Devastating USDA report
Wheat Wheat struggled last week with most of the selling tied to the June 30 bearish U.S. Department of Agriculture reports. For the short week ending July 2 (markets closed at noon on July 3 in observance of the Fourth of July and remained close...
Wheat struggled last week with most of the selling tied to the June 30 bearish U.S. Department of Agriculture reports. For the short week ending July 2 (markets closed at noon on July 3 in observance of the Fourth of July and remained closed until July 7 at 8:30 a.m.), September Minneapolis dropped 27.5 cents, September Chicago dropped 18 cents and September Kansas City gave back 43 cents.
USDA hit all of the grains hard June 30. USDA's export inspections report was slightly disappointing and that started the ball rolling downhill for wheat. The final push came with the acreage and quarterly grains stocks report. The stocks estimate was neutral to wheat, as it put June 1 wheat stocks at 590 million bushels, 8 million fewer than the average trade estimate.
The bearishness for wheat came in the acreage estimate. USDA put all wheat acreage at 56.47 million, compared with March's estimate of 55.82 million and the average trade estimate of 55.82 million. Spring wheat acreage was estimated at 12.4 million, compared with 12 million in March and 11.86 million from the average trade estimate.
Wheat continued to see selling pressure the rest of the week. The beating during the past few sessions was mainly a result of the negative USDA reports on June 30. In addition, U.S. wheat is overpriced when compared with other wheat exports in the world, evident because of the recent lost exports. The July 2 reports had Egypt buying 180,000 metric tons and July 2 reports had both Japan and Turkey buying wheat, but none of the wheat came from the U.S. Technically, wheat is in need of a recovery, and seasonally wheat does stage a post-harvest rally once the harvest approaches 50 percent complete.
As of June 29, 26 percent of the nation's spring wheat crop was headed, compared with 10 percent the previous week and 29 percent for the five-year average. Spring wheat conditions were estimated at 70 percent good to excellent, 25 percent fair and 5 percent poor or very poor, a decrease of 1 percent from the previous week. Winter wheat harvest was estimated at 43 percent complete, compared with 33 percent the previous week and 48 percent for the five-year average. Winter wheat crop conditions were unchanged at 30 percent good to excellent, 26 percent fair and 44 percent poor or very poor.
The corn futures traded sharply lower last week with a larger-than-expected stocks number from USDA, which was 132 million bushels above trade estimates. The crop conditions continue to improve and the weather is favorable for crop development. The market continues to struggle with large yield estimates and the fifth-largest planted acreage since 1944. As of the morning of July 3, the July contract was down 25.5 cents for the week, while the December contract lost 30.25 cents and traded to a new contract low at $4.1625 last week.
Traders have been focused on June 30 for some time and the much-awaited USDA report was seen as bearish, while corn closed sharply lower on June 30. USDA's estimated corn acreage came in at 91.64 million acres, down 150,000 acres from the March report. The corn grain stocks showed 3.854 billion bushels of corn on hand, with 1.86 billion stored on farms and 1.99 billion in commercials hands. The pre-report estimates were 3.722 billion bushels. Traders expected to see a slight increase in the crop conditions and they did go up 1 percent in the good to excellent rating, which pressured the futures on July 1.
Selling continued on July 2, as the funds liquidated their long positions. The weather also appears nonthreatening in the next two weeks and the month of July forecast looks favorable for crop development and pollination. The growing-degree days are running ahead of last year and the five-year average. The ethanol report did show corn use up from the previous week, but had little effect on the trade. Buying interest remained on the sideline on the morning of July 3 and the futures were slightly lower.
As of the July 2 close, August soybeans were 63.25 cents lower for the week, while the November contract lost 86.5 cents. At 10 a.m. July 3, August soybeans were trading 13 cents lower, while November was down 6 cents.
Soybeans were trading a few cents higher ahead of the reports June 30, but developed sharp losses quickly after the reports were released. In the acreage report, USDA pegged soybeans at 84.8 million acres. This was well above the average trade guess of 82.2 million and last year's 76.53 million acres. The 84.8 million acres estimated is also a new record by more than 7 million acres. USDA pegged soybean stocks at 405 million bushels in the quarterly stocks report, above the 387 million expected, but below last year's 435 million.
