Demand drives markets higher
Wheat: fundamentals negative Wheat traded mixed last week with winter wheat exchanges gaining ground while Minneapolis drifted lower. For the week ending April 26, May Minneapolis dropped 23.25 cents, May Chicago was 10.25 cents higher, and May K...
Wheat: fundamentals negative
Wheat traded mixed last week with winter wheat exchanges gaining ground while Minneapolis drifted lower. For the week ending April 26, May Minneapolis dropped 23.25 cents, May Chicago was 10.25 cents higher, and May Kansas City was 13.25 cents higher. Weather was the main driver in all exchanges as frost concerns supported the winter wheat exchange while ideal conditions in the north encouraged planting progress.
Wheat started the week mixed with the winter wheat exchanges trading with strong gains while the Minneapolis exchange struggled. The winter wheat exchanges were said to be seeing support from concerns about last week's weather and the potential for frost in the soft red winter wheat region. The spring wheat exchange was said to be seeing pressure from position squaring ahead of the Statistics Canada acreage report. In reality, the markets seemed to be getting more influence from the unwinding of long Minneapolis short Chicago or Kansas City wheat spreads. Weather forecasts are calling for this week's weather to be conducive for planting activity. This helped to limit the upside move in Minneapolis.
The April 24 session started as a mirror to April 23, but once the corn market started to lose ground, and actually turn negative, all of the wheat exchanges followed suit. Statistics Canada's acreage report had little effect on the wheat exchanges as most of the wheat numbers were close to expectations. According to Statistics Canada, Canadian producers are expected to plant 24.3 million acres of wheat in 2012, an increase of 13.3 percent from last year and 15.5 percent more than 2010. Spring wheat acres are expected to be at 17.18 million and increase of 9 percent from last year but only 4.3 percent above 2010 acreage.
The April 25 session saw wheat trading lower early in the session but recovering on the close. Technical buying was the main feature in the April 25 session. The April 26 session again opened mixed with the winter wheat exchanges on the plus side while the spring wheat contracts struggled. The winter wheat exchanges got a shot in the arm from weather forecasts that again are hinting of potential cold weather for much of the Southern Plains and southern Corn Belt. This could result in some freeze damage to wheat as wheat's crop development stage is farther along than normal for this time of year. Spring wheat was pressured by ideal planting conditions as it appears that most of the nation's spring wheat should have been planted by end of last. Rains were also in the forecast for last weekend, and that was also bearish, as it would bring needed moisture to the newly seeded crop.
Corn: fresh export sales
The corn market traded higher last week, with the May contract up 38 cents and December up 5 cents. Old-crop corn closed sharply higher last week with news of fresh export sales, while new-crop corn did end with small gains. Potential upside was limited with planting progress in the western Corn Belt and the estimated increase in acreage for 2012.
Corn opened and closed higher on April 23 with the lack of any selling interest and talk that China was in the market for corn. Chinese imports of corn for the first quarter came in at 1.74 million metric tons, which is the same amount that they imported for all of 2011. Talk of colder weather in the eastern Corn Belt last weekend also offered support.
The corn market closed lower on April 24 and 25, despite confirmed export sales. Announcements were made of a 480,000-metric-ton sale of old-crop corn to an unknown destination on April 24 and a 420,000-metric-ton corn sale to an unknown destination for 2012 to 2013 on April 25. USDA also announced a 262,500-metric-ton sale to China, with 90,000 metric tons for the current marketing year and 172,500 metric tons for 2012 to 2013. The reaction in the market was buy the rumor and sell the fact as this news was already built in. Planting intentions for Canada are for an increase in corn acreage and possibly a record for Ontario that was set back in 1981. A disappointing ethanol report and a less threatening forecast for the eastern Corn belt last weekend also added pressure. Fund selling was also noted.
To end the week, old-crop corn stormed back with news of fresh export sales. Export sale announcements were huge, with a sale of 1.4 million metric tons to unknown destinations for 2012 to 2013 and another 120,000-metric-ton sale of old crop to China. Private estimates of a smaller South American crop were supportive.
Ethanol production for the week ending April 20 averaged 865,000 barrels per day. This is down 2.15 percent versus the previous week and down 2.04 percent versus last year. Corn used in ethanol production for the week ending April 20 was estimated at 92.1 million bushels. Corn use needs to average 94.2 million bushels per week to meet this crop year's USDA estimate. Stocks were 21.852 million barrels, which is down 0.53 percent versus the previous week but up 13.32 percent versus last year.
