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Published September 02, 2014, 09:46 AM

Wheat issues lead grains

Wheat started last week on the defense, but recovered to end the week with gains. When it was all said and done, wheat closed mixed. For the week ending Aug. 28, September Minneapolis lost 14.75 cents, September Chicago gained 4.5 cents and September Kansas City gained 1.5 cents.

By: Ray Grabanski, Agweek

Wheat

Wheat started last week on the defense, but recovered to end the week with gains. When it was all said and done, wheat closed mixed. For the week ending Aug. 28, September Minneapolis lost 14.75 cents, September Chicago gained 4.5 cents and September Kansas City gained 1.5 cents.

Wheat started the week off on the defense as all three exchanges traded with losses for the first two sessions of the week. Early selling pressure was from spillover selling from a weaker corn and soybean complex. Additional selling was tied to a disappointing export shipments report. It appears the world will be awash of wheat, but what we did not know yet is the quality of that wheat. So far, Europe has had harvest issues and that has affected quality. And now the U.S. spring wheat region is experiencing harvest issues, lowering the quality. Reports are saying the early harvested wheat is seeing vomitoxin issues, while the later wheat seems to be a little better. Producers will need to be a little more diligent when moving wheat off the combine this fall. The only wheat that should be sold should be the average-quality. Consider binning your high- and low-quality wheat.

Aug. 26 and 27 sessions had wheat trading officially mixed, but mostly higher. Minneapolis was the only exchange that continued to struggle, as weather forecasts continue to show warm, dry conditions, which would allow for harvest to gear back up. But the bigger news came from the Black Sea region. Not even a face-to-face meeting with the two countries’ leaders was enough to stop the fighting between Russia and Ukraine. The conflict has reached the point that the North Atlantic Treaty Organization is starting to watch and comment on the conflict. NATO’s comments Aug. 28 warned of a severe escalation in Russia’s military action against Ukraine, and there is evidence of Russian combat soldiers operating inside Ukraine. This has traders concerned that wheat shipments from the Black Sea region could be disrupted. If realized, it could result in an increase in U.S. wheat demand. Additional support continued to come from slow harvest progress in the Northern Plains from wet weather.

As of Aug. 24, 27 percent of the nation’s spring wheat crop was harvested, compared with 17 percent the previous week and 49 percent for the five-year average. Spring wheat conditions were estimated at 66 percent good to excellent, 28 percent fair and 6 percent poor or very poor, a decrease of 2 percent from the previous week.

Corn

The corn market worked lower last week and remained just above the August contract low. Pressure came from talk of large yield estimates and an ideal forecast to finish the crop. The crop conditions also remain at historic highs. The downtrend in corn remains intact, with record production expected. As of the Aug. 28 close, September was off 3.75 cents while December lost 2.25 cents.

The corn futures were under pressure on Aug. 25, with better-than-expected rain over the weekend and more forecasted. The Pro Farmer tour came up with a yield estimate of 169.3 bushels per acre, putting production at 14.093 billion bushels, both above USDA’s August numbers. Traders were expecting a slight drop in the crop condition ratings and, seasonally, that is the case. The report raised the good to excellent rating 1 percent from the previous week, which is a 20-year high for this time of year. More of the same on Aug. 26 and 27, as buying interest remained on the sidelines.

Corn traded slightly higher on Aug. 28 with a technical bounce after trading lower. The wheat market was sharply higher with the unrest in the Ukraine and that spilled over to the corn trade. Rain has been falling throughout much of the country, and there was talk of excessive moisture in Nebraska and Iowa that could hurt yield potential.

Ethanol production for the week ending Aug. 22 averaged 913,000 barrels per day, down 2.56 percent from the previous week. Total ethanol production for the week was 6.391 million barrels. Corn used in production the week ending Aug. 22 is estimated at 95.87 million bushels and needs to average 167.619 million bushels per week to meet this crop year’s USDA estimate of 5.075 billion bushels. Stocks were 17.317 million barrels, down 5.12 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 59 percent, 27 percent and 14 percent, respectively, one year ago. Corn in the dough stage is at 83 percent versus 67 percent one year ago and a five-year average of 78 percent. Corn that is dented is at 35 percent versus 21 percent one year ago and a five-year average of 43 percent.

Soybeans

As of the Aug. 28 close, November soybeans were 13.25 cents lower for the week. At 10 a.m. Aug. 29, November soybeans were trading 6.5 cents lower.