The June 30 crop progress report showed soybean conditions essentially unchanged, as expected. Emergence and blooming were both in line with the five-year averages. June 30 export inspections were bearish, coming in below the amount needed to keep pace with USDA's projection.
Soybean trade continued to digest the June 30 bearish reports on July 1 and 2, closing lower both days with follow-through selling. Old-crop basis remains firm, indicating some level of commercial interest remains. The weather forecast remains nonthreatening in the near-term.
After opening with small gains July 3, soybeans quickly slipped back into negative territory, despite the morning's bullish export sales report, as traders positioned ahead of the long holiday weekend.
Soybean emergence was at 94 percent, compared with 90 percent the previous week and the five-year average of 94 percent. Soybeans blooming were at 10 percent, compared with the five-year average of 10 percent. Conditions for soybeans were rated at 72 percent good to excellent, 23 percent fair and 5 percent poor or very poor.
USDA estimated barley acreage for 2014 at 3.09 million, compared with 3.165 million in March.
As of June 29, 31 percent of the nation's barley was headed, compared with 17 percent the previous week and 25 percent for the five-year average. Barley crop conditions gained 1 percent to 68 percent good to excellent, 29 percent fair and 3 percent poor or very poor.
USDA reported barley export shipments pace for the week ending June 27 at 76,474 bushels, all to China. Barley export sales were reported at 100,000 bushels.
July 2 cash feed barley bids in Minneapolis were at $3.25 per bushel, while malting bids were $5.70.
USDA estimated U.S. durum acreage at 1.469 million, compared with 1.799 million in March and the average trade estimate of 1.79 million.
As of June 29, 34 percent of North Dakota's durum crop was jointing, compared with 19 percent the previous week and 54 percent for the five-year average. North Dakota's durum crop condition rating was estimated at 86 percent good to excellent, 13 percent fair and 1 percent poor, 3 percent less than the previous week.
July 3 cash bids for milling quality durum were at $8.80 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was at $8.70.
Canola futures on the Winnipeg, Manitoba, exchange were posting $16.80 (Canadian) losses as of July 2 close. Pressure came from improving weather forecasts. Additional selling spilled over from a sharply lower U.S. soybean complex, which was lower because of a larger-than-expected planted acreage report June 30.
USDA estimated canola acreage for 2014 at 1.75 million, compared with 1.737 million in March.
As of June 29, North Dakota canola was 27 percent in bloom, compared with 11 percent the previous week and 27 percent for the five-year average. Canola's crop condition rating was estimated at 81 percent good to excellent, 18 percent fair and 1 percent poor, 1 percent better than the previous week.
July 2 cash canola bids in Velva, N.D., were at $20.30 per hundredweight.
Dry edible beans
As of June 29, North Dakota's dry bean crop (40 percent of the nation's crop) was 4 percent in bloom, compared with zero the previous week and zero for the five-year average. North Dakota's crop was rated 72 percent good to excellent, 22 percent fair and 6 percent poor or very poor, 4 percent less than the previous week. Minnesota's crop (7 percent of nation's crop) was 95 percent emerged, compared with 87 percent the previous week and 97 percent for the five-year average. Nebraska's crop (10 percent of nation's crop) was 95 percent emerged, compared with 86 percent the previous week and 90 percent for the five-year average. Nebraska's crop was rated 76 percent good to excellent, 18 percent fair and 6 percent poor or very poor.
In its acreage report, USDA put dry beans at 1.7487 million, compared with 1.3547 million, a 29 percent increase from last year, and 4 percent more than expected in March. North Dakota's dry bean acreage is expected to increase 59 percent from last year, and is 13 percent higher than expected in March. Minnesota's acreage is equal to 2013, but 26 percent less than expected in March. Nebraska's acreage is up more than 35 percent from 2013, but off 3 percent from March.
USDA estimated all sunflower acreage at 1.7 million, compared with 1.592 million in March.
As of June 29, 91 percent of the nation's sunflower crop had been planted, compared with 83 percent the previous week and 93 percent for the five-year average.
July 3 cash sunflower bids in Fargo, N.D., were at $21.05 per hundredweight.