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Published May 19, 2014, 09:34 AM

Weather improves markets sell off

Wheat spun its wheels to start last week, trading with small losses the first two sessions. But May 14 and 15 May 15 with 40.25-cent losses in July Minneapolis, 38.75-cent losses in September Minneapolis, 44.25 cent-losses in July Chicago and 50-cent losses in July Kansas City.

By: Ray Grabanski, Agweek

Wheat

Wheat spun its wheels to start last week, trading with small losses the first two sessions. But May 14 and 15 May 15 with 40.25-cent losses in July Minneapolis, 38.75-cent losses in September Minneapolis, 44.25 cent-losses in July Chicago and 50-cent losses in July Kansas City.

The May 12 and 13 sessions had wheat virtually spinning its wheels in all three exchanges, as most months ended unchanged or with small losses. After trading to 13-month highs and almost to new contract highs in some months, wheat fell under technical pressure. Additional selling was from negative world wheat estimates (U.S. numbers were smaller than expected, but estimated more wheat, which again proves wheat’s issue is in the U.S.). Support was from delayed planting. Both Minnesota and North Dakota are lagging dramatically behind in planting progress because of the cold, wet spring.

Heavy selling dominated all three wheat exchanges late in the week. Technical selling was the main feature in the wheat exchanges, as once wheat broke through its first line of support, sell stops were triggered to push the market close to major support. The May 15 session had wheat break through major support lines. It appears that wheat’s run up to 13-month highs did the job it was suppose to do — curve demand. This was evident in the disappointing May 15 export sales estimate. To top that off, weather conditions are improving in both the Southern Plains and in the Northern Plains. Wheat is oversold and should stage a recovery and producers should be prepared to sell any rally.

The U.S. Department of Agriculture estimated wheat export shipments pace for the week ending May 9 at 22.9 million bushels. Wheat export sales pace was estimated at 9.2 million bushels, with 2 million being old crop and 7.2 million new. With three weeks left in wheat’s export marketing year, shipments will need to average 32.2 million bushels and sales need to average 7.3 million to make USDA’s expectations of 1.185 billion.

As of May 11, 34 percent of the nation’s spring wheat crop had been planted, compared with 26 percent the previous week and 53 percent for the five-year average. Spring wheat emergence was estimated at 12 percent, compared with 7 percent the previous week and 27 percent for the five-year average. Forty-four percent of the nation’s winter wheat crop was headed, compared with 29 percent the previous week and 46 percent for the five-year average. Winter wheat crop conditions declined 1 percent to 30 percent good to excellent, 28 percent fair and 42 percent poor or very poor.

Corn

The corn market came under pressure last week with rapid planting progress and the talk of more acres. The monthly USDA report released May 9 was bearish and carried over to last week’s trade. The corn futures broke through key technical support last week. As of the May 15 close, the July contract was down 23.25 cents for the week, while the December contract lost 18.25 cents.

Corn continued its sell-off May 12 with the bearish USDA report that showed larger-than-expected old- and new-crop world stocks. The stocks were also larger than expected for the U.S. 2014 and 2015 crop year. The planting progress report added additional selling as it stated that 59 percent of the corn was in the ground and 30 percent of the crop was planted the week ending May 9. Planted acreage is now 1 percent above the five-year average of 58 percent for this time frame. There was widespread rain over the weekend that did slow planting, but many areas said it was welcomed.

Corn closed slightly higher with turnaround May 13 and after a two-day sell-off. Support came from the May 12 export inspections report that was at the high end of expectations. There was also news that South Korea bought two cargos of corn.

Selling pressure remained intact on May 14 and 15. Fund selling came into play with talk of more corn acres. Some corn acres could get switched to soybeans in the Northern tier states, where field work remains spotty, but there is talk that corn acres in the Corn Belt might grow. Argentina is now 50 percent harvested with good yields.

Ethanol production for the week ending May 7 averaged 922,000 barrels per day, up 3.13 percent from the previous week. Total ethanol production for the week was 6.454 million barrels. Corn used in production the week ending May 9 is estimated at 96.81 million bushels and needs to average 99.297 million bushels per week to meet this crop year’s USDA estimate of 5 billion bushels. Stocks were 17.302 million barrels, up 0.95 percent from the previous week.

