December brings strong recovery

Wheat The wheat markets opened the week Nov. 29 with gains of up to 10 cents before slipping to gains of 2 to 6 cents at the end of the day. Export inspections were above expectations, but still below what is needed to keep pace with USDA project...


The wheat markets opened the week Nov. 29 with gains of up to 10 cents before slipping to gains of 2 to 6 cents at the end of the day. Export inspections were above expectations, but still below what is needed to keep pace with USDA projections. Heavy rains in South Australia and New South Wales are delaying wheat harvest there and creating quality concerns, while dry conditions continue to plague parts of the U.S. Winter Wheat Belt.

The wheat exchanges started the Nov. 30 session with small gains and had gains of up to 8 cents by midday. Pressure from the lower corn trade trimmed the gains to around 4 cents by the end of the day. The Nov. 29 crop condition report was the last one for the year and showed that the U.S. winter wheat crop is in poor shape compared with last year. The good/excellent percentage of 47 percent is down considerably from 63 percent at this time last year. It should be noted that the fall condition ratings for winter wheat have little statistical correlation with final yield.

The wheat exchanges started the day Dec. 1 with gains of 25 to 30 cents after the strong performance in the overnight markets. Wheat continued to rally from there, closing with gains of 45 to 50 cents. All commodities saw strong noncommercial buying interest, and wheat was able to lead the way. The Canadian Wheat Board is reporting poor-quality wheat, with only 38 percent of that country's wheat making top grades vs. an average of 70 percent. The dwindling supplies of quality wheat were confirmed as Egypt tendered for 220,000 metric tons of wheat, and the entire order was filled by the United States. With much of the world having either a short wheat crop (ex: drought in Black Sea region) or a poor quality crop (example: Canada), U.S. exports should pick up. The downside to this is increased competition for feed grains on the world market.

The wheat exchanges started the Dec. 2 session with gains of around 10 cents and rallied quickly from there to have gains of up to 27 cents during the day. The market collapsed at the end of the session to close with gains of less than 10 cents. Many of the wheat contracts traded within 10 cents of the November highs, but after failing to reach those levels, technical pressure stepped in to erode gains at the end of the day.


Dec. 3 brought another round of strong buying interest into the wheat market with gains of up to 25 cents in the nearby contracts, while the deferred contracts struggled to follow. It was estimated that up to 90 percent of southeast Australia's wheat crop would be downgraded to feed wheat because of the heavy rains and harvest delays.

USDA estimated last week's wheat export shipments pace at 20.8 million bushels. This brings the year-to-date export shipments pace for wheat to 548.9 million bushels compared with 429.9 million bushels for this time last year. Shipments need to average 27 million bushels to meet the annual USDA projection. USDA estimated weekly export sales at 24.4 million bushels, above the 15.6 million bushels needed to meet the USDA projection of 1.25 billion bushels for the year. Shipments of 21.6 million bushels were below the 27.4 million bushels needed to meet projections.


The corn market opened the week by trading close to unchanged for the session. The market found some support from an export sale of 120,000 tons of corn to Mexico. There also was talk that Russia may need feed grain and they are talking to Argentina about purchasing corn. This news supports the corn market as traders are thinking other exports will come from the U.S. The firmness in the wheat market also offered support to the corn trade, but the market's upside was limited by the negative outside markets. Export inspections were disappointing for corn at 23.9 million bushels.

The corn market opened slightly lower Nov. 30 and traded with losses for the session. The corn market came under pressure with end-of-the-month fund selling (the funds liquidated 28,000 contracts last week). The outside markets also had a negative tone. Pacific Northwest export basis bids dropped 10 cents a bushel on softer export demand to Asia. During the overnight, the chairman of one of China's largest grain trading organizations indicated that China has plenty of corn because of a record harvest, which added additional weakness.