Soybean trade was volatile Aug. 25, with the November contract setting a new contract low. Pro Farmer’s tour reinforced bearish expectations for a record crop, with an estimated yield of 45.35 bushels per acre and production at 3.812 billion bushels. Both are slightly lower than USDA’s estimates of 45.4 bushels per acre and 3.816 billion bushels, respectively. Good moisture and mostly average temperatures in the forecast are good for soybeans. The Aug. 25 crop progress report showed soybeans setting pods at 90 percent, slightly ahead of the five-year average, while soybean conditions dipped 1 percent to 70 percent good to excellent. Demand remains decent with solid export inspections Aug. 25, though less than needed to keep pace with USDA’s projection.

Soybeans traded lower Aug. 26, setting a new contract low, then closed lower again on Aug. 27. The trend remains down for soybeans, with expectations for a record crop and the forecast remaining generally favorable. There’s plenty of moisture across the central Midwest, with concerns about wetness beginning to develop in some areas.

Soybeans moved higher in quiet trade on Aug. 28 to close with 5-cent gains. The outlook for soybeans remains bearish, but some more positive news helped lead to the Aug. 28 bounce. The forecast remains generally favorable for crop development, but some areas are starting to see too much moisture as a growing problem. Additionally, Sudden Death Syndrome is being widely reported, though it’s too early to determine the extent of the damage. Demand continues to provide underlying support with good processor margins and strong export and crush demand. Aug. 28 export sales report showed a net cancellation in old crop, but strong numbers on the new-crop side.

Soybeans setting pods were at 90 percent, compared with 83 percent the previous week and the five-year average of 89 percent. Conditions for soybeans were down 1 percent at 70 percent good to excellent, 23 percent fair and 7 percent poor or very poor.

Barley

As of Aug. 24, barley harvest was estimated at 43 percent complete, compared with 31 percent the previous week and 50 percent for the five-year average. Barley’s crop condition rating dropped 6 percent to 56 percent good to excellent, 34 percent fair and 10 percent poor or very poor.

Aug. 28 cash feed barley bids in Minneapolis were at $2.50 per bushel, while malting bids were at $5.75.

Durum

As of Aug. 25, 9 percent of North Dakota’s durum crop was harvested, compared with 3 percent the previous week and 25 percent for the five-year average. North Dakota’s durum crop condition rating was 80 percent good to excellent, 18 percent fair and 2 percent poor, down 3 percent from the previous week.

Aug. 25 cash bids for milling quality durum were at $8.75 in Berthold, N.D., while the Dickinson, N.D., bid was at $8.60.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Aug. 28 with just under $7 (Canadian) gains. Canola started the week higher and closed the week with gains. The buying strength came from weather concerns, as forecasts are hinting of possible freezing temperatures to parts of Canada. If realized, it could result in crop damage. Mid-week selling was a result of selling tied to a weaker U.S. soybean complex. Additional selling came from a sharply higher Canadian dollar.

As of Aug. 25, North Dakota canola was 8 percent harvested, compared with 1 percent the previous week and 25 percent for the five-year average. Canola’s crop condition rating decreased 1 percent to 86 percent good to excellent, 12 percent fair and 2 percent poor.

Aug. 28 cash canola bids in Velva, N.D., were at $17.33 per hundredweight.

Dry edible beans

As of Aug. 25, North Dakota’s dry bean crop (40 percent of the nation’s crop) was 28 percent dropping leaves, compared with 7 percent the previous week and 18 percent for the five-year average. North Dakota’s crop was rated 68 percent good to excellent, 24 percent fair and 8 percent poor or very poor, up 2 percent from the previous week. Minnesota’s crop (7 percent of nation’s crop) was 85 percent setting pods, compared with 80 percent the previous week and 97 percent for the five-year average. Minnesota’s crop was rated 55 percent good to excellent, 33 percent fair and 12 percent poor or very poor, up 3 percent from the previous week. Nebraska’s crop (10 percent of nation’s crop) was 4 percent dropping leaves, compared with zero the previous week and 2 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, unchanged from the previous week. Michigan’s crop (12 percent of the nation’s crop) was 1 percent dropping leaves, compared with zero the previous week and zero for the five-year average. Michigan’s crop was rated 74 percent good to excellent, 21 percent fair, 5 percent poor or very poor, off 1 percent from the previous week.

Sunflowers

As of Aug. 25, North Dakota’s sunflower crop was 92 percent in bloom, compared with 77 percent the previous week and 93 percent for the five-year average. North Dakota’s sunflower crop was rated 83 percent good to excellent, 16 percent fair and 1 percent poor, unchanged from the previous week.

Aug. 28 cash sunflower bids in Fargo, N.D., were at $17.25 per hundredweight. New-crop bids were $17.45.

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