Focus on weather

Wheat: heavy snow on Southern Plains

The wheat markets had losses of 14 to 21 cents last week. Six-month highs in the U.S. dollar and snowfall in the Southern Plains put pressure on the wheat markets.

Noncommercial traders came back to the market Feb. 19 after the long weekend and continued to sell wheat and corn. The fund selling pressure overcame the bullish export inspections report. The pressure continued Feb. 20 because of snow falling in Oklahoma and central Kansas, but much of that negativity had already been priced into the market. As the day progressed, the snowfall totals were disappointing for the dry western areas and the markets finished the day higher.

While the snow petered out in the Southern Plains on Feb. 20, the system rebuilt overnight, sending the wheat markets lower again with losses of up to 20 cents on Feb. 21.

Pressure also came from outside markets, with a lower tone in commodities and continued gains in the U.S. dollar. India is expected to be an aggressive exporter of wheat going forward, with large stocks and a large crop coming. It will compete with the U.S. in the feed wheat market, but its crop does not meet milling standards. Japan bought U.S. wheat again last week; we hope this is a return to what used to be considered a weekly event.

Feb. 22 trade had decent gains early in the day before the markets backed off by noon. Export sales were surprisingly good for wheat last week, but the snow totals in the Southern Plains weighed on the wheat markets, as did the six-month highs in the dollar index.

The U.S. Department of Agriculture's wheat export inspections pace for the week ending Feb. 15 was estimated at 30.3 million bushels. This brings the year-to-date export shipments pace for wheat to 653.6 million bushels, compared with 716.1 million for last year at this time. With 15 weeks left in the marketing year, wheat shipments need to average 26.7 million bushels to make USDA expectations of 1.05 billion. USDA reported export sales of 25.7 million bushels, above the 15.9 million needed to keep pace with projections. Shipments of 19 million bushels were below the 28.6 million needed.

Corn: slow exports with higher dollar

The corn market was down 6 cents in the March contract last week, as of noon on Feb. 22. Corn struggled last week and traded in a sideways fashion with the lack of demand and fresh news. The sharp rally in the soybeans could not support a rally in the corn futures.

Weather forecasts turned more negative for the markets last week, with much-needed moisture in the western U.S. Demand data added pressure, as well, with bearish export inspections and sales reports, along with ethanol data.

News from the USDA Ag Outlook conference also added a negative tone to the trade. USDA raised its planted acreage estimate by 500,000 acres to 96.5 million for 2013 and production was estimated at 14.35 billion bushels, which is up 35 percent from 2012.

The only day the corn futures closed slightly higher was Feb. 20. There was early weakness from moisture in the western plains states last week and two moisture events forecast in Argentina in the next eight days.

The futures firmed up into the afternoon and did close with small gains. Support came from the strength in the soybean trade and a firm wheat market. The firm basis and slow farmer selling also was seen as supportive. Cash markets for old crop corn are strong, but it appears that rationing of the 2012 corn crop will be performed by the cash market, not the futures.

Ethanol production for the week ending Feb. 15 averaged 797,000 barrels per day, down 13.28 percent from last year. Corn used in production is estimated at 83.7 million bushels and needs to average 87.6 million bushels per week to meet this crop year's USDA estimate of 4.5 billion bushels. Stocks as of Feb. 15 were 19.5 million barrels, down 9.5 percent from last year.

USDA's export inspection report was bearish for corn. There were 9.5 million bushels shipped, below the 19.5 million bushels needed to keep pace with USDA projections.

The export sales report for corn was at 15 million bushels, above the 12.2 million needed to meet USDA's projection of 900 million. Total shipments last week were at 10.1 million bushels, below the 19.5 million needed for the 2012 to '13 marketing year.

Soybeans: Brazil exports not yet up to speed

As of the Feb. 21 close, March soybeans were up 63.25 cents on the week, while November 2013 soybeans were 15.25 cents higher. South American weather continues to have a strong impact on the market.

Strong commercial buying supported sharp gains in the soybean market to open the week on Feb. 19. South American concerns, such as disappointing weekend rains in Argentina and loading delays in Brazilian ports, continue to support the market, though the harvest is beginning to pick up the pace. Feb. 19 export inspections were well above the amount needed to keep pace with USDA's projection.

Follow-through buying from the Feb. 19 strong close supported soybean trade Feb. 20, as news remains generally positive. While the South American harvest continues to pick up the pace, logistical issues in Brazil and too little moisture in Argentina support soybean futures. Export demand is expected to remain strong, as well, with good Chinese crush margins.

Soybean trade was mixed Feb. 21 with strong commercial buying supporting old crop contracts, while the deferred closed with sharp losses. USDA raised planted acreage to 77.5 million acres and production to 3.405 billion bushels, pressuring new crop beans. Precipitation in the Midwest is seen as negative to deferred contracts, as well.

USDA reported soybean export inspections pace for the week ending Feb. 15 at 40.4 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.079 billion bushels, compared with 835.8 million for last year at this time. Soybean export sales pace for the week ending Feb. 15 was estimated at -4.4 million bushels, bringing this year's total to 1.246 billion, compared with 1.040 billion last year at this time.

Barley

USDA estimated barley export inspections pace for the week ending Feb. 15 at 14,000 bushels. This brings the year-to-date export inspections estimate for barley to 5.62 million bushels, compared with 5.87 million last year. USDA reported export sales of 4,600 bushels and shipments of 23,000 bushels of barley.

Feb. 21 cash feed barley bids in Minneapolis were at $5.15 per bushel, with malting barley bids at $7.05.

Durum

USDA estimated durum export inspections for the week ending Feb. 15 at 126,000 bushels. USDA reported export sales of 100,000 bushels, putting the total sales so far at 16 million bushels, up from 15.1 million at this time last year. Shipments of 100,000 bushels also were reported. Cash bids for milling quality durum on Feb. 21 were at $7.80 per bushel in Berthold, N.D., and $7.75 in Dickinson, N.D.

Canola

Canola futures on the Winnipeg, Manitoba, exchange had gains of $10 to $15 (Canadian) per ton forlast week. The new crop market actually had the bigger gains, with similar performance seen in the soybean market. Weakening cash basis signaled that the futures rally may have run its course in old crop canola, but the new crop market still feels that it needs to secure acres for 2013 to replenish supplies.

Canola will need to close above $650 (Canadian) per ton in the March contract to continue the recent uptrend. Cash canola bids in Velva, N.D., were at $28.32 per hundredweight on Feb. 21.

Sunflowers

USDA reported export sales of 28.9 trillion metric tons of soybean oil, with shipments of 42 trillion metric tons. Total sales so far this year are at 804.3 trillion metric tons, way up from 267.8 trillion last year. Cash bids for NuSun sunflowers in Fargo, N.D., were at $22.50 per hundredweight on Feb. 21.