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Published August 11, 2014, 10:20 AM

Strength on weather concerns

Wheat traded with good strength last week, ending with solid gains. For the week ending Aug. 8, September Minneapolis gained 18.5 cents, September Chicago was up 27.25 cents and September Kansas City gained 13.5 cents.

By: Ray Grabanski, Agweek

Wheat

Wheat traded with good strength last week, ending with solid gains. For the week ending Aug. 8, September Minneapolis gained 18.5 cents, September Chicago was up 27.25 cents and September Kansas City gained 13.5 cents.

Wheat was able to rally the first three sessions of the week, with the exchanges trading to levels not seen in a month. Weather forecasts are calling for rain in much of the wheat producing regions of Europe. This will result in a delay in harvest activity and has many traders concerned it could cause quality issues. Additional support spilled over from a stronger corn and soybean complex, as warm, dry weather forecasts in the U.S. has traders concerned about potential production issues in soybeans, especially with that crop at its critical development stage.

Another supporting factor is coming from reports that Russia has moved 20,000 troops back onto the border of Ukraine. This has traders concerned about wheat exports, as a lot of recent wheat export business has gone to the Ukraine because of price. Now traders are concerned that if the conflict escalates again, wheat shipments could be affected. This would favor the U.S., as we have plenty of exportable wheat.

Wheat traded to one-month highs before running into selling pressure. The recent push has been a welcome sign for wheat, but the rally has its own set of consequences, one of which is slow export demand. This was evident in the Aug. 7 disappointing export sales report. Additional selling was tied to weather forecasts calling for drier weather in Europe this week. This will allow combines to return to the fields to harvest ready wheat before further damage can be done. Light selling was also tied to weather reports calling for rain in the Southern Plains, which, if realized, could result in giving this year’s yet-to-be-seeded winter wheat crop a good start.

As of Aug. 3, 97 percent of the nation’s spring wheat crop was headed, compared with 93 percent the previous week and 97 percent for the five-year average. Spring wheat conditions were estimated at 70 percent good to excellent, 25 percent fair and 5 percent poor or very poor, unchanged from the previous week. Winter wheat harvest was estimated at 90 percent complete, compared with 83 percent the previous week and 85 percent for the five-year average.

Corn

The corn futures traded sideways last week as traders positioned ahead of the Aug. 12 monthly USDA report. Traders are expecting an increase in yield and production and this will be the first report of the year based on field measurements. The weather did lean negative last week, with scattered rain and cooler temperatures throughout the country. As of midmorning on Aug. 8, the September contract was up 1 cent for the week, while the December contract gained 3 cents.

The December futures traded to a new low in the December contract at $3.61 on Aug. 3, but lacked follow-through selling interest at that point and were able to close slightly higher on Aug. 4. The rain was less than expected over the weekend and traders want to see it in the field instead of in the forecast. Traders were also expecting the crop conditions to drop last week and the report showed a drop of 2 percent in the good to excellent category, to 73 percent. Aug. 6 was the other day that closed with green ink. Short covering came into play from the strength in the wheat complex, finding support from the military buildup by the Russians along the Ukraine border. There was also news that Columbia bought 160,000 metric tons of corn.

The corn futures closed lower on Aug. 5, as the five-day forecast showed more rain in the central Midwest and talk that one more shot could finish the crop. Additional weakness came from talk that the conditions did drop 2 percent last week, but this is still a strong rating for this time of year at 73 percent. Corn was under pressure again on Aug. 7, as larger yield and production estimates continue to surface for the Aug. 12 USDA report. The export sales also came in at the low end of estimates and the ethanol report showed corn use down from the previous week.

Ethanol production for the week ending Aug. 1 averaged 902,000 barrels per day, down 5.45 percent from the previous week. Total ethanol production for the week was 6.314 million barrels. Corn used in production the week ending Aug. 7 is estimated at 94.71 million bushels and needs to average 118.42 million bushels per week to meet this crop year’s USDA estimate of 5.075 billion bushels. Stocks were 18.26 million barrels, down 1.76 percent from the previous week.

The crop progress report has the corn rated at 73 percent good to excellent, 20 percent fair and 7 percent poor or very poor. Ratings were 64 percent, 25 percent and 11 percent, respectively, one year ago. Corn that is silking is at 90 percent versus 84 percent one year ago and a five-year average of 88 percent. Corn in the dough stage is at 36 percent versus 17 percent one year ago and a five-year average of 29 percent.

Soybeans

As of the Aug. 7 close, November soybeans were 19.5 cents higher for the week. At 10 a.m. Aug. 8, November soybeans were trading 0.5 cents higher.

