 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.115 billion bushels compared with 950.2 million bushels for last year at this time. The soybean export sales pace was estimated at 18.2 million bushels for the week ending Jan. 24. This brings soybean’s export sales pace for the year to 1.564 billion bushels compared with 1.225 billion bushels for the previous marketing year. With 31 weeks left in soybean’s export marketing year, sales are above USDA’s projection of 1.495 billion bushels.

Barley

USDA estimated barley export inspections pace for the week ending Jan. 24 at 8,000 bushels with all of the bushels going to Mexico. This brings barley’s export shipments pace to 4.36 million bushels compared with 5.58 million bushels the previous marketing year. USDA reported no barley export sales for the week ending Jan. 24. For the week ending Jan. 30, cash feed barley bids in Minneapolis were unchanged at $3.70 per bushel while malting barley bids decreased to $5.60.

Durum

USDA estimated durum export inspections pace for the week ending Jan. 24 at 86,000 bushels, with all of the bushels going to Columbia. Durum export sales pace for the week ending Jan. 24 was estimated at 1.1 million bushels. This brings durum’s year-to-date export sales pace to 17 million bushels compared with 16.1 million bushels the previous marketing year. The cash bids on Jan. 30 for milling quality durum were unchanged on the week at $7 per bushel in Berthold, N.D., and $6.80 in Dickinson, N.D.

Canola

As of the Jan. 30 close, March canola futures on the Winnipeg, Manitoba, exchange were 80 cents (Canadian) higher on the week at $426 (Canadian). Canola futures were supported throughout last week by ideas the market is oversold, as well as ongoing weakness in the Canadian dollar. Canada’s record-large canola crop and associated logistical issues continue to provide pressure. Cash canola bids in Velva, N.D., were 20 cents higher last week at $17.02 per hundredweight.

Sunflowers

The soybean oil export sales pace for the week ending Jan. 24 was estimated at 6.7 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 440 thousand metric tons compared with 733.2 thousand metric tons for the previous marketing year. As of the Jan. 30 close, July soybean oil was down 47 cents for the week at $37.07 per hundredweight. Cash sunflower bids in Fargo, N.D., were 5 cents higher for the week at $18.95.

Dry beans

Limited supplies of great northern beans have led to an increase in demand for navy beans, creating prices of $36 to $37 per hundredweight in the North Dakota and Minnesota region. This is an attractive price to sell 2013 navy production. Pintos remain off the board in the region.

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