The corn market opened with double-digit gains Dec. 1 and traded with big numbers for the rest of the day, holding mostly steady gains of around 20 cents. The positive outside markets helped create fresh buying interest to start the month. The strength in the wheat market also carried over to support the corn trade. Technically, the futures rallied back above all major moving averages. News out of Washington is that the blender's credit may not be extended, but had little effect on the market.

The corn market opened Dec. 2 with small losses and traded on both sides of unchanged for most of the session until the close. The corn market broke 10 cents during the last 15 minutes of the session as profit taking entered the market. The corn lacked any buying interest, even with the strength in the wheat trade and the positive outside markets. Exports were decent for corn as they came in at the high end of estimates, and there was an announced sale of 238,000 tons of U.S. corn to unknown destinations and 135,000 tons to Japan. It was a disappointing day for the corn market considering the positive news. Open interest has dropped off the past few days, which does not support a higher market.



The soybean market started the week with small gains but quickly turned lower because of pressure from the strong U.S. dollar, ending the day with 3.5-cent losses. Export inspections were strong again for the week, but the outside markets were the primary factor for Nov. 29. Financial troubles in Europe lent strength to the dollar, with the dollar making new two-month highs.

The soybean market opened the Nov. 30 session with mixed trade, but rallied later in the day to close with gains of 6 to 8 cents. The soybean market was able to fight off pressure from the higher dollar and lower energy markets on renewed commercial support. Concerns about dry weather in Argentina and new highs in Malaysian palm oil markets supported the soybean complex. End-of-month position squaring by noncommercial traders appeared to help soybeans trade higher as corn was pushed lower.

The soybean markets opened Dec. 1 with gains of around 20 cents and continued to rally into the end of the day to close with gains of 37 to 40 cents. After selling off long positions at the end of November, noncommercial buyers stepped back into the commodity markets in a big way. Recovery in the euro and weakness in the dollar propelled gains in all commodities. The soybean market closed above all major moving averages, with potential to test the $12.90 to $13 range in January beans.

The soybean market started the day Dec. 2 with 2- to 3-cent losses and had mixed trade with gains of up to 5 cents before backing off to close with 3- to 4-cent losses. Soybeans had a rather poor performance considering the weakness in the dollar and strength in the other outside markets. The Dow Jones Industrial Average had triple-digit gains, and Malaysian palm oil markets made 29-month highs overnight. Export sales were exceptional again this week as well, but soybeans seemed to run into some technical pressure. The soybean market closed above all major moving averages Dec. 1, completing a 62 percent retracement of the November range, so a further rally was difficult to achieve.


The weekly USDA export sales report showed of 6,600 metric tons of canceled sales, while shipments were estimated at 19,900 metric tons. Cash feed barley bids in Minneapolis gained 30 cents on the week to be at $3.80. Malting barley bids in Minneapolis gained 20 cents at $4.70.


Last week's durum export inspections were estimated at 693,000 bushels. USDA reported export sales of 300,000 bushels of durum to bring the total so far to 26.8 million bushels vs. 32.3 million bushels at this time last year. Cash durum bids gained 20 to 25 cents on the week to be in $7.00 to $7.25 range for milling durum.



Canola futures on the Winnipeg, Manitoba, exchange had strong gains for the week to trade at more than $550 per ton in the January contract Dec. 3. The Statistics Canada report released recently pegged 2010 production at 11.87 million metric tons, above the expected 11.2 million metric tons, but canola traded higher on support from outside markets. The canola market found strength from higher world palm oil prices and strength in the soybean complex. Additional support spilled over from a higher U.S. crude oil market. Cash canola bids in Velva, N.D., were up 53 cents for the week to be at $23.32 Dec. 2.


Cash sunflower bids in Fargo, N.D., gained 60 cents on the week at $20.45.

Dry beans

USDA is reporting spotty bids of $17 to $19 per hundredweight for pintos in the North Dakota-Minnesota region. Trading activity remains slow, with most movements being previously contracted orders.

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