The crop progress report showed 59 percent of the corn is planted versus 26 percent one year ago and a five-year average of 58 percent. Emergence is at 18 percent versus 5 percent one year ago and a five-year average of 25 percent.

USDA’s export inspections report was friendly for corn at 47.22 million bushels versus the 43.86 million needed to keep pace with USDA projections of 1.9 billion.

Soybeans

As of the May 15 close, July soybeans were 16.75 cents lower for the week, while the November contract fell 8.5 cents. At 11 a.m. May 16, July soybeans were trading 2.5 cents lower, while November was up 3 cents.

Soybeans started the week lower with follow-through selling from the May 9 report, which pegged new-crop domestic production at a bearish 3.635 billion bushels. Additional pressure came from expectations for good planting progress on the May 12 crop progress report. The report, released after the market closed, did show strong progress with 20 percent of the soybean crop planted, on track with the five-year average of 21 percent. The May 12 export inspections were bullish at 8.8 million bushels. This was more than enough to keep pace with USDA’s new projection of 1.6 billion.

Soybeans traded higher May 13 as the July to November spread firmed after weakening on May 12. Wednesday saw lower trade through much of the day from profit taking and favorable weather in the near-term, but the market turned around to close with small gains in anticipation of the National Oilseed Processors Association crush report on May 15. On May 13, USDA announced a sale of 116,000 metric tons of new-crop soybean meal to Thailand.

Soybean trade closed lower May 15, as planting continues to move along in the south and with a better planting forecast for the northern states. The NOPA crush number came in at 132.67 million bushels. This was near pre-report estimates of 126 million bushels, but down from the 153.8 million crushed in March. USDA announced a sale of 120,000 metric tons of new-crop soybeans to China May 15. May 15 export sales were seen as bullish, as the total grew to 1.643 billion bushels, well above USDA’s revised estimate of 1.6 billion.

USDA reported soybean export inspections pace for the week ending May 9 at 8.8 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.532 billion bushels, compared with 1.256 billion for last year at this time. Soybean export sales pace for the week ending May 9 was estimated at 14.6 million bushels (2.7 million for 2013 and 2014). Soybean export sales remain above USDA’s demand projection of 1.6 billion bushels. Shipments were reported at 9.9 million bushels.

As of May 11, 20 percent of the U.S. soybean crop was planted, compared with 5 percent the previous week and the five-year average of 21 percent.

Barley

As of May 11, 55 percent of the nation’s barley had been planted, compared with 46 percent the previous week and 56 percent for the five-year average. Barley emergence was estimated at 29 percent, compared with 17 percent the previous week and 27 percent for the five-year average.

USDA reported barley export shipments pace for the week ending May 9 at 1.7 million bushels. Barley export sales estimate was at 100,000 bushels.

May 15 cash feed barley bids in Minneapolis were $4 per bushel, while malting bids were at $6.50.

Durum

As of May 11, 1 percent of North Dakota’s durum crop was planted, compared with 1 percent the previous week and 23 percent for the five-year average.

USDA reported durum export shipments pace for the week ending May 9 at 424,000 bushels, all going to Algeria. Durum export sales pace for the week ending May 9 was estimated at a negative 500,000 bushels (cancellation).

May 15 cash bids for milling quality durum were at $7.10 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was $7.25.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed with a $3.80 (Canadian) gain for the week ending May 15. Canola started the week posting strong gains. Early support spilled over from a stronger U.S. soybean complex. Additional support was from commercial buying, as traders bought old crop in an attempt to secure product. Delayed planting concerns also added strength. Canola struggled to end the week. Selling pressure was from improving weather forecasts, which is hinting of a break in the cold, wet conditions in the Northern Plains, which might allow planting progress to start.

As of May 11, North Dakota producers had 2 percent of the state’s canola planted, compared with 1 percent the previous week and 26 percent for the five-year average.

May 15 cash canola bids in Velva, N.D., were $21.14 per hundredweight.

Sunflowers

USDA estimated soybean oil export sales pace for the week ending May 9 at 1.8 thousand metric tons. This brings the soybean oil export sales pace to 593.5 thousand metric tons, compared with 827.5 thousand metric tons for last year.

May 15 cash sunflower bids in Fargo, N.D., were at $21.45 per hundredweight.

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