Grabanski: USDA report bearish
Wheat Wheat traded with gains last week, with most of the strength coming in the winter wheat exchanges. Winter wheat continues to get support from production concerns, not only in the U.S., but also worldwide. Positioning ahead of the Nov. 9 cro...
Wheat traded with gains last week, with most of the strength coming in the winter wheat exchanges. Winter wheat continues to get support from production concerns, not only in the U.S., but also worldwide. Positioning ahead of the Nov. 9 crop production report also was seen, as traders expect the U.S. Department of Agriculture to decrease world production and tighten world stocks significantly. This did not happen, as the only change in U.S. wheat numbers came in a 50-million-bushel reduction in exports, which followed through to increase stocks by the same. As for the world estimates, USDA only cut Argentina's production by 2 million metric tons. This led to an increase in world stocks of 1.18 million metric tons. For the week ending Nov. 8, December Minneapolis gained 18.25 cents, December Chicago gained 38 cents and December Kansas City was up 28.25 cents.
Wheat struggled to start the week, trading with gains for the early part of the session, but slipping to end officially mixed. Wheat was supported early in the session by thoughts that USDA's crop progress report will show declining conditions ratings for the Southern Plains winter wheat crop.
The Nov. 6 session opened with strength. Early support was a result of technical buying, as Nov. 5 sellers turned to buyers. Trading was thin, as most traders were sitting on the sidelines waiting to see election results. Late session strength was a result of another week of lower crop condition ratings.
Wheat traded with gains throughout the Nov. 7 session, as traders continue to price in concerns about production, not only in the Southern Plains but also in Australia. Traders are concerned about the dry condition in the Southern Plains, as it has resulted in poor emergence and low crop ratings for the U.S. winter wheat crop. Additional support was a result of position squaring ahead of USDA's November crop production report, which is expected to show decreasing wheat ending stocks.
Wheat traded with gains throughout most of the Nov. 8 session as traders continued to show concerns toward world wheat supplies. Almost every one of the major wheat exporting countries (U.S., European Union, Canada, Argentina, Australia and Black Sea) has had or is experiencing some sort of production issue. This has many traders convinced that USDA will cut world wheat stocks in November's report. Traders are not expecting much change in the U.S. estimates. The grains appear to be entrenched in trading ranges, with wheat and corn's trading range at 60 cents, while soybeans' range is closer to $1.
As of Nov. 4, 92 percent of the nations' winter wheat crop was planted, compared with 88 percent the previous week and 90 percent for the five-year average. Emergence was estimated at 73 percent, compared with 63 percent the previous week and 74 percent for the five-year average. Winter wheat conditions dropped 1 percent to 39 percent good to excellent, 42 percent fair and 19 percent poor to very poor.
Corn: USDA report negative
The December corn contract was unchanged for the week ending Nov. 8. Traders were cautious last week with the presidential election on Nov. 6 and the Nov. 9 USDA report. The report raised corns yield 0.3 bushels per acre to 122.3 bushels per acre and increased production 19 million bushels to 10.725 billion. Ending stocks were raised 28 million bushels to 647 million.
Corn closed slightly lower Nov. 5 and with small gains Nov. 6 and 7. Early week pressure came from an improving weather forecast in South America and another disappointing export inspection report. Corn closed slightly higher midweek. Additional support came from thoughts of a friendly report Nov. 9. Yield estimates are at 122 bushels per acre, unchanged from last month. Production estimates are at 10.65 billion bushels versus the October estimate of 10.7 billion. Additional support came from talk that the Argentina crop may be smaller as a result of excessive rain in October. The ethanol report was OK on Nov. 7, but stocks were lower and that has traders talking that demand has picked up. The spread between corn and wheat has also widened and that will keep wheat out of the feed rations.
The corn market was slightly lower Nov. 8 as traders positioned ahead of the USDA report. The strength in the wheat market offered support, but the disappointing export report limited the upside. The South American weather is also being watched and the 10-day forecast is favorable for planting and growing conditions.
Ethanol production for the week ending Nov. 2 averaged 827,000 barrels per day, which is up 0.25 percent versus the previous week, but down 9.2 percent versus last year. Total ethanol production for the week was 5.79 million barrels, up from 5.77 the week before. Corn used in production the week ending Nov. 2 is estimated at 86.8 million bushels. Corn use needs to average 86.5 million bushels per week to meet this crop year's USDA estimate of 4.5 billion. Stocks as of Nov. 2 were 18.14 million barrels, which is down 5.6 percent versus the previous week, but up 10.4 percent versus last year.
