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Published March 17, 2014, 09:46 AM

Wheat surges, soybeans falter

Wheat had gains last week again, as the Ukrainian situation continues to make traders nervous, and dry weather in the southern U.S. is showing no signs of changing. As of midday on March 14, May Minneapolis had gained 30 cents on the week, May Chicago was up 36 cents, and May Kansas City gained 32 cents.

By: Ray Grabanski, Agweek

Wheat

Wheat had gains last week again, as the Ukrainian situation continues to make traders nervous, and dry weather in the southern U.S. is showing no signs of changing. As of midday on March 14, May Minneapolis had gained 30 cents on the week, May Chicago was up 36 cents, and May Kansas City gained 32 cents.

Wheat trade had light gains March 10 with the release of the monthly U.S. Department of Agriculture report. U.S. ending stocks were unchanged at 558 million bushels, while world ending stocks increased slightly from 183.73 million metric tons in February to 183.81 million metric tons in March. Production numbers for Russia and Ukraine were unchanged at 52.1 million and 22.3 million metric tons, respectively.

The wheat markets posted big gains March 11 with traders showing concern about dry conditions in the southern plains. While crop condition ratings did improve slightly last week with wheat breaking dormancy, soil moisture is low in much of the hard red winter wheat growing areas, with the two-week forecasts showing little chance for moisture.

The wheat markets posted big gains again March 12 with tensions escalating about the Ukraine situation. Dow Jones reported substantial planting delays in Ukraine, attributed mostly to dry weather, but this news served to fuel the fires of concern about Ukrainian production and exports going forward. Around 17 percent of the world’s wheat exports come from the Black Sea region, so the wheat markets are very vulnerable to a change in the situation there.

The wheat markets felt pressure from some profit taking March 13 after surging in recent sessions. May Chicago wheat held above its 200-day moving average. Buying interest returned on March 14 with double-digit gains at midday, as traders do not want to be short ahead of the weekend with the risk for conflict in Ukraine. Western countries are threatening economic sanctions against Russia if it doesn’t agree to hold negotiations.

The National Agricultural Statistics Service weekly crop condition reports showed Texas winter wheat at 28 percent good to excellent, up from 15 percent the previous week, but topsoil moisture levels are 76 percent short to very short. The Oklahoma crop is rated at 31 percent good to excellent, unchanged from the previous week, with Kansas at 37 percent good to excellent versus 34 percent the previous week.

USDA reported wheat export inspections pace for the week ending March 7 at 15.8 million bushels. This brings the year-to-date export shipments pace for wheat to 895.2 million bushels, compared with 721.6 million for last year at this time. Wheat export sales pace for the week ending March 7 was estimated at 17.5 million bushels, above the 9.4 million needed to keep pace with projections. Shipments of 16.7 million bushels were below the 25.3 million needed.

Corn

Corn had mixed trade last week with losses after the monthly USDA report, while support came from strength in the wheat market as political unrest continues in Ukraine. As of midday on March 14, the May contract was down 3 cents for the week, while the December contract gained 1 cent.

The corn market traded lower on March 10 with the monthly USDA report. The report showed a reduction in ending stocks because of an increase in exports. USDA increased corn exports by 25 million bushels and left the rest of the balance sheet alone. Ending stocks came in at 1.456 billion bushels, with a stocks-to-use ratio at 10.9 percent, compared with last year at 7.4 percent. Brazil and Argentina’s corn production estimates were left unchanged, while global ending stocks were increased 1.17 million metric tons. The global stocks-to-use ratio increased to 16.8 percent.

The futures did crawl higher on March 11 and 12, as the strength in the wheat complex spilled over from continued turmoil in Ukraine. USDA did lower the U.S. stocks by 25 million bushels on March 10 and that helped the market. Corn also found support as the ethanol futures made new contract highs on March 12 and are creating buying interest from good demand and smaller stocks.

The corn market lost some ground on March 13 with the sharp losses in the wheat complex. CONAB (Brazil’s crop agency) also released its estimate for Brazil’s crop at 75.2 million metric tons, down slightly from its last estimate of 75.5 million, but substantially higher than the latest USDA figure of 70 million metric tons.

