Grabanski: Mixed week in grain markets
Wheat started the week with sharp gains. Fund short covering was the main driver, as the funds have been adding to a large short position, and with recent weather developments, some traders are starting to think it’s time to grab their profits and go to the sidelines.
Heavier-than-expected rains fell in eastern Texas, while little to no moisture fell in Kansas and Oklahoma. That, along with continued dry concerns in Australia and the Ukraine, helped wheat move higher. Light support also came from a weaker U.S. dollar.
Gains were kept in check by another disappointing weekly export shipments report.
The Oct. 27 and 28 sessions had wheat trading steady to lower. Wheat took a step back to process the abundant global supply and disappointing domestic demand. There are dry weather concerns and winter kill worries in the former Soviet Union, Australia and U.S. plains, but abundant global stocks are offsetting the concerns.
The Oct. 28 session had wheat lower, with most of the pressure coming from weather forecasts calling for rain in much of the Southern Plains. Warm, dry conditions have been the mainstay the past few weeks in most of the southern plains. Light selling was also tied to a stronger U.S. dollar. Wheat needs to see demand increase, and with a strong U.S. dollar, exports likely will be flat, which has been evident in the weekly export reports.
Gains returned to the wheat market Oct. 29, with Chicago wheat leading the way. Wheat export sales were good, coming in on the high end of expectations. The sales pace so far puts exports slightly above the levels needed to meet U.S. Department of Agriculture estimates. A weaker dollar helped give strength to the market, as U.S. wheat prices have been undercut by other global sellers, especially Russia.
For the week ending Oct. 23, USDA estimated the wheat export shipments pace at 11.7 million bushels.
The wheat export sales pace was estimated at 20.2 million bushels. Shipments need to average 16.9 million bushels and sales need to average 2.3 million bushels to make USDA’s export pace of 850 million bushels.
As of Oct. 25, 83 percent of the nation’s winter wheat crop was planted, compared with 76 percent the previous week and 85 percent for the five-year average.
Emergence is estimated at 62 percent, compared with 49 percent the previous week and 62 percent for the five-year average. Winter wheat’s crop condition rating was estimated at 47 percent good to excellent, 39 percent fair and 14 percent poor or very poor, 12 percent lower than last year.
The corn market remained range-bound last week, with the lack of positive news. Corn has been a follower of late, with no fresh news on its own to get out of the small trading range it has seen since harvest. Harvest pressure remains, with better-than-expected yields in the Midwest and Western states. As a side note, the Federal Reserve decided against a rate hike at last week’s meeting, but left the door open for the December meeting, just in time for Christmas.
As of the Oct. 29 close, December was up 0.25 cents for the week and down 8 cents for the month.
Corn closed slightly higher Oct. 26 and Oct. 29, with the strength in the wheat complex. Additional support came from export sales that showed slightly higher than expected estimates, but still 33 percent behind last year’s pace. Bloomberg reported South Africa expects to plant 6.3 million acres of corn, the lowest acreage since 2011.
Corn closed slightly lower on Oct. 27 and 28, with strong harvest activity. It was another good week for harvest, with the trade expecting corn at 75 percent harvested. The report showed 75 percent of the crop is in the bin, compared with 44 percent one year ago. Demand has been slow, with U.S. corn prices not competitive on the global market. Lower crude prices have put pressure on corn, as ethanol margins continue to stay tight. There was talk that Brazil corn is being imported into the U.S. and China will stop buying U.S. distillers grains, which might launch an anti-dumping probe. The weekly managed fund reports showed the funds liquidated 59,000 contracts of long corn positions and have 33,000 long positions left.
Ethanol production for the week ending Oct. 23 averaged 944,000 barrels per day, down 0.74 percent from the previous week. Total ethanol production for the week was 6.608 million barrels. Corn used in production is estimated at 99.12 million bushels and needs to average 100.866 million bushels per week to meet this crop year’s USDA estimate of 5.25 billion bushels. Stocks were 18.273 million barrels, down 3.17 percent the previous week and up 7.24 percent, compared with last year.
For the week ending Oct. 25, corn was 75 percent harvested, compared with 44 percent one year ago, and 68 percent for the five-year average.
