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Published July 21, 2014, 10:22 AM

Minor technical correction

Wheat closed the week ending July 17 with gains. For the week ending July 17, September Minneapolis gained 9 cents, September Chicago gained 24.75 cents and September Kansas City gained 12.75 cents.

By: Ray Grabanski, Agweek

Wheat

Wheat closed the week ending July 17 with gains. For the week ending July 17, September Minneapolis gained 9 cents, September Chicago gained 24.75 cents and September Kansas City gained 12.75 cents.

Wheat started the week higher. Now that the U.S. Department of Agriculture has all of the bearish numbers out and most of the unknown news is known, the market can stage a slight recovery and clean up the oversold market condition that it has been in for the past few weeks. Technically, wheat does need to stage a slight recovery, as it needs to give traders an incentive to keep them off the sidelines.

The July 15 and 16 session brought sloppy trading back into the wheat market. The July 15 session had the hard wheat lower on improving weather forecasts for the Southern Plains (warm, dry conditions that will help wrap harvest up) and for the northern Plains (warm, dry conditions that should alleviate disease concerns). The July 16 session had wheat steady to slightly lower because of improving weather forecasts, as well as from disappointing export news as most wheat importers continue to secure needs from other sources.

To wrap up the week July 17, wheat struggled to start with selling tied to a bearish U.S. export sales estimate. But around noon, news broke that a Malaysian airplane was shot down by Russia over Ukraine. This helped all of the grains push higher as the knee jerk reaction was disruption in grain movement. Corn and soybeans were not able to hold those gains, but wheat held its gains. Traders kept the premium in wheat, as many traders believe the U.S. will be able to garner some wheat export business from the thought that Russia will lose export business because of the plane crash. Gains were limited by improving weather forecasts.

As of July 13, 69 percent of the nation’s spring wheat crop was headed, compared with 47 percent the previous week and 68 percent for the five-year average. Spring wheat conditions were estimated at 70 percent good to excellent, 24 percent fair and 6 percent poor or very poor, unchanged from the previous week. Winter wheat harvest was estimated at 69 percent complete, compared with 57 percent the previous week and 68 percent for the five-year average.

Corn

The corn futures lost more ground last week and traded to a four-year low. The July 11 USDA report was not friendly for the market, as feed demand was cut for old crop and stocks were increased, which carried over to last week’s trade. The weather also remains ideal for crop development and yield estimates continue to grow. As of the July 17 close, the September contract was up 1.25 cents for the week, while the December contract gained 2.5 cents, but did post a new contract low at $3.7825 last week.

The futures were choppy for the first three days of the week. Pressure came from a good weather forecast and an improvement in the crop condition ratings. The weather remains ideal for the next two weeks, as the crop pollinates and silking is ahead of the five-year average. The crop rating also improved from the previous week and is the fourth-best-rated crop for this time of year in history. There are now a number of private estimates that have this year’s yield pegged at 170-plus bushels per acre. Corn did find support from the ethanol report that showed corn use up and stocks down from the previous week and the plants are profitable. Short covering also came into play after closing with red ink the past two weeks.

The corn market traded slightly higher on July 17, with the strength in the wheat complex. A Malaysian passenger jet was shot down over Eastern Ukraine and that created buying interest in the wheat market, which spilled over to the corn. The export sales were decent and also helped support the trade. Late week forecasts show temperatures will heat up early this week across the country with rain forecast late in the week. Traders want to see the rain materialize and that should help stabilize the market. The futures seem to have found short-term support after posting a new low early in the week.

Ethanol production for the week ending July 11 averaged 943,000 barrels per day, up 1.73 percent from the previous week. Total ethanol production for the week was 6.601 million barrels. Corn used in production is estimated at 99.02 million bushels and needs to average 106.797 million bushels per week to meet this crop year’s USDA estimate of 5.05 billion bushels. Stocks were 17.945 million barrels, down 1.86 percent from the previous week.

The crop progress report has the corn rated at 76 percent good to excellent, 19 percent fair and 5 percent poor or very poor. Ratings were 66 percent, 25 percent and 9 percent, respectively, one year ago. Corn that is silking is at 34 percent, compared with 15 percent one year ago and a five-year average of 33 percent.

Soybeans

As of the July 17 close, August soybeans were 21 cents lower for the week, while the November contract gained 19 cents. At 10 a.m. July 18, August soybeans were trading 6 cents higher, while November was up 1.5 cents.

