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Published April 07, 2014, 09:59 AM

USDA report drives market

Wheat struggled last week with reports of moisture opportunities for the Southern Plains causing traders to head for the sidelines. The U.S. Department of Agriculture’s acreage report was friendly to wheat, but that was offset by a neutral stocks estimate. For the week ending April 3, May Minneapolis dropped 9.25 cents, September Minneapolis dropped 8.5 cents, July Chicago dropped 17.5 cents and July Kansas City lost 16 cents.

By: Ray Grabanski, Agweek

Wheat

Wheat struggled last week with reports of moisture opportunities for the Southern Plains causing traders to head for the sidelines. The U.S. Department of Agriculture’s acreage report was friendly to wheat, but that was offset by a neutral stocks estimate. For the week ending April 3, May Minneapolis dropped 9.25 cents, September Minneapolis dropped 8.5 cents, July Chicago dropped 17.5 cents and July Kansas City lost 16 cents.

Wheat started the week with small gains as a result of USDA’s reports. In the quarterly grain stocks report, USDA estimated wheat stocks at 1.056 billion bushels, 14 million bushels more than expected, but 179 million fewer than last year. All wheat acreage was estimated at 55.82 million acres, 460,000 fewer than expected by the trade and 340,000 fewer than last year. Winter wheat acres were estimated at 42.01 million, 150,000 fewer than expected and 1.08 million fewer than last year. Spring wheat acres were estimated at 12.01 million, 260,000 fewer than expected, but 420,000 more than last year.

April 1 and 2 sessions had wheat on the defense because of forecasts calling for beneficial moisture for parts of the Southern Plains. Rain is expected to fall in the eastern portion of the Southern Plains, though little is expected for the western portion where moisture is badly needed. If rain does not fall in the western regions of Kansas, wheat conditions will likely decline again. Additional selling spilled over from an overall bearish tone to the grains.

Gains returned to wheat April 3 as a result of a friendly export sales estimate. Most of the strength for wheat came from reports that dry conditions in the Southern Plains are a little worse than maybe most expected. Reports have 99 percent of Kansas rated at some level of drought, up from 91 percent the previous week. Oklahoma is 51 percent in severe, extreme or exceptional drought condition, up from 32 percent the previous week. This will likely result in another week of declining crop ratings.

USDA estimated wheat export shipments pace for the week ending March 28 at 18.1 million bushels. Wheat export sales pace was estimated at 23.8 million bushels with 12.4 million being old crop and 11.4 million being new crop. With nine weeks left in wheat’s export marketing year, shipments need to average 17.2 million bushels and sales need to average 7.2 million to reach USDA’s expectations of 1.175 billion.

Winter wheat conditions continue to show concerns. Kansas’s crop declined 1 percent to 32 percent good to excellent, 43 percent fair and 25 percent poor or very poor. Oklahoma’s crop condition was unchanged at 17 percent good, 59 percent fair and 44 percent poor or very poor. Texas’s crop was unchanged at 11 percent good to excellent, 30 percent fair and 59 percent poor or very poor. Colorado’s crop declined 2 percent to 34 percent good to excellent, 33 percent fair and 33 percent poor or very poor.

Corn

Corn traded to seven-month highs last week with a supportive USDA report. USDA quarterly stocks and 2014 acreage numbers came in below estimates and created buying. USDA came out with the all crop acres number at 317.3 million for 2014 and up 600,000 from 2013, but traders are wondering where the near 9 million acres of preventive plant in 2013 and the Conservation Reserve Program acres that were released are located. As of midday April 4, the May contract was up 3 cents for the week, while the December contract gained 12 cents.

The corn market traded double digits lower on the morning of March 31, ahead of the anticipated USDA quarterly stocks and prospective plantings report. The report was viewed as friendly, which led the futures higher into the afternoon. The quarterly stocks came in at 7.006 billion bushels, because feed usage was 100 million bushels more than expected, and below the 7.1-billion-bushel estimate. The acreage number came in below estimates at 91.7 million and the smallest since 2010, while estimates were for 93 million, and 95.4 million were planted in 2013. Projected new-crop stocks are adequate at 1.7 billion bushels, but there will be less room for any crop adversity this year. The supportive report carried over to the trade on April 1.

On April 2, the corn market traded slightly lower overnight with light fund selling and accelerated lower during the day session. The futures are overbought and traded to September highs on April 1, which created profit taking. The ethanol report showed corn use up from the week ending March 28, but ethanol futures were sharply lower to end the week. The export sales were decent last week, but down 32 percent from the previous week and 12 percent from the four-week average. Shipments are also running 5 percent behind, and there were more Chinese cancellations in the report. We closed slightly higher on April 3, but selling pressure came April 4 with talk of more Chinese cancellations.

