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Published March 31, 2014, 09:38 AM

Strength continues in wheat

Wheat traded with gains again last week with most of the support coming from continued dry conditions in the Southern Plains. For the week ending March 27, May Minneapolis gained 11 cents, September Minneapolis gained 15 cents, July Chicago gained 19 cents and July Kansas City picked up 17.5 cents.

By: Ray Grabanski, Agweek

Wheat

Wheat traded with gains again last week with most of the support coming from continued dry conditions in the Southern Plains. For the week ending March 27, May Minneapolis gained 11 cents, September Minneapolis gained 15 cents, July Chicago gained 19 cents and July Kansas City picked up 17.5 cents.

Wheat started the week with gains. Early support came from the weekend weather, which brought no rain to the winter wheat belt. Kansas, Oklahoma and Texas were expecting rain showers over the weekend, but no moisture fell in those states.

Additional support came from reports that the conflict between the Ukraine and Russia has not settled down yet, and there still could be military action.

The March 25 session had wheat struggling with all three of the exchanges trading with losses for most of the session. Early selling was tied to profit taking. But wheat was able to recover late in the session and actually turned to the plus side in some exchanges as weather continues to be a main concern in the Southern Plains.

March 26 saw wheat trade to levels not seen since May 2013 (in Kansas City) and that brought in technical selling pressure as the market tried to correct an overbought market condition. Additional selling was tied to rain showers in parts of the Southern Plains. Parts of Oklahoma and Texas are currently seeing rain showers, but the system appears to be moving away from the driest regions of the winter wheat belt. The rattling of the sabers has quieted down in Ukraine and that also added light pressure to the wheat as it appears that Black Sea wheat exports will not be affected. Position squaring ahead of the March 31 acreage and stocks report was also seen.

Wheat started the March 27 session on the defense with carryover selling coming from a system that dropped little rain in the Southern Plains. Light market activity focused on position squaring ahead of the March 31 U.S. Department of Agriculture reports. Early estimates have wheat stocks at 1.05 billion bushels, compared with December’s estimate of 1.463 billion bushels and last March’s estimate of 1.235 billion. All wheat acreage is estimated at 56.09 million acres, compared with 56.2 million last year. Spring wheat acreage is estimated at 12.2 million, compared with 11.6 million last year.

USDA estimated wheat export shipments pace for the week ending March 21 at 19.3 million bushels. This brings the year-to-date shipments total for wheat to 933 million bushels, compared with 766.5 million for last year. Wheat export sales pace was estimated at 26.7 million bushels with 14.7 million being old crop and 12 million being new crop. This brings the year-to-date export sales pace for wheat to 1.099 billion bushels, compared with 929.3 million for last year. With 10 weeks left in wheat’s export marketing year, shipments need to average 24.2 million bushels and sales need to average 7.6 million to reach USDA’s expectations of 1.175 billion.

Winter wheat conditions continue to decline with all three major states reporting lower conditions. Kansas’s crop declined 1 percent to now be rated 33 percent good to excellent, 46 percent fair and 21 percent poor to very poor. Oklahoma’s crop conditions declined 1 percent to 17 percent good to excellent, 41 percent fair and 42 percent poor to very poor. Texas’s crop declined 2 percent to 11 percent good to excellent, 34 percent fair and 55 percent poor to very poor.

Corn

Corn traded sideways last week and at the upper end of its recent range. The futures found support from the continued unrest in the Ukraine and a good export sales report, but buying remained limited as traders position ahead of the USDA quarterly stocks and prospective plantings report. As of midday on March 28, the May contract was up 15 cents for the week, while the December contract gained 10 cents.

The corn futures had decent gains on March 24 and 27. Support came from strength in the wheat complex and the unrest in Crimea as Russia seized more military bases over the weekend and military forces remain on the border. The cattle on feed report was supportive with a larger-than-expected placement number that created talk of increased feed demand. Additional strength came from a good export sales report that exceeded estimates. There was some talk that the large sales might be coming from purchases being switched from the Ukraine. The ethanol market has also traded sharply higher in the past month to near an eight-year high and is now above gasoline because of rail issues. Traders continue to look at the forecast, which remains cool throughout much of the country.

