Grabanski: Final week in March expected slow
All three wheat markets were higher to start last week. May Chicago and Kansas City wheat were the leaders after temperatures dropped into the teens and low 20s in Kansas. U.S. Department of Agriculture’s National Agricultural Statistics Service showed at least 6 percent of Kansas and 10 percent of Oklahoma winter wheat crops were jointed when the cold snap hit. Wheat is a resilient crop with the cold, so we will have to wait until April to see how much damage was actually done.
Red flag warnings in the southwestern Plains continue to give wheat crop concerns about dry conditions. Below-normal temperatures are being predicted in the southern Plains after the short warm up.
Exports for U.S. wheat are still slow, and is limiting large price rallies that is coming from hard red winter wheat area weather.
The March 18 Commodity Futures Trading Commission data showed noncommercial investors remain bearish in Chicago wheat, but backed down from their record net-short position two weeks ago with the 40-cent run in wheat prices.
There are still bearish fundamentals at work with a large supply of ending stocks. Less expected acres, dry weather in the plains and frost threats were keeping the bears at bay to start the week.
For the holiday-shortened week ending March 24, Minneapolis gained 2.75 cents, Chicago wheat was unchanged after it was down 13.5 cents the previous week, and Kansas City was down 2.75 cents.
Prices fell off early gains March 22 as light selling from technical traders brought this market back down to a couple cents above the March 22 opening price.
Negative fundamentals and large stocks limit upside but price action is showing the willingness to put on risk ahead of month end crop report.
Ukraine’s total grain output is expected to drop this year, with the decline caused mainly by reduction in wheat production from unfavorable weather conditions this fall. One-third of Ukrainian winter wheat is estimated to be in poor condition.
Wheat had an off day March 23. It followed the row crops down as the U.S. dollar was higher for the second day in a row, and we saw a large dip in crude prices.
With another cold snap forecast for the central plains, bullish traders took a step back and are in a holding pattern for a couple days to see what kind of frost damage comes from the next round of expected freezing weather in hard red winter wheat areas.
The dry southwestern plains areas had another dry and windy day week, and the forecast is for another week and a half of the same.
It was another narrow ranged week for corn, trading up marginally for the week. It is expected that corn will continue to timidly follow other markets, whether they be outside markets such as oil or other ag markets such as soybeans until the end of March.
While the export and ethanol reports provide some information to influence the market, until planting gets underway there will continue to be a lack of direction.
March 21 and 22, saw collective gains of three cents, with positive pressure coming from cold weather induced gains in wheat and improved export inspections on March 21. The same day also saw the purchase of 45,000 metric tons of U.S. dried distillers grains by Pakistan, and a similar volume tendered for by Taiwan, but Argentina and Brazil still might get Taiwan’s business. The March 21 small gain of 0.5 cent was disappointing considering soybeans gained eight cents. Crude oil likely offers some explanation of corns movements; March 21 saw 50-cent gains in crude, whereas March 22 was unchanged to marginally down crude markets.
March 23 saw corn lose 1.5 cents, following soybeans down. Zimbabwe gave some support to the market as it tendered for 469,000 metric tons of corn, half of which was expected to come from the U.S. or Mexico, as the country faces a drought-induced food emergency.
Crude, however, had fallen around $1.75 by the time the ag markets closed, reaching down to $39.70 region.
The March 23 ethanol report pegged production from the previous week at 6.97 million barrels, down 0.4 percent from the week before. Stocks were down 1.46 percent from the previous week at 22.52 million barrels, falling for the second week in a row. Corn use was down marginally at 104.48 million bushels, bringing cumulative use to 2,922.20 million bushels. It needs to average 98.7 million bushels per week to meet the USDA estimate of 5,225 million bushels.
Support from the wheat complex and political unrest in Brazil gave soybean markets a boost to start last week.
Even with record production coming out of Brazil and Argentina this year, uncertainty in the economic and political outlook for Brazil is the talk that is moving these markets. The political crisis has a few issues: the popular backlash against the government because of the state of the economy and a large corruption scandal.
The biggest surprise in the March 18 CFTC data was that noncommercials switched from net short in soybeans to net long 13,461 contracts as of March 15.
The fundamentals in soybean stocks is not friendly, but Brazil’s political problems are adding uncertainty and led to short covering last week and the beginning of last week. For the holiday shortened week, May soybeans were up 7.75 cents and new-crop November soybeans were up 7.5 cents.
The soybean market continued its run up March 22, and once again was the leader of the pack. It finished the day off strong, even after the other grains fell off at the end of the day.
May soybeans closed to the highest level since the beginning of last December. Ongoing protests and political turmoil is helping to shrink the spread between the higher dollar and the Brazilian Real.
Cash feed barley bids in Minneapolis were unchanged for the week end March 24 at $2.45, while malting barley received no quote. Berthold, N.D., showed bids of $2.25 and CHS Southwest bid $2.50 in New Salem, N.D.
Cash bids for milling quality durum are unchanged for the week ending March 24 at $6 in Berthold, N.D., and unchanged at $5.85 in Dickinson, N.D. ADM-Benson Quinn is bidding $6.50 into Carrington, N.D., and $7.25 down to Hastings, Minn.
Canola futures, as of March 24 morning, were up $3.7 (Canadian) for the week at $469.5 per metric ton (Canadian) for the May contract. The Canadian dollar lost 0.01 at 0.76. This brings U.S. prices to $16.13 per hundredweight, a 9 cent loss for the week.
Cash bids in Velva, N.D., finished the week up 23 cents at $16.16 per hundredweight for March and April.
Enderlin, N.D, bids were up 24 cents at $16.62 per hundredweight.
Hallock, Minn., bids were up about 18 cents at $16.36 for March and $16.54 for April, and up about 6 cents at $15.95 for September.
Prices have seen quite an improvement as of late. According to charts, May canola futures could see some resistance at $475 per metric ton (Canadian), but beyond that there is no resistance until $490. November futures see chart resistance at $485 and then relative freedom until $495.
Cash sunflower bids in Fargo, N.D., were $16.60 for March and April.
Soybean oil net lost 6 cents for May contracts, bringing the price up to $33.36 as of March 23.