Markets: Harvest reports improving
Wheat started the week with gains, as carryover buying pushed wheat. Dry weather concerns in Australia and Ukraine provided support. Buyers were limited, and by midsession Sept. 28 (and into Sept. 29), sellers took control.
Concerns about China’s economy caused most of the pressure. Light selling spilled over from a softer corn and lower soybean complex. The market saw position-squaring ahead of the Sept. 30 U.S. Department of Agriculture reports.
USDA’s Annual Grain Summary report was not expected to show much change from its September estimates, but the Quarterly Grain Stocks estimate was expected to show much larger stocks. Sept. 30 was report day. Wheat started with gains and held onto them throughout the session. Support came from friendlier-than-expected reports, as USDA cut production and stocks more than expected. In its annual Small Grains Summary, USDA estimated all wheat production at 2.05 billion bushels, 81 million bushels less than expected, and 84 million bushels less than USDA’s September estimate. Spring wheat production was estimated at 599 million bushels, 26 million bushels less than estimated by the trade, and 22 million bushels less than estimated in September. Winter wheat production was estimated at 1.37 billion bushels, 60 million bushels less than expected by the trade and USDA. All wheat stocks also were less than expected, at 2.09 billion bushels, 60 million bushels less than expected, but 180 million bushels more than last year.
Wheat pushed higher Oct. 1, with support spilling over from Sept. 30’s friendly Small Grains Summary and Quarterly Grain Stocks report. The reports estimated lower production and tighter stocks than expected by the trade. Light support came from weather forecasts that called for hot, dry conditions for much of Ukraine and Australia. This could result in production issues down the road. Technically, wheat was in need of a corrective bounce. Gains were kept in check by a disappointing export sales estimate.
For the week ending Sept. 24, USDA estimated wheat export shipments pace at 23.9 million bushels. Last week’s wheat export sales pace was estimated at 2.8 million bushels. With 35 weeks left in wheat’s export marketing year, shipments need to average 17.9 million bushels and sales need to average 14.1 million bushels to make USDA’s export pace of 900 million bushels.
The corn market remained close to unchanged last week. The Quarterly Grain Stocks report was big news, which was close to earlier trade estimates.
Corn continues to trade sideways because of an active harvest. As of the Oct. 1 close, December was down 0.25 cents for the week.
Corn struggled to start the week, after good harvest activity, and forecasts call for more of the same. Harvest pressure remains in place, and traders expected harvest to be at 20 percent complete for the weekly report. The report left crop conditions unchanged, and put harvest completion at 18 percent. The upside was limited, with exports higher, but below the needed amount to meet USDA’s estimate and 13 percent behind last year’s pace. Trade was quiet Sept. 29, as corn closed with small gains. Traders were looking ahead to the Sept. 30 stocks report.
Futures lost ground Sept. 30 after the stocks report. USDA put Sept. 1 corn stocks at 1.73 billion bushels, just below the average pre-report estimate, and even with USDA’s September ending stocks estimate. USDA raised its June 1 stocks number to 4.452 billion bushels from 4.447 billion bushels. Feed usage was strong during the past quarter, but stocks are more than adequate, and 500,000 million bushels larger than one year ago. Corn closed slightly higher Oct. 1 after quiet trade. Export sales numbers were decent, and in the middle of the estimates, while the ethanol report showed a slight increase in weekly production.
Ethanol production for the week ending Sept. 25 averaged 943,000 barrels per day, up 0.53 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 100.761 million bushels per week to meet this crop year’s USDA estimate of 5.25 billion bushels. Stocks were 18.782 million barrels, down 0.62 percent, compared with the previous week, and down 0.24 percent, compared with last year.
For the week ending Sept. 27, corn was rated 68 percent good to excellent, 22 percent fair and 10 percent poor or very poor. Dented corn was 97 percent, compared with 95 percent one year ago and 97 percent for the five-year average. Mature corn was 71 percent, compared with 57 percent one year ago and 72 percent for the five-year average. Corn that was harvested was 18 percent, compared with 11 percent one year ago and 23 percent for the five-year average.
