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Published June 02, 2014, 09:40 AM

Markets slip during short week

Wheat closed the short trading week lower on May 29. The U.S. markets were closed May 26 for Memorial Day and lower the rest of the week. By the close May 29, July Minneapolis dropped 11 cents, September Minneapolis dropped 11.25 cents, July Chicago dropped 20 cents and July Kansas City gave back 14.5 cents.

By: Ray Grabanski, Agweek

Wheat

Wheat closed the short trading week lower on May 29. The U.S. markets were closed May 26 for Memorial Day and lower the rest of the week. By the close May 29, July Minneapolis dropped 11 cents, September Minneapolis dropped 11.25 cents, July Chicago dropped 20 cents and July Kansas City gave back 14.5 cents.

Weather, or at least improving weather conditions, continues to pressure wheat. Rain fell over the weekend in much of the Southern Plains, while warm, dry conditions prevailed in the Northern Plains. The rain in the south is not enough to save the crop, but it is enough to help improve crop potential. In the north, the dry conditions have allowed for producers to get back into the field. Light selling was also tied to the May 27 disappointing export inspections estimate, which proves it is going to be hard for wheat exports to make the U.S. Department of Agriculture’s projections.

The May 27 crop condition report was bearish for wheat, as rain in the Southern Plains helped the wheat improve 1 percent the previous week. Warm, dry conditions in the Northern Plains allowed for producers to get back in the fields and plant 25 percent of the nation’s spring wheat. Losses were limited by support from early harvest reports out of Texas, which has the crop yielding 10 to 15 bushels per acre and 14 percent protein.

Wheat moved lower May 29, as the July Chicago contract closed with losses for the seventh consecutive day. There is little fresh news to inspire buying with the outlook for 2014 and 2015 world wheat production remaining bearish. Selling was also from recent strength in the U.S. dollar. The only positive news for wheat came from an announcement that Japan purchased 74,600 metric tons of milling wheat from the U.S.

USDA estimated wheat export shipments pace for the week ending May 23 at 18.7 million bushels. This brings wheat’s export shipments pace to 1.13 billion bushels, compared with 987.5 million for last year at this time. With one week left in wheat’s export marketing year, shipments will need to average 55.8 million bushels to make USDA’s expectations of 1.185 billion.

As of May 25, 74 percent of the nation’s spring wheat crop had been planted, compared with 49 percent the previous week and 82 percent for the five-year average. Spring wheat emergence was estimated at 43 percent, compared with 24 percent the previous week and 57 percent for the five-year average. Seventy percent of the nation’s winter wheat crop was headed, compared with 57 percent the previous week and 69 percent for the five-year average. Winter wheat crop conditions increased 1 percent to 30 percent good to excellent, 26 percent fair and 44 percent poor or very poor.

Corn

The corn market struggled again last week, with planting progress at the five-year average and near ideal weather for plant development. Additional pressure came from talk that feed demand will be lower this year and the crop is in very good condition. USDA will release its first condition rating for corn on June 2 and expectations are that it will be at 70 percent good to excellent. As of the May 29 close, the July contract was down 8.5 cents for the week, while the December contract lost 12.25 cents.

The corn futures traded under pressure to start the week on May 27 and lost 9 cents. Selling came into the market with ideal weather for plant development and another good week of planting progress. Traders were expecting the planting progress report to show that 87 percent of the nation’s corn crop is planted, while the report stated that 88 percent is in the ground and at the five-year average. Also, China will auction off 3.5 million metric tons of its corn reserves.

The corn futures closed with a small gain on May 28 with short covering, and export inspections were at the upper end of estimates, but selling picked up on May 29. The weather leans negative with another good week of planting and then rain starting over the weekend and into this week. Temperatures have also warmed up and are forecast to be 10 degrees above average in the Corn Belt. Additional pressure came from talk that feed demand will be down this year with the porcine epidemic diarhea virus in the hogs and a smaller cow herd. New-crop corn from South America is also moving into the world market. The International Grains Council released its monthly report and raised its global estimate to 955 million metric tons for corn and up from 950 million metric tons in April.

Ethanol production for the week ending May 23 averaged 927,000 barrels per day, up 0.22 percent from the previous week. Total ethanol production for the week was 6.489 million barrels. Corn used in production the week ending May 23 is estimated at 97.34 million bushels and needs to average 103.087 million bushels per week to meet this crop year’s USDA estimate of 5.05 billion bushels. Stocks were 17.489 million barrels, up 2.94 percent from the previous week.

The crop progress report showed 88 percent of the corn is planted versus 84 percent one year ago and a five-year average of 88 percent. Emergence is at 60 percent versus 49 percent one year ago and a five-year average of 64 percent.