Soybean trade was higher Aug. 4, with concerns about a lack of moisture continuing. Additional support came from two export sales announced by USDA. One sale was for 110,000 metric tons to China, while the other was 102,000 metric tons to Taiwan, both for 2014 and 2015 delivery. Better-than-expected overseas demand and high export prices in Brazil have kept interest in U.S. soybeans high.

More moisture in the five-day forecast led to weakness in soybeans on Aug. 5. The forecast showed a broader path of moderate to heavy rain across the central Midwest. This potential rain couldn’t come at a better time with soybeans entering the pod-filling stage. The Aug. 4 crop progress report showed soybeans blooming and setting pods ahead of the five-year average, while conditions were unchanged from the previous week. While the fundamental outlook for new crop remains bearish, strong export demand has continued to provide support, particularly with supplies in South America low, as indicated by Brazil’s prices being substantially higher than those in the U.S. gulf.

Soybeans overcame early weakness to close higher Aug. 6, despite beneficial rainfall from the Dakotas to western Illinois. Strength in corn and wheat spilled over to lead soybeans higher. Support in corn and wheat was tied to a Russian build-up of troops on the Ukrainian border.

Soybeans blooming were at 85 percent, compared with 76 percent the previous week and the five-year average of 83 percent. Soybeans setting pods were at 57 percent, compared with 38 percent the previous week and the five-year average of 48 percent. Conditions for soybeans were unchanged at 71 percent good to excellent, 23 percent fair and 6 percent poor to very poor.

Barley

As of Aug. 3, barley’s crop condition rating was 66 percent good to excellent, 30 percent fair and 4 percent poor, a 1 percent decrease from the previous week.

Aug. 7 cash feed barley bids in Minneapolis were $2.90, while malting bids were $5.85.

Durum

As of Aug. 3, 24 percent of North Dakota’s durum crop was turning, compared with 10 percent the previous week and 32 percent for the five-year average. North Dakota’s durum crop condition rating was 84 percent good to excellent, 15 percent fair and 1 percent poor, an increase of 1 percent from the previous week.

Aug. 7 cash bids for milling quality durum were at $8.80 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was at $8.70.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Aug. 7 with $6.60 (Canadian) gains. Canola traded with gains to start the week. Early support spilled over from a stronger U.S. soybean complex. Additional support came from the lack of farmer selling and weakness in the Canadian dollar. Light selling was uncovered late in the week because of a sloppy performance in the U.S. soybean complex. Additional selling was tied to improving weather conditions in the Northern Plains.

As of Aug. 3, North Dakota canola was 44 percent turning color, compared with 25 percent the previous week and 48 percent for the five-year average. Canola’s crop condition rating was 85 percent good to excellent, 14 percent fair and 1 percent poor, unchanged from the previous week.

Aug. 7 cash canola bids in Velva, N.D., were at $17.02 per hundredweight.

Dry edible beans

As of Aug. 4, North Dakota’s dry bean crop (40 percent of the nation’s crop) was 44 percent setting pods, compared with 33 percent the previous week and 55 percent for the five-year average. North Dakota’s crop was rated 71 percent good to excellent, 23 percent fair and 6 percent poor or very poor, unchanged from the previous week. Minnesota’s crop (7 percent of nation’s crop) was 46 percent setting pods, compared with 19 percent the previous week and 50 percent for the five-year average. Minnesota’s crop was rated 53 percent good to excellent, 33 percent fair and 14 percent poor or very poor, 2 percent higher than the previous week. Nebraska’s crop (10 percent of nation’s crop) was 25 percent setting pods, compared with zero the previous week and 35 percent for the five-year average. Nebraska’s crop was rated 81 percent good to excellent, 15 percent fair and 4 percent poor or very poor, 1 percent higher than the previous week. Michigan’s crop (12 percent of the nation’s crop) was 54 percent in bloom, compared with 29 percent the previous week and 53 percent for the five-year average. Michigan’s crop was rated 76 percent good to excellent, 19 percent fair and 5 percent poor or very poor, unchanged from the previous week.

Sunflowers

As of Aug. 3, North Dakota’s sunflower crop was 21 percent in bloom, compared with 3 percent the previous week and 32 percent for the five-year average. North Dakota’s sunflower crop was rated 79 percent good to excellent, 20 percent fair and 1 percent poor, unchanged from the previous week.

Aug. 7 cash sunflower bids in Fargo, N.D., were at $18.35 per hundredweight. New-crop bids were unchanged at $18.55 per hundredweight.

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