Corn prices lower as old crop gets hauled to town
Wheat performed well this week, primarily on thoughts that fall winter wheat plantings will be lower in both the U.S. and the European Union. Paris futures were 0.6 percent higher on this sentiment. Australia continues to experience nightly frosts and dry conditions. Agrimoney reported that U.S. Department of Agriculture estimates of Australia exporting 18 million metric tons are likely on the high side and that their sources think the number will be closer to 14 million metric tons.
Agritel estimates that Russian harvest is 82 percent complete with yields averaging 3.44 metric tons per hectare versus 2.9 metric tons last year. With these kinds of numbers, Russian production will easily exceed the 81 million metric tons estimate from USDA. The interesting development with Russia is that dryness is impeding some of their winter wheat sowings.
$4.505 December Chicago is current resistance. Above that $4.59. Support is $4.375. Funds are short nearly 84,000 contracts so a short covering rally is not out of the question given weather concerns in Australia and Russia.
Stats Canada released its model based principal field crop estimates for the 2017 crop Sept. 19. Total wheat production is estimated to be 27.1 million metric tons, down 14.5 percent from 2016 but 1.6 million metric tons higher than the August report. Spring wheat production is estimated at 20.1 million metric tons, down 1.8 percent from 2016. Although yields are 9.2 percent lower than last year at 47.2 bushels per acre, this was offset by an 8 percent increase in expected harvested acres.
Egypt is back in the news for putting up more restrictions on imported wheat. Last year they placed a zero tolerance on ergot versus international standards. This week, Egyptian officials halted cargoes that they claimed were infested with poppy seeds. This has caused speculation from analysts that Egypt may be delaying payment due to a lack of cash. The net result is fewer offers from six merchants versus the usual 15. Freight rates have also been increasing, so shipping risk is far greater and could lead to less competition and higher prices paid by Egypt.
Weekly export sales totaled 11.3 million bushels, all for the 2017-18 marketing year. This puts total marketing year sales at 480.7 million bushels, 3 percent below the previous marketing year. Weekly shipments of 15.7 million bushels put the marketing year total at 302.7 million bushels, 1 percent ahead of the previous year and on pace for total demand of 947 million bushels.
For the week ending Sept. 21, December contracts for Minneapolis wheat were up 3.25 cents at $6.2425, up 3.5 cents at $4.525 for Chicago wheat, and up 3.5 cents at $4.495 for Kansas City wheat.
Corn prices are trending lower as farmers continue to bring corn into town to make room for new crop. There has been a lack of news in the corn complex lately as prices hover around the bottom end of the trading range, and have been sideways the last two weeks. A lack of news is bearish as traders don't need excuses to keep futures where they are or even lower. The bulls need to be fed to push prices higher.
We are still three weeks from the next World Agricultural Supply and Demand Estimates report. Trading volume continues to lighten before the main harvest gets on its way. December corn is getting close to testing the December contract lows of $3.4425 that were put in place on Aug. 31. For the week ending Sept. 21, December corn was down 4.5 cents and March corn was down 4.25 cents.
Weather forecasts oscillated back to a cooler eight- to 14-day forecast, with temps shifting back to below normal for the Corn Belt during most of that period. That means a likely frost threat for the northern Corn Belt, about equal to a normal frost date in these areas as we still have a seven-day forecast that calls for above-normal temperatures in all of the Corn Belt. The only area forecast to have below normal temperatures the next seven days is the Pacific Northwest and the far western U.S.
Informa estimates the 2018 U.S. corn area is up 1.2 million acres versus last year to 91.88 million acres. Informa 2017 corn yields are at 169.7 bushels per acre versus USDA's 169.9. The Pro Ag yield model was slightly higher this week and is still over a bushel higher than USDA's 169.9 bushel per acre estimate.
Solid weekly ethanol corn usage numbers continue to try and provide support. Ethanol production was at 1.033 million barrels per day. Weekly ethanol production decreased 1.34 percent from last week and is up 5.3 percent from last year. Corn use for ethanol was 106.22 million bushels, ahead of the 104.84 pace needed for USDA's estimates of 5.475 billion bushels. Ethanol stocks are at 21.138 million barrels which is 5.6 percent higher than the stocks carried one year ago.
The funds are heavy short in the corn market. In the week that ended Sept. 12, funds added to their net short positions to around 119,000 contracts, up from 110,000 net short the week prior.
Soybeans had a lackluster week until Sept. 22 as there was not much yield data for analysts to trade yet. Soybean prices continue to teeter totter as they are looking for direction from yields, that, as you may guess, are variable in the early bean harvest. For the week ending Sept. 21, November 2017 soybeans were up 2 cents but were double digits higher the morning of Sept. 22. January soybeans were also up 2 cents.
The main question is, are yields as good as the USDA says they are? People have been hearing about trouble spots around the Midwest all summer long. So many farmers have a hard time believing that the yields are there. We will have a much better idea in a few weeks. But even then, data might be limited for lack of harvest data leading into the October USDA report. For example, many soybeans in Minnesota are still two weeks away from the combine hopper.
The USDA has announced a nice run of fresh soybean sales in their daily reports. There has been a soybean sale announcement in 10 of the last 11 trading sessions. It has helped that Brazil's Free On Board soybean prices were around 10 cents above Free On Board prices at the U.S. Gulf early in the week. This could continue to support U.S. exports.
This past week's export sales report was bullish, but we did not see much positive reaction from these bullish numbers until Sept. 22. Weekly export sales of soybeans showed a total of 85.9 million bushels. This puts total marketing sales for 2017-18 at 710.3 million bushels, 21 percent less than last marketing year. The lower number is due to a lower carryover number for the previous year's unshipped sales.
There is a better chance for rains in Brazil than what they were predicting earlier this week. Though it is still too early for the majority of the South America planting season, weather conditions remain dry for central and northern Brazil and wet in southern Brazil and Argentina. This time of year in South America compares to the February to early March time period in the U.S.
Soybeans broke through $9.79 resistance on Sept. 22, which is both chart support and the 200 day-moving average. Soybeans were not able to break through this resistance the few tries. The Pre-August report highs of $9.88 November futures are last resistance before $10. November 2017 support is $9.58 and then $9.20 is support before we get to the recent lows of $9.07 we saw on June 23.
For the week ending Sept. 21, November canola futures in Winnipeg were $6 lower at $492.10 Canadian per metric ton. The Canadian dollar traded to .8104. This brings the U.S. price to $18.09 per hundredweight.
• Velva, N.D., $17.35 per hundredweight, October $16.98
• Enderlin, N.D., $17.82 per hundredweight, October $18.04
• Hallock, Minn., $17.29 per hundredweight, October $17.55
• Fargo, N.D., $17.80 per hundredweight, October $18.00
Stats Canada estimates canola production at 19.7 million metric tons, up 0.5 percent from 2016. Harvested acreage was up 13.8 percent from last year which offset declines in production due to the drought in the western provinces.
Cash feed barley bids in Minneapolis were at $2.10, while malting barley received no quote. Berthold bid is $2 and CHS Southwest New Salem bids were at $2.50.
Canadian barley production is expected to decline 16.8 percent from 2016.
Cash bids for milling quality durum are $6.75 in Berthold and at $6.75 in Dickinson.
Canadian durum production is estimated at 4.3 million metric tons, down 44.6 percent from 2016. This was due to a 12.9 percent reduction in harvested acreage and a 36.5 percent reduction in yield at 31 bushels per acre.
Cash sunflower bids in Fargo were at $17, and October to November were at $16.90.
For the week ending Sept. 21, soybean oil was down 41 cents at $34.10 on the October contract.