Soybeans

As of the May 29 close, July soybeans were 16.5 cents lower for the week, while the November contract fell 21.5 cents. At 11 a.m. May 30, July soybeans were trading 1.25 cents lower, while November was down 6 cents.

On May 27, soybeans started the Memorial Day-shortened weak sharply lower as good weather and a good start for the 2014 crop pressured the market. While old-crop supplies remain extremely tight, the market appears to have turned its attention to new crop and its bearish early fundamental outlook. USDA is projecting record-high soybean production, and current favorable conditions support that projection. The May 27 crop progress report was expected to show soybean planting progress and emergence near the five-year averages. Soybean planting came in at 59 percent, above the five-year average of 56 percent, while emergence was at 25 percent, just below the five-year average of 27 percent. May 27 export inspections were bearish, coming in below the amount needed to keep pace with USDA’s projection.

Soybean trade was slow on both sides of unchanged May 28 before closing with moderate gains following a late round of buying. Tight supplies and strong exports and crush demand continue to support old-crop contracts, while bearish fundamentals put some pressure on new crop. The May 27 crop progress report showed planting and emergence near average levels. Expectations for a record soybean crop are bearish for deferred contracts, and corn planting delays in northern states might add even more soybean acres. On May 28,USDA announced a sale of 110,000 metric tons of new-crop soybeans to China, as well as 172,000 metric tons of new-crop soy meal to the Philippines.

Soybeans traded higher again May 29, with support provided in part by light commercial buying. Extremely tight supplies of old-crop soybeans remain a major factor in soybean prices staying as high as they are. So far, we have seen new-crop soybeans ignore bearish expectations of a potentially record-sized crop to maintain high price levels, as well. With rain in the forecast in northern states-some planting delays are possible, which would provide additional support.

USDA reported soybean export inspections pace for the week ending May 23 at 3.3 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.542 billion bushels, compared with 1.263 billion for last year at this time. Soybean export sales pace for the week ending May 23 was estimated at 32.4 million (2.2 million for 2013 and 2014). Soybean export sales remain above USDA’s demand projection of 1.6 billion. Shipments were reported at 4.4 million bushels.

Planting progress as of May 25 had 59 percent of the U.S. soybean crop planted, compared with 33 percent the previous week and the five-year average of 56 percent. Emergence was at 25 percent, compared with 9 percent the previous week and the five-year average of 27 percent.

Barley

As of May 25, 84 percent of the nation’s barley had been planted, compared with 68 percent the previous week and 82 percent for the five-year average. Barley emergence was estimated at 57 percent, compared with 37 percent the previous week and 55 percent for the five-year average.

May 29 cash feed barley bids in Minneapolis were at $3.95 per bushel, while malting barley bids were at $6.

Durum

As of May 25, 37 percent of North Dakota’s durum crop was planted, compared with 14 percent the previous week and 60 percent for the five-year average. Emergence was estimated at 10 percent, compared with 1 percent the previous week and 35 percent for the five-year average.

USDA reported durum export shipments pace for the week ending May 23 at 713,220 bushels, all going to Algeria.

May 29 cash bids for milling quality durum were at $7.10 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was at $7.40.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending May 29 with $23.20 (Canadian) losses. Canola started under pressure from improving weather conditions and from spillover pressure from a weaker U.S. soybean complex. The May 28 session saw a slight recovery as traders thought the week’s pressure was overdone and that canola was underpriced compared with other vegetable oil products. Losses returned to canola May 29 with selling tied to gains in the Canadian dollar.

As of May 25, North Dakota producers had 45 percent of the state’s canola planted, compared with 13 percent the previous week and 63 percent for the five-year average. Emergence was estimated at 11 percent, compared with zero the previous week and 32 percent for the five-year average.

May 29 cash canola bids in Velva, N.D., were at $20.36 per hundredweight.

Dry edible beans

As of May 25, North Dakota producers (37 percent of the nation’s crop) had 13 percent of their dry beans planted, compared with 2 percent the previous week and 32 percent for the five-year average. Minnesota producers (10 percent of nation’s crop) had 13 percent planted, compared with 1 percent the previous week and 46 percent for the five-year average. Nebraska producers (11 percent of nation’s crop) had 5 percent planted, compared with zero the previous week and 15 percent for the five-year average.

Sunflowers

As of May 25, 12 percent of the nation’s sunflower crop was planted, compared with 1 percent the previous week and 18 percent for the five-year average.

May 29 cash sunflower bids in Fargo, N.D., were at $21.25 per hundredweight.

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