Soybean trade was higher throughout the day July 14 and closed with gains after 10 consecutive lower sessions. Light profit taking provided support, as the market might be somewhat oversold. Commercial buying supported, as well, with old-crop stocks remaining tight. There are thoughts we need to keep the weather premium in place, particularly with cool weather slowing development. July 14 export inspections were bearish, coming in below the amount needed to keep pace with USDA’s projection.

Soybeans traded lower for much of the day again July 15. The front-month August closed at a new contract low, but the November contract firmed into the close to end unchanged. The July 14 crop progress report showed blooming ahead of the five-year average and conditions near unchanged from the previous week. Good to excellent ratings are currently 7 percent ahead of last year at this time. On July 15, USDA announced a sale of 120,000 metric tons of soybeans to China for 2014 to ’15 delivery.

On July 16, soybeans traded higher, with signs that China’s demand remains strong. USDA announced more export sales: a sale of 120,000 metric tons of old-crop soybeans to China, and 240,000 metric tons of new-crop beans to unknown destinations. This export business, combined with ideas the market might be oversold, could provide support. The market remains in a downtrend, however, with the favorable weather forecast and USDA’s bearish planting estimates providing pressure. The July 15 National Oilseed Processors Association crush report came in near the low end of expectations at 118.72 million bushels.

Soybeans started July 17 with gains following another export sale announcement, this time 708,000 metric tons of new-crop beans sold to China. The support did not hold and soybeans wound up closing with losses again. The downtrend slowed last week, but is still intact with bearish fundamentals and a nonthreatening forecast. The weather should remain mostly good near term, though the market has kept the weather premium in place with some above-normal temperatures in the forecast.

Soybeans blooming were at 41 percent, compared with 24 percent the previous week and the five-year average of 37 percent. Conditions for soybeans were rated at 72 percent good to excellent, 22 percent fair and 6 percent poor or very poor.

Barley

As of July 13, 83 percent of the nation’s barley was headed, compared with 61 percent the previous week and 67 percent for the five-year average. Barley crop conditions dropped 4 percent to 64 percent good to excellent, 31 percent fair and 5 percent poor or very poor.

July 17 cash feed barley bids in Minneapolis were at $2.90 per bushel, while malting bids were $5.60.

Durum

As of July 13, 24 percent of North Dakota’s durum crop was headed, compared with 9 percent the previous week and 47 percent for the five-year average. North Dakota’s durum crop condition rating dropped 5 percent to 82 percent good to excellent, 17 percent fair and 1 percent poor.

July 17 cash bids for milling quality durum were $9 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was $8.70.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending July 17 with $10.70 (Canadian) gains. Canola traded with gains every session last week, with support coming from technical buying, as well as from spillover strength from a stronger U.S. soybean complex. Additional strength came from production concerns, as traders are worried this year’s yield potential is not there because of the excessive rain this spring. A lower Canadian dollar added support.

As of July 13, North Dakota canola was 86 percent in bloom, compared with 63 percent the previous week and 72 percent for the five-year average. Canola’s crop condition rating improved 2 percent to 85 percent good to excellent, 14 percent fair and 1 percent poor.

July 17 old-crop cash canola bids in Velva, N.D., were $18.56 per hundredweight, while new-crop bids were $17.72.

Dry edible beans

As of July 13, North Dakota’s dry bean crop (40 percent of the nation’s crop) was 23 percent in bloom, compared with 8 percent the previous week and 34 percent for the five-year average. North Dakota’s crop was rated 70 percent good to excellent, 23 percent fair and 7 percent poor or very poor, 1 percent less than the previous week. Minnesota’s crop (7 percent of nation’s crop) was rated 50 percent good to excellent, 37 percent fair and 13 percent poor or very poor, unchanged from the previous week. Nebraska’s crop (10 percent of nation’s crop) was 6 percent in bloom, compared with 1 percent the previous week and 7 percent for the five-year average. Nebraska’s crop was rated 80 percent good to excellent, 16 percent fair and 4 percent poor or very poor, up 4 percent from the previous week. Michigan’s crop (12 percent of the nation’s crop) was 17 percent in bloom, compared with 15 percent the previous week and 11 percent for the five-year average. Michigan’s crop was rated 77 percent good to excellent, 20 percent fair and 3 percent poor or very poor, an increase of 1 percent from the previous week.

Sunflowers

As of July 13, North Dakota’s sunflower crop was 93 percent emerged. North Dakota’s sunflower crop was rated 81 percent good to excellent, 14 percent fair and 5 percent poor.

July 17 old-crop cash sunflower bids in Fargo, N.D., were at $20.15 per hundredweight, while new-crop sunflower bids were $19.50.

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