Corn that was harvested was 95 percent, compared with 85 percent one year ago and a five-year average of 71 percent.
Soybeans: election, report pressure
Soybeans struggled last week, mainly because of position squaring ahead of what is expected to be a negative USDA November supply and demand report. For the week ending Nov. 8, November soybeans were down 31 cents. The Nov. 9 USDA report was bearish, as yield and production were increased more than expected. Yield was at 39.3 bushels per acre, compared with 37.8 bushels per acre last month and expectations of 38.2 bushels per acre. Production was at 2.971 billion bushels, compared with 2.86 billion last month and expectations of 2.891 billion. The net result is a 10-million-bushel increase in ending stocks, now estimated at 140 million bushels, compared with expectations of 133 million.
Soybeans were lower throughout Nov. 5. Outside markets were weak because of uncertainties tied to the Nov. 6 election. Expectations that planting would pick up in South America as weather improves added pressure. Support came from continued strong Chinese demand. Nov. 5 export inspections were strong, but mostly ignored by the market.
The session had soybeans higher on renewed buying, as traders began to position ahead of the Nov. 9 USDA report. The export pace has been strong because of Chinese demand, while global supply remains tight. The outside markets were positive as well, with crude oil higher and the U.S. dollar lower.
Soybeans were lower Nov. 7 and 8 as a result of negative outside markets and positioning ahead of the Nov. 9 USDA report. Outside markets were negative, as the U.S. dollar was higher both days, while the Dow Jones fell more than 300 points on Nov. 7, followed by a 120-point drop on Nov. 8. A drop of more than $4 in crude oil on Nov. 7 pressured the market, as well. The Nov. 9 USDA report was expected to be bearish as traders anticipate a yield increase to 38.2 bushels per acre from 37.8 last month. Production is expected to be raised by 30 million bushels, but much of that could be offset by demand. Continued favorable South American weather places additional pressure on soybeans.
USDA reported soybean export inspections pace for the week ending Nov. 2 at 59.4 million bushels. This brings the year-to-date export shipments pace for soybeans to 369.6 million bushels, compared with 260.2 million for last year at this time. Soybean export sales pace for the week ending Nov. 2 was estimated at 6.8 million bushels, bringing this year's total to 953.1 million, compared with 702.7 million last year at this time.
Soybeans harvested as of Nov. 4 was at 93 percent, compared with 87 percent the previous week and the five-year average of 86 percent.
USDA left all of barley's November supply and demand estimate numbers unchanged. USDA estimated the barely export shipments pace for the week ending Nov. 2 at 1,000 bushels. This brings the year-to-date export shipments pace to 5.45 million bushels, compared with 5.5 million for last year at this time. There was no barley export sales reported for the week ending Nov. 2. This brings the year-to-date export sales pace to 5.6 million bushels, compared with 3.8 million for last year at this time. Nov. 8 cash barley bids in Minneapolis had feed barley bids at $5.50 per bushel, while malting barley bids were at $7.25.
USDA made no adjustments to durum's November supply and demand estimates. USDA estimated durum export shipments pace for the week ending Nov. 2 at 1.016 billion bushels, with most of the bushels heading for Algeria and Italy. Durum export sales pace for the week ending Nov. 2 was at 200,000 bushels. This brings the year-to-date export sales pace for durum to 12.5 million bushels, compared with 12 million for last year. Nov. 8 cash bids for milling quality durum were $8.25 per bushels in Berthold, N.D., while Dickinson, N.D., bids were at $8.30.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Nov. 8 with almost $3 (Canadian) losses. Canola traded back and forth all week starting by selling off hard on Nov. 5, gaining most of those losses back Nov. 6, then ending the week with minor changes. Most of the week's activity was focused on positioning ahead of the Nov. 9 crop production report. Nov. 9 cash canola bids in Velva, N.D., were at $27.40 per hundredweight.
As of Nov. 4, 88 percent of the nation's sunflower crop was harvested, compared with 82 percent for the previous week and 60 percent for the five-year average. Soybean oil export sales pace for the week ending Nov. 2 was estimated at 36.7 trillion metric tons, bringing the year-to-date total to 304.2 trillion, compared with last year's 108.1 trillion. With 47 weeks left in the soybean oil export marketing year, soybean oil exports need to average 5 trillion metric tons per week to make USDA's projection of 540 trillion. Nov. 8 cash sunflower bids in Fargo, N.D., were at $22 per hundredweight.