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Grabanski: Flat week in grain markets

Wheat

Wheat returned to the negative side of the equation last week, with the first and last sessions ending lower, and gains at midweek.

For the week ending Oct. 22, December Minneapolis wheat declined 4.25 cents, December Chicago slipped 1.5 cents and Dec. Kansas City gave back 8 cents.

Wheat struggled to start the week, with weather the main factor. Weather forecasts called for rain to fall in parts of the Southern Plains, Russia and Ukraine. These regions need rain desperately, and if realized, it would help newly emerging wheat. Rain was expected in the Southern Plains, which should aid recently planted winter wheat. Losses were kept in check by further deterioration of Australia’s wheat crop.

The middle of the week had wheat trade with modest gains. Most trading was back and forth.

Early selling was tied to favorable weather forecasts.

Wheat continues to have the dark cloud from the U.S. Department of Agriculture’s recent negative crop production estimate. Late in the session, technical buying set in to help wheat push to the plus side. Light support spilled over from a stronger corn and soybean complex. The Oct. 21 session saw strength from commercial buying. Light support spilled over from the stronger soybean complex, and to some degree, corn (which mainly traded flat).

Some traders attributed rainy forecasts to a rally in the market, but the winter wheat crop needs moisture, and it is unlikely rain will result in crop production issues. Technical support was seen, as wheat traded to minor support lines.

The Oct. 22 session had more negative news, resulting from the rainy forecast.

A stronger dollar also put pressure on the markets. The U.S. needs an increase in exports (or any demand source), but the strong dollar is preventing the U.S. from being a viable option. India is expected to come to the market for quality wheat, and currently, the U.S. is the only exporter that can fill India’s needs.

For the week ending Oct. 16, USDA estimated the wheat export shipments pace at 7.5 million bushels. The wheat export sales pace was estimated at 13.1 million bushels. Shipments need to average 16.7 million bushels and sales need to average 12.6 million bushels to make USDA’s export pace of 850 million bushels.

As of Oct. 18, 76 percent of the nation’s winter wheat crop was planted, compared with 64 percent the previous week and 77 percent for the five-year average.

Emergence is estimated at 49 percent, compared with 33 percent the previous week and 49 percent for the five-year average.

Corn

The corn market remained in a sideways pattern last week. Demand remains sluggish, and the crop in the western U.S. is exceeding expectations. Export shipments are lagging behind USDA projections for the year. As of the Oct. 22 close, December corn was up 1.5 cents.

Corn struggled to start the week because of negative outside markets, driven by China’s lower-than-expected third quarter Gross Domestic Product (6.9 percent, and below 7 percent for the first time since March 2009). Harvest pressure remains in place, and yields are exceeding expectations across the western Midwest.

Additional selling was tied to corn’s disappointing export inspections estimate, which is 24 percent behind last year’s pace. Corn was slightly higher Oct. 20, with support from a firm soybean market. The Ukrainian Ag Ministry is estimating 2015 corn production at 22.9 million metric tons, compared with USDA’s estimate of 25 million metric tons. The upside was limited with an active harvest pace, as USDA said 59 percent of corn is in the bin, compared with the five-year average of 54 percent.

Corn closed slightly higher Oct. 21, with support coming from a firm soybean market and friendly weekly ethanol report. The ethanol report showed production up and stocks down from the previous week. China also imported 933,537 tons of distiller’s grains in September, up 73 percent from last year, but the country only imported 169,711 tons of corn for the month. Crude oil stocks also continue to rise. The American Petroleum Institute reported an increase of 7.1 million barrels for the week of Oct. 16, putting stocks at 473 million barrels, exceeding estimates of a 3.9-million-barrel increase.

Corn futures started higher Oct. 22, but quickly went into negative territory to finish the day lower. A poor export sales number and higher dollar were the leading factors in bringing corn lower. Global sales for U.S. corn have been poor as of late, as South American corn is getting priced at a huge discount to U.S. corn.