USDA’s export inspections report was bearish for corn at 16.3 million bushels, below the 37.3 million bushels needed to meet USDA’s projection. Corn export sales were estimated at 27.9 million bushels, and below the 29.9 million bushels needed to meet USDA’s estimate of 1.85 billion bushels for the year. The shipments came in at 27.9 million bushels, below the 37.7 million bushels needed to keep pace with USDA projections.
Soybeans had a rough week, as favorable planting weather in Brazil put downside pressure on the market. A lack of fresh news was negative for beans. After weeks of daily soybean sales to China, there was only one small sale reported Oct. 26, and none for the rest of the week.
Wider bean and meal spreads also suggest pipelines are adequately supplied. With the U.S. harvest almost wrapped up, the market needs fresh news to give this market direction. For the week ending Oct. 29, soybeans were down 16.5 cents.
To start the week, soybeans continued to have good soybean shipment inspection numbers. But they could not find positive momentum after a good export report. Corn followed wheat higher, but soybeans moved lower. A rainy forecast is expected to relieve some of the drier parts of Brazil, which put downward pressure on soybeans. Good exports and a new sale of 120,000 metric tons of soybeans to China could not offset favorable Brazil soybean growing weather forecasts.
Soybeans gained back some of the Oct. 26 losses on Oct. 27. The market experienced a reversal day, as it was the only major U.S. grain to close positive. Soybeans rallied some, as the only known news was the Oct. 26 export inspections, which came in above expectations. This would be the only strength soybeans see for the week.
Soybeans saw losses Oct. 28, as bears took control once again. A day after recovering Oct. 26 losses, soybeans could not find any new news to stay on positive ground. After a couple of weeks of daily sales to China, no new sales were reported for the second day in a row. Improving weather conditions in South America and world vegetable oil weakness was negative for soybeans.
South American rains in central Brazil weighed on the soybean market Oct. 29. USDA reported big export sales, which again were above the high end of expectations. Traders thought most of the sales were already built into the market. Export sales were good for corn and soybeans too, but soybeans were the only grain to not find strength from the Oct. 29 report. Soybeans topped 2 million metric tons for the third time this year. All of last year, there were three weeks of sales above 2 million metric tons.
For the week ending Oct. 23, USDA reported soybean export inspections at 98.2 million bushels. Soybean export sales pace was estimated at 76.7 million bushels. We are ahead of the export pace need to meet USDA’s estimate of 1.675 billion bushels.
For the week ending Oct. 25, soybeans harvested are at 87 percent, ahead of the five-year average of 80 percent.
For the week ending Oct. 23, USDA reported the barley export shipments pace at 28,109 bushels, with 22,506 bushels going to Pakistan and 11,253 bushels to Korea.
Oct. 29 cash feed barley bids in Minneapolis were $2.55 per bushel.
For the week ending Oct. 23, USDA reported durum export shipments pace at 1.57 million bushels, with Spain getting 72,699 bushels and Italy receiving 73,486 bushels. This brings the year-to-date export sales pace to 19.9 million bushels, compared with 11.7 million bushels for last year at this time. Oct. 29 cash bids for milling quality durum were at $6.75 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was $6.50 per bushel.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Oct. 29 with $14.90 (Canadian) losses. The canola market traded with losses for three out of four sessions last week (only Oct. 27 saw small gains).
Canola was under pressure from spillover selling from a weaker U.S. soybean complex, with additional selling coming from a stronger Canadian dollar. Losses were kept in check by strong demand.
Oct. 29 cash canola bids in Velva, N.D., were at $14.13 per hundredweight.
As of Oct. 25, 54 percent of nation’s sunflower crop was harvested, compared with 33 percent the previous week and 44 percent for the five-year average. North Dakota’s sunflower crop condition ratings were unchanged, at 72 percent good to excellent, 21 percent fair and 7 percent poor.
For the week ending Oct. 23, USDA estimated the export sales pace for soybean oil at 82.1 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 377.4 thousand metric tons, compared with 238 thousand metric tons last year.
Oct. 29 cash sunflower bids in Fargo, N.D., were at $16.30 per hundredweight.