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Published June 23, 2014, 09:43 AM

Wheat leads the charge

Wheat traded with gains last week with weather concerns continuing to be the main supporting factor. This time it is too much rain in the Southern Plains, which in turn is delaying harvest. Additional support came from technical buying as wheat traded to support.

By: Ray Grabanski, Agweek

Wheat

Wheat traded with gains last week with weather concerns continuing to be the main supporting factor. This time it is too much rain in the Southern Plains, which in turn is delaying harvest. Additional support came from technical buying as wheat traded to support. For the week ending June 19, July Minneapolis gained 18.75 cents, September Minneapolis gained 10.25 cents, July Chicago gained 7.5 cents and July Kansas City gained 16 cents.

Wheat started the week with gains but slipped into negative territory once the day session started. Early support spilled over from the other grains as both corn and soybeans traded with gains. But once the day session started, selling pressure accelerated because of a disappointing export inspections report, as well as from expectations of improving wheat conditions in both the Southern and Northern Plains.

The June 17 session started off on the defense with selling spilling over from the June 16 negative crop progress report. Strong spring wheat conditions and a stronger U.S. dollar added to the selling pressure. Late in the session, wheat firmed with strength coming from technical strength once wheat traded to support. Wheat is looking for direction and is getting it from corn and soybeans.

June 17 gains spilled over to June 18 and 19 and technical buying kicked in once wheat traded below psychological support (Chicago at $6 and Minneapolis at $7). Support also came from weather forecasts calling for additional rain for parts of the Southern Plains. Traders are concerned that this will further slow down harvest activity and cause further damage to the harvest-ready wheat. Seasonally, wheat does stage a post-harvest rally once harvest activity reaches 30 to 50 percent complete. Wheat also saw an increase in commercial buying last week. The rumor broke June 19 that Brazil is in looking to buy U.S. wheat. This helps explain why the commercial firms have been willing buyers the past few sessions.

As of June 15, 91 percent of the nation’s spring wheat crop was emerged, compared with 80 percent the previous week and 90 percent for the five-year average. Spring wheat conditions were estimated at 72 percent good to excellent, 24 percent fair and 4 percent poor or very poor, an increase of 1 percent from the previous week. Sixteen percent of the nation’s winter wheat crop was harvested, compared with 9 percent the previous week and 20 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 showed a small gain in the July contract last week for the first time in six weeks, while the December contract traded near the low last seen in January. Early week pressure came from good crop conditions and larger production estimates. The futures bounced higher late in the week from too much rain in areas and technical support. Traders will position this week for the June 30 planted acreage and grain stocks report. As of the June 19 close, the July contract was up 3.25 cents for the week, while the December contract was unchanged.

The corn futures lost more ground on June 16 and 17. The funds continue to liquidate their long positions and traders look at a nonthreatening weather forecast. Additional weakness came from the crop condition report that raised the good to excellent category 1 percent from the previous week to 76 percent and emergence was at 97 percent. The weekly export inspection numbers were below estimates and down from the previous week. The export sales were also disappointing and the net sales were down 79 percent from the four-week average with a 15.6-million-bushel cancellation to an unknown destination.

Old-crop corn closed slightly higher on June 18 in a quiet trading session and June 19, we saw green numbers for both old and new. Support came from a positive ethanol report that showed corn use up from the previous week and a record for weekly production. The strength in the wheat market also spilled over and USDA announced a sale of 134,500 metric tons of new-crop corn to Mexico. Short covering came into play on June 19 and a technical bounce off support. The December contract low was made on Jan. 10 at $4.35 and on June 17, we traded to $4.3625. Too much rain in some areas also triggered short position liquidation.

Ethanol production for the week ending June 13 averaged 972,000 barrels per day, up 2.97 percent from the previous week. Total ethanol production for the week was 6.804 million barrels. Corn used in production the week ending June 13 is estimated at 100.06 million bushels and needs to average 103.936 million bushels per week to meet this crop year’s USDA estimate of 5.05 billion bushels. Stocks were 17.85 million barrels, down 3.1 percent from the previous week.

The crop progress report showed emergence at 97 percent versus 91 percent one year ago and a five-year average of 96 percent. The crop is rated at 76 percent good to excellent, 20 percent fair and 4 percent poor or very poor. Ratings were 64 percent, 28 percent and 8 percent respectively one year ago.

Soybeans

As of the June 19 close, July soybeans were 5 cents lower for the week, while the November contract gained 6 cents.