USDA’s export inspections report was bearish for corn at 31.8 million bushels, below the 36.2 million bushels needed to meet USDA’s projection. Corn export sales were estimated at 29.5 million bushels and at the 29.6 million bushels needed to meet USDA’s estimate of 1.85 billion bushels for the year.
Soybeans had an up and down week, as the market tried to rebound from early losses. The market gained positive ground Sept. 29 and 30, but lost gains Oct. 1. Good yields are being reported for most of the country, and that is putting pressure on soybeans’ upside. For the week ending Oct. 1, November beans were down 12 cents.
Soybeans started the week with losses, as most of the country experienced a nice weekend to dry crops, and fall harvest is making headwind.
Global weakness was a big concern, as outside markets were weak, adding to the bearishness in the ag sector. Even with fresh exports of 249,000 metric tons of soybeans to an unknown destination for 2015 to ’16 and 1 million metric tons to China for 2016 to ’17, the soybean market traded down 12.5 cents.
On Sept. 29, traders were positioning ahead of the Sept. 30 grain stocks report.
Soybeans started slow and gained momentum as the day went on. Traders saw Sept. 28’s lower soy crop rating as bullish news, and covering short positions on concerns that USDA will reduce its estimate for last year’s soybean crop. Soybeans ended up 7.5 cents.
The quarterly report Sept. 30 was considered neutral to slightly friendly against pre-report estimates. Soybeans didn’t do much after the report, as a lower soybean stocks number was mostly expected, and built into soy prices before the report was published. The report gave some positive news, as supplies are tighter than what USDA estimated, but were still higher than last year. Soybeans traded up and down in positive territory, and ended up 7.5 cents.
Soybeans started the Oct. 1 session testing the $9 resistance mark, but turned downward at midday. Technical selling and fund trading led the downward action. Harvest pressure and good yields put pressure on the market, as good export sales could not keep soybeans in positive territory. Soybeans lost 14.5 cents Oct. 1.
Soybean stocks as of Sept. 1 came in at 191.5 million bushels compared with the average trade estimates of 205 million bushels and the 210 million bushels forecast by USDA in September. A year ago, stocks were about 92 million bushels. This new stocks number lowers beginning stocks for 2015 to ’16 by 19 million bushels, which still leaves projections for the 2015 to ’16 ending stocks at 431 million bushels, which would be the highest since 2006 to ’07.
For the week ending Sept. 24, the soybean export inspections pace was 19.5 million bushels. The export sales pace was estimated at 92 million bushels. USDA is expecting 2015 soybean exports and sales of 1.725 billion bushels.
For the week ending Sept. 27, soybeans dropping leaves were at 74 percent, compared with 56 percent the previous week and the five-year average of 70 percent. Soybean condition ratings decreased 1 percent to 62 percent good to excellent, 26 percent fair and 12 percent poor or very poor.
USDA’s Small Grains summary estimated barley production at 214.3 million bushels, up 18 percent from last year. Barley stocks were estimated at 218.5 million bushels compared with 179.8 million bushels last year. Oct. 1 cash feed barley bids in Minneapolis were at $2.50 per bushel, while malting bids were at $4.95 per bushel.
USDA estimated durum production at 83 million bushels, 4 million bushels higher than expected by the trade and 6 million bushels higher than USDA estimated in August. Durum stocks were estimated at 73.8 million bushels compared with 57.8 million bushels last year.
Oct. 1 cash bids for milling quality durum were at $6.50 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was at $6.75 per bushel.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Oct. 1 at $5.40 (Canadian) lower. For September, canola gained $1.20 (Canadian). Canola split the week, with half the session ending with gains and half with losses.
As of Sept. 27, North Dakota’s canola harvest at 93 percent complete, compared with 90 percent the previous week and 91 percent for the five-year average.
As of Sept. 27, 1 percent of North Dakota’s sunflower crop was harvested, compared with none the previous week and 2 percent for the five-year average. North Dakota’s sunflower crop condition rating improved 1 percent to 72 percent good to excellent, 19 percent fair and 9 percent poor.