Ethanol production for the week ending March 7 averaged 869,000 barrels per day, down 2.8 percent from the previous week. Total ethanol production for the week was 6.083 million barrels. Corn used in production is estimated at 91.25 million bushels and needs to average 97.82 million bushels per week to meet this crop year’s USDA estimate of 5 billion bushels. Stocks were 15.908 million barrels, down 4.23 percent from the previous week.

USDA’s export inspections report was bullish for corn at 36.8 million bushels versus the 34.3 million needed to keep pace with USDA projections. Corn export sales were estimated at 27.1 million bushels, which was well above the 5.2 million needed to stay on pace with USDA’s estimate of 1.625 billion bushels. The shipments came in at 36 million bushels, above the 34.7 million needed to keep pace with USDA projections.

Soybeans

Soybeans slipped lower last week as commercial buying dried up, creating the first downturn in the weekly chart since the end of January. As of the March 13 close, May soybeans were 61.5 cents lower for the week, while the November contract lost 7.5 cents.

Soybeans opened the week lower, following slower-than-expected economic data out of China reported by Dow Jones over the weekend. Weak outside markets with sharp losses in crude oil added pressure ahead of USDA’s March World Agricultural Supply & Demand report, as well. The report pegged U.S. ending stocks at 145 million bushels, down from 150 million last month. This was a smaller decline than expected. World carryout was 70.64 million metric tons, compared with 73.01 million in February. Brazilian soybean production decreased from 90 million metric tons to 88.5 million, while Argentine soybean production was left unchanged at 54 million metric tons.

Soybeans traded mixed on March 11 with losses in the front month contracts tied to commercial selling. March 12 saw further losses as bull spreads continued to unwind. Soybean demand appears to be slowing with the slowdown in China’s economy likely responsible. China has accounted for 69 percent of this year’s U.S. soybean exports so far. The South American harvest continues to progress and shipments should continue to increase. Dow Jones reported March 12 that CONAB reduced its production estimate from 90 million metric tons to 85.4 million.

Soybean futures closed with gains in all months on March 13 with support from another round of bullish export sales. Export sales are currently 6 percent above USDA’s projection for the year with roughly six months remaining. Old crop supplies remain tight, and traders’ concerns about potential Chinese cancellations are diminishing with the majority of the export sales already having been shipped. Soybeans slipped lower again March 14 with profit taking ahead of the weekend.

USDA reported soybean export inspections pace for the week ending March 7 at 55.3 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.411 billion bushels, compared with 1.164 billion for last year at this time. Soybean export sales pace for the week ending March 7 was estimated at 4.2 million bushels. This brings soybean’s export sales pace for the year to 1.627 billion bushels, compared with USDA’s demand projection of 1.53 billion bushels.

Barley

USDA reported barley export inspections pace for the week ending March 7 at 13,733 bushels. There were no export sales reported for barley. For the week ending March 13, cash feed barley bids in Minneapolis were unchanged at $3.90 per bushel, while malting barley was unchanged at $5.90.

Durum

No export inspections or sales were reported for durum the week ending March 7. As of the March 13 close, cash bids for milling quality durum were at $7 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was at $7.15.

Canola

As of the March 13 close, May canola futures on the Winnipeg, Manitoba, exchange were $5.90 (Canadian) higher on the week at $456.10 (Canadian). Canola futures traded lower March 10, but closed with gains throughout the remainder of the week. Logistical issues and weakness in Chicago Board of Trade soybean and soyoil futures following the release of USDA’s March WASDE report pressured the market. Speculative buying and limited farmer selling provided support that led to ending the week higher. News that Canada had negotiated a free trade agreement with South Korea provided additional support on March 12. As of the March 13 close, cash canola bids in Velva, N.D., were 60 cents higher on the week at $19.18 per hundredweight.

Sunflowers

Soybean oil export sales pace for the week ending March 7 was estimated at 7.1 thousand metric tons. As of the March 13 close, May soybean oil was down $1.33 for the week at $42.99. Cash sunflower bids in Fargo, N.D., were 19 cents lower for the week at $20.60 per hundredweight.

Dry beans

Market activity has been extremely quiet this winter, with processing and shipping efforts hampered by cold weather and transportation logistics. Old crop navy beans are steady at $37, while pintos remain off the board. There are rumors of new crop contracts being offered for pintos sometime before planting, probably in the upper $20 range.

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