Waiting for harvest data
The wheat markets struggled this week in follow through selling to the bearish Sept. 30 stocks report. December Chicago traded to $4.38 with $4.3825 and $4.3575 as support. We are now 22 cents off the recent $4.62 high in the front month, so one could expect this $4.30 to $4.60 range to trade for awhile. Minneapolis contracts are also finding a base of support at the $6.06 level as a trade gap of $6.06 to $6.14 from early June was filled in this week's trade.
A good band of rain is making its way across the Texas Panhandle through southern Iowa. Kansas is forecast to receive 1- to 5-inch rains with this system greatly replenishing much needed subsoil moisture. Although winter wheat plantings are behind schedule, the market is viewing this as a negative price development.
Also negative remains the growing record Russian crop. Big crops always seem to get bigger. The European Union increased their production estimate by 1 million metric tons to 140.4 metric tons.
Egypt purchased 180,000 metric tons of Russian wheat. Russian offers were $211 to $216 per metric ton. The nearest offers to Russia were France and Romania which were still $7 to $10 per metric ton higher, showing that Russia is winning the export battle out of the Black Sea region. Russian export prices have increased for the fourth consecutive week due to a lack of farmer selling. Brazil showed record exports of both corn and soybeans for the month of September. World competition will stifle any rallies in the grains this winter.
About the only positive is uncertainty about Australian yields. Australian wheat production is expected to decline under 20 million metric tons from the current U.S. Department of Agriculture estimate of 22.5 million metric tons. They recently received rains so the speculation of the trade is whether the rains were enough to help crop development.
Weekly export sales were bearish totaling 18.1 million bushels, with all for the 2017-18 marketing year. This puts total marketing year sales at 514.8 million bushels, 3 percent below the previous marketing year. Weekly shipments of 26.3 million bushels put the marketing year total at 344.6 million bushels, 3 percent below the previous year.
For the week ending Oct. 5, December contracts for Minneapolis wheat were down 8.25 cents at $6.155, down 7.5 cents at $4.4075 for Chicago wheat, and down 8.5 cents at $4.3425 for Kansas City wheat.
For the week ending Oct. 5, December corn was down 6.25 cents at $3.495. Open interest is up over 53,000 contracts in the last five trading days, signaling that fund traders are adding to their heavy net-short position. The $3.44 August low held this week with December trading to $3.46. Informa released its corn yield estimates at 170.5 bushels per acre, which is up 1.3 bushels from last month.
Corn growers in the Texas Panhandle up to Kansas are reporting high levels of the mycotoxin fumonisin which at higher levels is toxic to cattle. The dry July followed by a wet August was ideal for the growth of this mycotoxin. Excessive testing is occurring to insure toxic levels do not get into the supply chain. Some farmers are seeing corn being turned away at delivery points.
USDA reported a 2017-18 sale of 597,000 metric tons of corn to Mexico on Oct. 2.
Weekly export sales were bearish at 32.0 million bushels. Low water levels on the Mississippi plus lock and dam repairs on the Ohio are contributing to higher freight rates and widening basis.
The heart of the Corn Belt and eastern Corn Belt are receiving rains which will delay harvest, but the pattern looks more favorable in the eight- to 14-day outlook. Forecasts for South America show Brazil being dry for the next 10 days with southern Brazil and Argentina being wet.
Ethanol production for the week ending Sept. 29 averaged 1.01 million barrels per day. This is up 1.41 percent versus last week and up 3.06 percent versus last year. Total ethanol production for the week was 7.07 million barrels. Stocks as of Sept. 29 were 21.545 million barrels. This is up 3.88 percent versus last week and up 6.78 percent versus last year. Corn used in last week's production is estimated at 103.81 million bushels bringing cumulative corn usage to 529.12 million bushels.
Soybeans are in a holding pattern as harvest delays have been keeping yield information out of the news wire. The trade is still trying to decipher the numbers from the quarterly stocks report and how they will change with the expected record soybean crop coming this fall.
The Sept. 29 USDA report was bullish as they lowered stocks to 301 million bushels, well below pre-report estimates in the Oct. 6 report.
Pre-report estimates were for stocks to come in at 339 million bushels versus the September estimates of 345 million bushels. But with a lack of recent yield data, not much excitement is expected until we hear the numbers on the Oct. 12 WASDE report. For the week ending Oct. 5, November 2017 soybeans were up 0.75 cents and January 2018 soybeans were up 1 cent.
As of Oct. 2, the U.S. as a whole was only slightly over 20 percent harvested, and it has been slow going since then. Soybeans harvested was at 22 percent nationally versus the five-year average of 26 percent and 24 percent last year.
Rains have put a halt to harvest in much of the Midwest. There are trains sitting in the Dakotas at elevators waiting for the rains to stop so they can get enough beans in to fill the contracted rail. Early soybean yields have been good, but what is not known is how the later-maturing soybeans will compare.
Soybean prices have bounced off the recent three week lows and are sitting in the middle of the two-month trading range. Soybeans found support later in the week with an uptick in soybean meal and good weekly export reports. China was on holiday, so it was quiet on the export sales front this past week. Export sales total marketing sales for 2017-18 at 857.3 million bushels, 18 percent more than the previous marketing year.
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. Soybeans closed below both the 50-day and 100-day moving average, the latter being $9.60. Resistance is at $9.87 November futures is resistance before $10.00.
For the week ending Oct. 5, November canola futures in Winnipeg were $2.80 Canadian higher at $495.20 Canadian per metric ton. The Canadian dollar traded down to .7957. This brings the U.S. price to $17.88 per hundredweight.
• Velva, N.D., $17.32 per hundredweight, November at $17.32
• Enderlin, N.D., $17.75 per hundredweight, November at $18.04
• Hallock, Minn., $17.33 per hundredweight, November at $17.44
• Fargo, N.D., $17.80 per hundredweight, November at $17.95
Cash feed barley bids in Minneapolis were at $2.10, while malting barley received no quote. Berthold, N.D., bid is $2 and CHS Southwest New Salem, N.D., bids were at $2.50.
Cash bids for milling quality durum are $6.75 in Berthold and at $6.75 in Dickinson, N.D.
Cash sunflower bids in Fargo were at $16.95. Oct. 8 to November were at $16.80.
For the week ending Oct. 5, soybean oil was up 20 cents at $32.77 on the October contract.