Soybeans: exports support market
Soybeans gained 10 to 60 cents last week. Chinese demand was expected to stay strong in the near-term as South American crop estimates continue to erode.
Soybeans opened lower April 23 and closed with moderate losses after choppy trade. Beliefs that an April 27 rally was inspired in-part by option expiration pressured the market. Talk of expectations for good planting weather for the next few weeks pressured as well. Outside markets were negative, with gains in the U.S. dollar, while the Dow Jones and crude oil traded lower. USDA announced a sale of 165,000 metric tons of old-crop soybeans to an undisclosed destination April 23.
Soybeans opened higher on April 24 and 25, posting new highs for the move both days. South American production estimates continued to fall well below USDA's estimates, and freezing temperatures in Argentina April 24 led to ideas that double-crop beans could have suffered further frost damage. Due to the smaller South American crop, China should continue to import soybeans from the U.S., keeping demand strong. The April 24 Statistics Canada report estimates a soybean area of 4 million acres for 2012; up from 3.8 million acres in 2011 and a record high. Old-crop soybeans closed as much as 20 cents off the highs on April 25, but new crop contracts were able to close much closer to the daily highs as the market becomes more concerned about 2012 to 2013 global supplies.
The April 26 session had soybeans opening higher, but selling quickly pushed the market lower into midday and through most of the session. New crop led the market lower on pressure from noncommercial, long liquidation. Commercial selling late in the day helped lift old-crop soybeans back into positive territory to close with moderate gains while new crop remained sharply lower, closing near the day's lows.
The April 27 session opened higher and traded with strong gains throughout the morning. Announcements of old-crop sales of 110,000 metric tons to China and 116,000 metric tons to an undisclosed location were supportive. A large sale of new-crop corn provided spillover support to the soybean market as well.
USDA estimated no barley export shipments for the week ending April 20. This brings barley's year-to-date export shipments pace to 6.35 million bushels compared with 5.3 million bushels last year. There were no reported barley export sales for the week ending April 20. This brings the year-to-date export sales pace for barley to 3.9 million bushels compared with 4.6 million bushels for last year at this time.
As of April 22, 50 percent of the nation's barley had been planted compared with 33 percent the previous week and 27 percent for the five-year average. Barley emergence was estimated at 11 percent compared with 5 percent the previous week and 7 percent for last year.
Statistics Canada is estimating Canadian producers will plant 7.97 million acres of barley in 2012, an increase of almost 23 percent from 2011 and 15 percent higher than 2010. Cash barley bids in Minneapolis have feed barley bids at $5.20 while malting barley bids were at $7.05.
As of April 22, 36 percent of North Dakota's durum crop was planted compared with 16 percent the previous week and 3 percent for the five-year average. Durum emergence was estimated at 1 percent compared with .05 percent the previous week and none for the five-year average. Durum export sales pace for the week ending April 20 was estimated at 300,000 bushels. This brings the year-to-date export sales pace for durum to 17.3 million bushels compared with 34.8 million bushels for last year at this time.
Durum acres in Canada for 2012 are expected to increase to 5.1 million.
Cash bids for milling quality durum dropped to $7.50 in Berthold, N.D., while the Dickinson, N.D., bid dropped to $7.30.
Canola futures on the Winnipeg, Manitoba, exchange gained almost $23 (Canadian) for the week ending April 26. The old-crop canola contracts traded with strength throughout last week because of strong domestic crush demand and tight supplies of vegetable oil products. The deferred contracts were under pressure from expectations for more acres of canola in Canada, which was verified in Statistics Canada's acreage report.
Statistics Canada is expecting Canadian producers will plant 20.37 million acres of canola, an increase of 8 percent from 2011 and 15.7 percent higher than 2010. This will be a record number of acres for canola and the sixth straight year in a row that Canadian producers have increased canola acreage. Cash canola bids in Velva, N.D., on April 26 were at $29.99.
Soybean oil export sales pace for the week ending April 20 was estimated at 700 billion metric tons, bringing the year-to-date total to 358 trillion metric tons, compared with last year's 1,168.6 trillion metric tons. Cash sunflower bids in Fargo, N.D., on April 26 were at $27.15.
Grabanski is president of Progressive Ag, a Fargo, N.D.-based hedge brokerage firm. Reach Grabanski at (800) 450-1404.