Soybean trade was narrowly mixed early in the session June 16 with gains in old crop and small losses in new. Bullish export inspections provided some support, but soybeans moved lower as the day wore on, ultimately closing with small losses in most months. June’s National Oilseed Processors Association crush number came in higher than expected at 128.82 million bushels, compared with 132.87 million last month. The June 16 crop progress report was as expected with soybean conditions remaining mostly steady while planting progress was 92 percent complete, near the 95 percent expected. Export inspections were bullish, coming in above the amount needed to keep pace with USDA’s projection.

Soybeans traded lower June 17 as the July-November inverse continued to narrow, falling below $2. The crop progress report showed planting and emergence both ahead of the five-year average, while crop condition ratings were near unchanged from the previous week. Old-crop soybean prices continued to decline as price rationing and likely imports from South America have eased commercials’ concerns about their ability to obtain soybeans this summer.

Soybeans rebounded from early week losses on June 18 to close with moderate gains, followed by additional gains June 19 following another round of bullish export sales. June 19 export sales totaled 3.6 million bushels for 2013 to ’14, bringing the total for the year so far to 1.659 billion bushels, 59 million above USDA’s estimate for the entire year with 11 weeks remaining. An announced sale of 140,000 metric tons of old-crop soybeans to unknown destinations on June 18 provided support and was the first announced sale of old-crop beans since Feb. 25. The weather forecast remained nonthreatening in the near-term, but new-crop contracts continue to trade sideways ahead of the June 30 acreage report despite bearish fundamentals.

Planting progress as of June 15 had 92 percent of the U.S. soybean crop planted, compared with 87 percent the previous week and the five-year average of 90 percent. Emergence was at 93 percent, compared with 71 percent the previous week and the five-year average of 77 percent. Conditions for soybeans were rated at 73 percent good to excellent, 23 percent fair and 4 percent poor or very poor.

Barley

As of June 15, 92 percent of the nation’s barley was emerged, compared with 86 percent the previous week and 91 percent for the five-year average. Barley crop conditions gained 1 percent to 65 percent good to excellent, 31 percent fair and 4 percent poor or very poor.

June 19 cash feed barley bids in Minneapolis were at $3.50 per bushel, while malting bids were $5.75.

Durum

As of June 15, 84 percent of North Dakota’s durum crop was planted, compared with 73 percent the previous week and 85 percent for the five-year average. Emergence was estimated at 70 percent, compared with 51 percent the previous week and 76 percent for the five-year average. North Dakota’s durum crop condition rating was estimated at 92 percent good to excellent, 7 percent fair and 1 percent poor.

June 19 cash bids for milling quality durum were at $8.55 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was at $8.50.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending June 19 with $13.30 (Canadian) gains. Canola started the week stronger and traded with solid gains for the first three sessions of the week. Early support spill over from a higher U.S. soybean complex, which was spurred on by export demand as reports of an old-crop export to an unknown destination. The front month was also supported by spread trading as traders rolled short positions to further out contracts. Late-session pressure came from an improving crop outlook for Canadian producers because of reports of good planting progress.

As of June 15, North Dakota producers had 98 percent of the state’s canola planted, compared with 94 percent the previous week and 87 percent for the five-year average. Emergence was estimated at 84 percent, compared with 66 percent the previous week and 75 percent for the five-year average. Canola’s crop condition rating was estimated at 80 percent good to excellent, 18 percent fair and 2 percent poor.

June 19 cash canola bids in Velva, N.D., were at $20.56 per hundredweight.

Dry edible beans

As of June 15, North Dakota producers (37 percent of the nation’s crop) had 94 percent of their dry beans planted, compared with 79 percent the previous week and 86 percent for the five-year average. Emergence was estimated at 68 percent, compared with 37 percent the previous week and 55 percent for the five-year average. Minnesota producers (10 percent of nation’s crop) had 93 percent planted, compared with 73 percent the previous week and 93 percent for the five-year average. Emergence was estimated at 70 percent, compared with 43 percent the previous week and 74 percent for the five-year average. Nebraska producers (11 percent of nation’s crop) had 86 percent planted, compared with 63 percent the previous week and 77 percent for the five-year average. Emergence was estimated at 55 percent, compared with 15 percent the previous week and 38 percent for the five-year average.

Sunflowers

As of June 15, 71 percent of the nation’s sunflower crop was planted, compared with 52 percent the previous week and 70 percent for the five-year average.

June 19 cash sunflower bids in Fargo, N.D., were $21.80 per hundredweight.

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