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Published June 09, 2014, 09:33 AM

Improving crop pressures

Wheat traded with losses again last week with most of the selling again tied to improving growing conditions in the Southern Plains and Northern Plains.

By: Ray Grabanski, Agweek

Wheat

Wheat traded with losses again last week with most of the selling again tied to improving growing conditions in the Southern Plains and Northern Plains. For the week ending June 5, July Minneapolis dropped 16 cents, September Minneapolis dropped 16.25 cents, July Chicago slipped 21.5 cents and July Kansas City gave back 9 cents.

Wheat struggled to start the week, with the June 2 and 3 sessions dropping significantly. There were a lot of negative stats to go with wheat dropping to three-month lows, trading lower 18 out of 20 sessions, trading lower for 10 straight sessions, and the longest decline in more than 20 years. Not to mention, export reports are clearly showing that wheat will not make U.S. Department of Agriculture export projections. The main story in wheat continues to be improving growing conditions as the U.S. plains weather has adjusted to allow for planting progress in the north and rains in the south. Additional selling was tied to reports of early harvest progress in the Southern Plains, and world crop conditions look good so far with widespread favorable weather.

The end of the week brought cooler heads to the wheat exchanges, or at least some buy orders were uncovered, helping wheat break its downward spiral. Technical buying helped push wheat, but gains were small because of selling pressure from a sloppy close in corn and soybeans. The hard wheat exchanges (Kansas City and Minneapolis) had the best recovery, but did slip off session highs going into the close June 4 and 5. The hard wheat was supported by technical buying as traders tried to correct an oversold market condition. It will be tough for wheat to put together a full fledge rally until winter wheat harvest surpasses the 50 percent complete level.

USDA estimated wheat export shipments pace for the week ending May 30 at 18.9 million bushels. This was the last export inspections report for the 2013 season, and it appears wheat export shipments will end up 35 million bushels short of USDA’s expectations of 1.185 billion bushels.

Wheat export sales pace for the week ending May 30 was estimated at 12.6 million bushels with 0.1 million old crop and 12.5 million new crop. This is the last export sales estimate for the 2013 wheat export year. Wheat’s 2013 export sales pace will fall 19 million bushels short of USDA’s expectations of 1.185 billion bushels.

As of June 1, 88 percent of the nation’s spring wheat crop had been planted, compared with 74 percent the previous week and 88 percent for the five-year average. Spring wheat emergence was estimated at 67 percent, compared with 43 percent the previous week and 72 percent for the five-year average. Seventy-nine percent of the nation’s winter wheat crop was headed, compared with 70 percent the previous week and 78 percent for the five-year average. Winter wheat crop conditions were unchanged at 30 percent good to excellent, 26 percent fair and 44 percent poor or very poor.

Corn

The corn market worked lower last week. USDA released its first report of the year for the crop conditions and it came in well above estimates. The weather remains near ideal for crop development and many reports out of the Corn Belt state this is the best looking crop in years. As of the June 5 close, July closed lower for the sixth day in a row, posting a 16.75-cent loss for the week, while December traded to levels last seen in January and off 10.25 cents.

Corn traded lower overnight and into the start of the day on June 2, as the funds continue to liquidate long positions. Additional selling pressure came from widespread rain over the weekend and warm temperatures. The export inspections were disappointing. The June 2 planting progress report showed 95 percent of the crop is planted. This year’s first crop condition rating came in at 76 percent good to excellent, the third-highest rating in recent history, with 78 percent being the record in 2007. Also, none of the crop had a very poor rating and only 2 percent was poor. Emergence was at 80 percent, at the five-year average.

Soybeans

As of the June 5 close, July soybeans were 32.75 cents lower for the week, while the November contract fell 23.25 cents. At 11 a.m. June 6, July soybeans were trading 3.5 cents lower, while November was up 1 cent.

Soybeans closed mixed on June 2 as nearby contracts posted gains, while the deferred contracts finished with small losses. Commercial buying led to gains in old crop as strong crush demand and good exports combine with extremely tight supplies to continue to provide support. Weather has been good for new-crop progress, and continues to encourage more shifting of acreage to soybeans. June 2 export inspections were bullish, coming in above the amount needed to keep pace with USDA’s projection.

The market traded on the defensive June 3 following good numbers in USDA’s crop progress report the afternoon of June 2. Planting was estimated at 78 percent and emergence at 50 percent, both above their respective five-year averages. Additionally, good crop ratings for corn suggest soybeans could see similarly high numbers in this week’s initial ratings, especially with rain in the forecast for some areas. Talk of potential imports from Brazil weighs on the old-crop contracts.

