Harvest doldrums sink in
The first winter wheat ratings of the season were released Oct. 30. Currently 52 percent of the winter wheat crop is rated as good to excellent versus last year's rating at this time of 58 percent good to excellent. Twelve percent of the crop is rated poor to very poor versus 9 percent last year.
Despite these lower ratings, wheat contracts traded lower and failed to hold the $4.25 support level in the December Chicago contract. Chicago traded to a new contract low of $4.1625 in Nov. 1 trade before some buying came in to lift contracts back to the $4.25 level Nov. 2. Kansas City contracts acted in similar fashion and Minneapolis contracts fared better staying in the recently established range of $6.10 to $6.22.
Ten percent of Europe's wheat growing regions have been experiencing wetter-than-normal conditions. In the northeast, Poland and Lithuania are experiencing the brunt of the wet weather, and their planting window is rapidly closing pointing to reduced acreage. In the southwest, France is experiencing drier than normal conditions, which is holding farmers from continued planting, but rains are expected next week. Ukraine plantings are nearly complete with an expected half-a-million-acre increase.
An article from Reuters quoted Justin Gilpin of the Kansas Wheat Commission stating that Kansas winter wheat plantings could be down another 10 percent from a year ago. This was due to poor market prices and weather delays in planting. Oklahoma, the No. 3 producer of winter wheat, could see a similar reduction, according to their agricultural economics department. Some preliminary U.S. wheat planting forecasts are anywhere in the range of 44.5 million to 46.3 million acres. In 2017 the U.S. planted 46.1 million acres of wheat.
Weekly export sales were bearish totaling 12.8 million bushels, with all for the 2017-18 marketing year. This puts total marketing year sales at 569.9 million bushels, 5 percent below the previous marketing year. Weekly shipments of 13.9 million bushels put the marketing year total at 386.4 million bushels, 5 percent below the previous year.
For the week ending Nov. 2, December contracts for Minneapolis wheat were up 5.75 cents at $6.2275, down 1.25 cents at $4.26 for Chicago wheat, and down 0.5 cents at $4.2575 for Kansas City wheat.
On Nov. 2 a 1,356,360 metric ton sale of corn to Mexico was announced. This was one of the largest top 10 corn sales ever in a single day. Of that, 845,820 metric tons are for 2017-18 shipment and 510,540 metric tons are for 2018-19 shipment. While this was welcome news, weekly export sales were viewed as bearish at 35.5 million bushels (811,400 metric tons). Marketing year sales are running 31 percent less than the previous marketing year.
For the week ending Nov. 2, December corn was up 1.75 cents at $3.505 and March was up 1.5 cents at $3.64. Current support is $3.4625 with resistance at $3.515. Last week corn failed to close above the 50-day moving average of $3.545. This week, the same held true as the 50-day moving average of $3.515 could not be surpassed. Open interest is up over 75,000 contracts in the last 6 sessions with managed money likely short over 200,000 contracts. We need a close above $3.515 to spark short covering.
Corn harvest remains 18 percent behind normal pace according to the latest weekly crop progress report. The Dakotas, Minnesota and Wisconsin are all under 40 percent compared to around 60 percent normally. Snowfall in the northern Corn Belt and expected rains in the eastern Corn Belt looks to delay harvest further. Despite this delay, the funds seem unconcerned and reluctant to push the market higher.
Estimates for the upcoming Nov. 9 monthly supply and demand report are out. FC Stone is estimating U.S. corn yield at 173.7 bushels per acre compared to the current USDA estimate of 171.8. Informa increased their corn yield estimate to 173.4 bushels per acre compared to an earlier estimate of 170.5.
Weekly ethanol production averaged 1.056 million barrels per day. This is up 1.64 percent versus last week and up 3.33 percent versus last year. Total ethanol production for the week was 7.392 million barrels. Stocks as of Oct. 27 were 21.474 million barrels. This was up 2.09 percent versus last week and up 8.79 percent versus last year. Corn used in last week's production is estimated at 108.64 million bushels bringing cumulative yearly usage to 948.65 million bushels.
Commercial buying in soybean meal gave soybeans a boost this week. January soybeans flirted with the magic $10 number before retreating. People's Republic of China meal processors are buying spring cargoes and locking in favorable crush margin. Soy oil also has been on a month-long winning streak. Good exports and demand continue to eat away at the U.S.'s record production numbers, which is providing support. The funds are still net long, but lightened up on their long positions last week, moving from 68,000 contracts down to 49,000. For the week, January soybeans were up 12 cents and March soybeans were up 12.5 cents.
Traders are positioning ahead of the Nov. 9 USDA report where there is a possibility that soybean yields could be lowered again this month as late season soybeans are not yielding as well as the early planted soybeans. Early analyst estimates have the USDA raising yields though. Informa came out with a yield of 49.7 bushels per acre, down from their last estimate of 50 bushels per acre. FC Stone is guessing the USDA will change course from last month's lower yield estimates and go back to their September yield of 49.9 bushels per acre.
As the U.S. soybean harvest wraps up, the trade is looking for news to push this market one way or the other. As of Oct. 30, the soybean harvest came in at 83 percent complete, in line with the five-year average.
The main market driver will continue to be South American weather. They are off to a poor start to their spring, but it is slowly improving. South American weather holds the next key to the grain market, but with improving Brazilian rain forecasts, we'll have to wait for the next major weather threat to push the markets significantly higher. Light rains are starting to fall in Brazil, but they need more substantial rain to catch up and get their crop started. Argentina is slowly drying out, and they are starting to get their soybeans planted.
Export sales were solid at 72.8 million bushels for the 2017-18 marketing year. This puts marketing year sales at 1.116 billion bushels, 16 percent less than the previous marketing year.
September U.S. soybean crush is in line with expectations. September U.S. soybean oil stocks are slightly higher than expected and above USDA at the last 2016-17 ending stocks estimate. USDA reported U.S. soybean crush for the month of September was 145.4 million bushels, in line with pre-report average market expectations of 145.4 million bushels (pre-estimate range of 144.2 million-147 million). This is 5.1 percent above last year's September crush of 138.3 million bushels, but down from 151.6 million in August U.S. total crush for the month.
For the week ending Nov. 2, November canola futures in Winnipeg were up $11.50 Canadian to $518.4 Canadian per metric ton. The Canadian dollar is at .7807. This brings the U.S. price to $18.36 per hundredweight.
• Velva, N.D., $17.84 per hundredweight, December at $17.95.
• Enderlin, N.D., $18.44 per hundredweight, December at $18.62.
• Hallock, Minn., $17.94 per hundredweight, December at $18.11.
• Fargo, N.D., $18.45 per hundredweight, December at $18.50.
Cash feed barley bids in Minneapolis were at $2.10, while malting barley received no quote. Berthold, N.D., bid is $3.00 and CHS Southwest New Salem, N.D., bids were at $2.50.
Cash bids for milling quality durum are $6.25 in Berthold and $6.25 in Dickinson, N.D.
Cash sunflower bids in Fargo were at $17.25 and December $17.15. For the week ending Nov. 2, soybean oil was up 17 cents to $34.85 on the December contract.