Ethanol production for the week ending March 28 averaged 922,000 barrels per day, up 4.18 percent from the previous week. Total ethanol production for the week was 6.454 million barrels. Corn used in production the week ending March 28 is estimated at 96.81 million bushels and needs to average 98.28 million bushels per week to meet this crop year’s USDA estimate of 5 billion bushels. Stocks were 15.875 million barrels, up 1.42 percent from the previous week.

USDA’s export inspections report was bullish for corn at 52.3 million bushels, above the 34.6 million needed to keep pace with USDA projections of 1.625 billion. Corn export sales were estimated at 39.6 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 56.1 million bushels, above the 33.3 million needed to keep pace with USDA projections.

Soybeans

As of the April 3 close, May soybeans were 38.75 cents higher for the week, while the November contract gained 13 cents. Soybeans were down 1 to 4 cents early in the April 4 trade.

Soybeans traded mixed overnight and lower into the morning, as weakness in the corn market and profit taking pressured the market ahead of theUSDA reports. Better-than-expected export inspections limited the selling. Soybean stocks as of March 1 came in at 992 million bushels, slightly above the average trade estimate of 989 million. Planting acreage came in at 81.5 million acres, compared with the average trade estimate of 81.37 million acres. This would be a record number of acres. The tight old-crop supplies are supportive to nearby contracts, while the acreage could be bearish to new crop, though plenty of uncertainty remains.

On April 1, the May contract set another new contract high, while the November closed at its highest level in seven months. Tight old-crop stocks continue to be the driving force with renewed demand following the quarterly stocks report. Feed demand in the U.S. remains strong, though Chinese demand is said to be slowing. The South American harvest continues to move along, though excess moisture has slowed the progress somewhat in Argentina. Brazil is seeing good development in double-crop acres.

Soybeans traded lower April 3, with pressure from commercial selling. Recent weakness in the May to July spread indicates a slowing of nearby demand as South America’s harvest continues to move along. There is talk that Brazil could make changes to its export taxes in favor of the government, which could limit farmer selling in the future.

Soybean trade was mixed at midday April 3, but the market strengthened into the close to finish with moderate gains. Tight old-crop stocks remain the primary supportive factor with price rationing likely necessary, despite talk of potential imports. Another round of bullish export sales provided additional support. With five months remaining, export sales and shipments remain 7 percent ahead of USDA’s estimate for the year.

USDA reported soybean export inspections pace for the week ending March 28 at 18.6 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.476 billion bushels, compared with 1.209 billion for last year at this time. Soybean export sales pace for the week ending March 28 was estimated at 3.1 million bushels (2.4 million for 2013 to ’14). Soybean export sales remain above USDA’s demand projection of 1.53 billion bushels. Shipments were reported at 24.2 million bushels.

Barley

USDA estimated barley stocks at 122 million bushels, up 4 percent from last year. U.S. barley acreage is estimated at 3.165 million, a decrease of 9 percent from last year. North Dakota barley acreage is estimated at 650,000, 14 percent less than last year. USDA reported barley export shipments pace for the week ending March 28 at 59,500 bushels. No barley export sales were reported for the week. April 3 cash feed barley bids in Minneapolis were at $3.95 per bushel, while malting barley bids were at $6.

Durum

USDA estimated durum stocks at 38.1 million bushels, a decline of 10 percent from last year. Durum acreage is estimated at 1.799 million, an increase of 22 percent from last year. North Dakota producers are expected to plant 1.1 million acres of durum, 38 percent more than in 2013. USDA reported durum export shipments pace for the week ending March 28 at 4,400 bushels. No durum export sales were reported. April 3 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

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending April 3 $5.50 (Canadian) higher. Canola started the week with losses. USDA’s prospective plantings report showed a large increase in U.S. canola acreage, estimated at 1.737 million, an increase of 29 percent from last year. North Dakota producers are expected to plant 1.27 million acres of canola, 38 percent more than last year. Canola was able to trade with gains late in the week because of strong domestic demand coming from crushers. Additional support spilled over from a stronger U.S. soybean complex. April 3 cash bids in Velva, N.D., were at $19.50 per hundredweight.

Dry beans

Total dry bean acreage is estimated at 1.686 million, a 24 percent increase from last year. North Dakota producers are expecting to plant 620,000 acres of edible beans, 41 percent more than last year. Minnesota producers are expected to plant 170,000 acres of edible beans, an increase of 36 percent from last year.

Sunflowers

Sunflower stocks are estimated at 806 million pounds, 33 percent less than last year. All sunflower acreage is estimated to be 1.592 million, a 1 percent increase from last year. North Dakota producers are expected to plant 670,000 acres of sunflowers, an increase of 34 percent from last year. USDA estimated soybean oil export pace for the week ending March 28 at 6.2 thousand metric tons. April 3 cash sunflower bids in Fargo, N.D., were at $20.85 per hundredweight.

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