Soybean trade was active June 4 before closing with small changes, higher in the nearby contracts and lower in the deferred. Historically tight old-crop supplies will continue to provide support to the market. New-crop fundamentals remain bearish, but uncertainty is keeping prices from dropping too quickly. Conditions are generally favorable for late planting and early crop development.

On June 5, soybeans traded with sharp losses in nearby months, as July closed below its 50-day average for the first time since early February. These losses raise the possibility that commercial needs are being met for old-crop soybeans, likely by imports from South America. Traders will watch for additional import confirmations to spur more profit taking. June 5 export sales were bullish, showing that demand remains strong. The outlook for new-crop beans remains bearish with the expected record crop. USDA announced a sale of 40,000 metric tons of soybean oil to unknown destinations.

USDA reported soybean export inspections pace for the week ending May 30 at 5.7 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.548 billion bushels, compared with 1.268 billion for last year at this time. Soybean export sales pace for the week ending May 30 was estimated at 10 million bushels (1.5 million for 2013 and 2014). Soybean export sales remain above USDA’s demand projection of 1.6 billion bushels. Shipments were reported at 7.8 million bushels.

Planting progress as of June 1 had 78 percent of the U.S. soybean crop planted, compared with 59 percent the previous week and the five-year average of 70 percent. Emergence was at 50 percent, compared with 25 percent the previous week and the five-year average of 45 percent.

Barley

As of June 1, 93 percent of the nation’s barley had been planted, compared with 84 percent the previous week and 89 percent for the five-year average. Barley emergence was estimated at 76 percent, compared with 57 percent the previous week and 69 percent for the five-year average. Barley crop conditions were rated 67 percent good to excellent, 32 percent fair and 1 percent poor or very poor.

USDA reported barley export shipments pace for the week ending May 30 at 645,508 bushels. No barley export sales were reported for the week. This will be the last export sales report for the 2013 crop year. Barley’s export pace was estimated at 8.2 million bushels, compared with 6.5 million last year.

June 5 cash feed barley bids in Minneapolis were at $3.65 per bushel, while malting bids were at $5.85.

Durum

As of June 1, 62 percent of North Dakota’s durum crop was planted, compared with 37 percent the previous week and 69 percent for the five-year average.

Emergence was estimated at 29 percent, compared with 10 percent the previous week and 49 percent for the five-year average.

USDA reported durum export shipments pace for the week ending May 30 at 724,978 bushels. No durum export sales were reported for the week. This will be the last export sales report for the 2013 crop year. Durum’s export pace was estimated at 19.5 million bushels, compared with 22.1 million for last year.

June 5 cash bids for milling quality durum were at $7.25 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was at $7.60.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending June 5 with $1.60 (Canadian) gains. Canola started the week off lower because of good weather across most of the prairies and losses in the U.S. soybean complex contributed to losses in Canola June 2. A lack of significant farmer selling and weakness in the Canadian dollar limited the decline. Technical buying helped limit losses in canola after canola traded to its lowest levels in almost three months.

As of June 1, North Dakota producers had 77 percent of the state’s canola planted, compared with 45 percent the previous week and 72 percent for the five-year average. Emergence was estimated at 39 percent, compared with 11 percent the previous week and 46 percent for the five-year average.

June 5 cash canola bids in Velva, N.D., were at $20 per hundredweight.

Dry edible beans

As of June 1, North Dakota producers (37 percent of the nation’s crop) had 61 percent of their dry beans planted, compared with 13 percent the previous week and 47 percent for the five-year average. Emergence was estimated at 13 percent, compared with the five-year average of 15 percent. Minnesota producers (10 percent of the nation’s crop) had 52 percent planted, compared with 13 percent the previous week and 65 percent for the five-year average. Emergence was estimated at 10 percent, compared with the five-year average of 11 percent. Nebraska producers (11 percent of nation’s crop) had 16 percent planted, compared with 5 the previous week and 31 percent for the five-year average.

Sunflowers

As of June 1, 26 percent of the nation’s sunflower crop was planted, compared with 12 percent the previous week and 33 percent for the five-year average.

USDA estimated soybean oil export sales pace for the week ending May 30 at 5.1 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 654.9 thousand metric tons, compared with 870.3 thousand metric tons for last year.

June 5 cash sunflower bids in Fargo, N.D., were at $21.15 per hundredweight.

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