Ethanol production for the week ending Oct. 16 averaged 951,000 barrels per day, up 0.21 percent from the previous week. Total ethanol production for the week was 6.657 million barrels. Corn used in production is estimated at 99.86 million bushels and needs to average 100.828 million bushels per week to meet this crop year’s USDA estimate of 5.25 billion bushels. Stocks were 18.872 million barrels, down 0.44 percent compared with the previous week, and up 5.2 percent, compared with last year.

For the week ending Oct. 18, corn’s crop condition rating was 68 percent good to excellent, 22 percent fair and 10 percent poor or very poor. The report is unchanged from the previous week. Mature corn was 98 percent, compared with 92 percent one year ago and 96 percent for the five-year average.

Harvest was estimated at 59 percent complete, compared with 30 percent last year and 54 percent for the five-year average.

USDA’s export shipment inspections report was bearish to corn at 18.1 million bushels, below the 37.3 million bushels needed to meet USDA’s projection. Corn export sales were estimated at 9.8 million bushels, below the 30.7 million bushels needed to meet USDA’s estimate of 1.85 billion bushels for the year.

Soybeans

Soybeans had a choppy trading week, pushing through the $9 resistance mark again, but not finding support to stay above it. Soybean harvest is wrapping up, with 77 percent of acres combined. For the week ending Oct. 22, November beans were up just 1 cent.

Soybeans started the week on a negative note, closing lower Oct. 19. Shipments had another good week, but the market could not track higher on its own, as it followed wheat and corn lower. Forecasts for rain in northern and central Brazil put a negative undertone on soybean futures. Rain is seen as a positive, as Brazil has been dry going into planting season.

The Oct. 22 session had soybeans gaining back losses.

There were more reported sales from China, as it continues to be an aggressive buyer of U.S. soybeans. Soybean sales for Oct. 20 were reported at 132,000 metric tons after earlier reports of sales of 238,000 metric tons.

This news gave the market a push on a slow day.

Soybeans followed Oct. 20 gains with more of the same Oct. 21. The market climbed above $9 again. Farmer selling has been slow this fall, and the market was trying to give farmers incentive to dump some of their beans to fill up the pipeline. Commercial buying has been aggressive, with the recent return of imports by China.

Like wheat and corn, soybeans slipped slightly lower Oct. 22. The November contract dipped below the major support level of $9 for the second week in a row. Dry weather in northern Brazil is something the analysts have been keeping an eye on, but there was rain in the forecast.

Good yields in the U.S. and a potential for good production in South America are putting pressure on soybeans. Export sales have been positive. This is helping the rebound from a sluggish start in sales for the start of this marketing year. The question is whether demand is going to continue so the U.S. can get rid of a big soybean crop.

For the week ending Oct. 16, USDA reported soybean export inspections at 86.9 million bushels. Soybean export sales pace was estimated at 74.6 million bushels. We are ahead of the export pace need to meet USDA’s estimate of 1.725 billion bushels.

These reports should be considered bullish for the week.

For the week ending Oct. 18, soybeans dropping leaves was at 96 percent, compared to 92 percent the previous week and the five-year average of 96 percent. USDA is done updating soybean condition ratings for the year. Soybeans were 64 percent good to excellent, 25 percent fair and 11 percent poor or very poor.

Barley

For the week ending Oct. 16, USDA reported the barley export shipments pace at 13,458 bushels, all going to Pakistan. No barley export sales were reported.

Oct. 22 cash feed barley bids in Minneapolis were at $2.55 per bushel, while malt barley had no bid.

Durum

Oct. 22 cash bids for milling quality durum were at $6.75 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was at $6.50 per bushel.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed $1.80 (Canadian) higher. Canola started and ended the week with losses, and traded with gains midweek. Canola’s direction was influenced by the U.S. soybean complex and the Canadian dollar. Oct. 22 cash canola bids in Velva, N.D., were at $14.60 per hundredweight.

Sunflowers

As of Oct. 18, 33 percent of nation’s sunflower crop was harvested, compared with 10 percent the previous week and 28 percent for the five-year average. North Dakota’s sunflower crop condition ratings were at 72 percent good to excellent, 21 percent fair and 7 percent poor. USDA estimated export sales pace for soybean oil at 24.8 thousand metric tons.

Oct. 22 cash sunflower bids in Fargo, N.D., were at $16.55 per hundredweight.

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