Corn was soft on March 25 and 26. Traders started to focus on the USDA report that will be released March 31. Trade estimates for corn acres is 93 million versus 95.4 million planted in 2013 and stocks at 7.09 billion bushel versus 5.4 billion one year ago. The ethanol report was also disappointing on March 26 with corn usage down from the previous week, and stocks were larger. Taiwan was tendering for corn last week and bought from South Africa, as U.S. corn is priced too high. Additional weakness came from better-than-expected corn yields being reported out of Argentina, as they are 9 percent harvested.

Ethanol production for the week ending March 21 averaged 885,000 barrels per day, down 0.67 percent from the previous week. Total ethanol production for the week was 6.195 million barrels. Corn used in production the week March 21 is estimated at 92.93 million bushels and needs to average 98.22 million bushels per week to meet this crop year’s USDA estimate of 5 billion bushels. Stocks were 15.653 million barrels, up 2.46 percent from the previous week.

USDA’s export inspections report was bullish for corn at 45 million bushels versus the 35 million needed to keep pace with USDA’s projections of 1.625 billion. Corn export sales were estimated at 57 million bushels, which was well above the 3.3 million needed to stay on pace with USDA’s estimate of 1.625 billion. The shipments came in at 48.8 million bushels, above the 34.6 million needed to keep pace with USDA projections.

Soybeans

As of the March 27 close, May soybeans were 27.75 cents higher for the week, while the November contract gained 15.5 cents.

Soybean trade was higher March 24, with commercial buying combining with spillover strength from the corn market. Tight old-crop supplies continue to provide support, though there is some concern with Chinese demand slowing. The harvest is moving along in South America with shipments picking up the pace. March 24 export inspections were bullish, coming in well above the amount needed to keep pace with USDA’s projection.

Soybeans closed higher on March 25 and 26 as commercial buying tied to tight old-crop supplies helped overcome weakness in the other grains and the outside markets. The South American harvest is a limiting factor with Brazil’s harvest expected to be 70 percent complete by the end of the week. There are ongoing concerns that China could delay or cancel purchases as demand slows in the second quarter. Traders continued to position ahead of the March 31 USDA report.

Soybean trade was quiet March 27 as the market closed with small losses in most months. March 27 export sales were bullish again, with sales and shipments remaining 7 percent ahead of USDA’s estimate for the year. Traders continue to position ahead of the March 31 reports. The average trade guess for March 1 stocks is 990 million bushels, down from 998 million last year at this time. The average estimate for planted acreage is 81.1 million acres, which would be up from 76.5 million acres last year. This would be a record for planted acreage.

USDA reported soybean export inspections pace for the week ending March 21 at 26.9 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.457 billion bushels, compared with 1.193 billion for last year at this time. Soybean export sales pace for the week ending March 21 was estimated at 20.1 million bushels (0.4 million for 2013 to ’14). Soybean export sales remain above USDA’s demand projection of 1.53 billion bushels. Shipments were reported at 26.5 million bushels.

Barley

USDA reported barley export shipments pace for the week ending March 21 at 55,000 bushels. This brings barley’s year-to-date export shipments pace to 7.2 million bushels, compared with 6.2 million last year. No barley export sales were reported for the week. This brings the year-to-date export sales pace for barley to 8.2 million bushels, compared with last year’s pace of 6.1 million. March 27 cash feed barley bids in Minneapolis were at $3.95 per bushel, while malting barley bids were at $6.

Durum

USDA reported durum export shipments pace for the week ending March 21 at 588,000 bushels. No durum export sales were reported for the week. This brings the year-to-date export sales pace for durum to 17.8 million bushels, compared with last year’s pace of 17.9 million. March 27 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. Early estimates for durum’s 2014 acreage are at 1.76 million compared with 1.47 million last year.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending March 27 $18.30 (Canadian) higher. Canola traded with gains during all four of the sessions last week, with support coming from technical buying as the traders thought the recent losses have been overdone. Additional support spilled over from a stronger U.S. soybean complex. Strong commercial demand added strength. March 27 cash canola bids in Velva, N.D., were at $19.48 per hundredweight.

Sunflowers

USDA estimated soybean oil export sales pace for the week ending March 21 at 4 thousand metric tons. This brings the year-to-date export sales total for soybean oil to 562.6 thousand metric tons, compared with 817.7 thousand metric tons for last year. March 27 cash sunflower bids in Fargo, N.D., were at $20.45 per hundredweight.

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