Wheat
Wheat opened the week with losses, trading with red numbers throughout the day. The ongoing debt crisis in Europe resurfaced, this time in Italy. This sparked a rally of almost a full point in the dollar index, putting heavy pressure on the export-dependent wheat market. In addition, improved crop prospects in the Black Sea region will serve to pressure the export business even more.
The July 12, session wheat opened with small gains but the winter wheat contracts rallied throughout the day. Minneapolis wheat failed to follow along once again, finishing with mixed trade. It appears that traders may be sitting on the sidelines in Minneapolis, waiting for the acreage resurvey. Strong gains in the corn market helped the winter wheat contracts, especially in Chicago, where the wheat currently is priced as feed wheat. The retreat in the dollar index helped the wheat market. The USDA supply and demand report was somewhat bearish for wheat, with small increases in global ending stocks and higher production for 2011 to '12, while there were small cuts in domestic ending stocks for 2011 to '12. Next month's report should give us better numbers to work with after the acreage resurvey.
Wheat traded with strong gains July 13 with support spilling over from the gains in the other grains. It was evident that wheat is playing a follower role as Chicago continues to be the leader in the wheat exchanges. Chicago wheat has regained its premium to corn and now is unwilling to give that premium back.
The July 14 session saw wheat start mixed with Chicago under pressure from technical selling while the Kansas City and Minneapolis markets traded with small gains. The hard wheats were supported by concerns for supplies of high-quality wheat because of drought, reducing the size of the winter wheat crop. Wet conditions have reduced the amount of acres in spring wheat country. Additional selling pressure for the Chicago market came from reports that Russia's wheat crop could be bigger than expected, now estimated at 90 million metric tons, up from previous estimate of 85 million metric tons.
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Corn
For the week ending July 14, corn ended higher, with September corn up 41.25 cents while December gained 41 cents. The driver this week came from a friendly USDA report. The weather forecast also is being closely watched as this year's crop starts to pollinate.
To start the week, corn closed mixed. Corn was most influenced by positioning ahead of July 12's report, with expectations USDA will increase its inventories and acres. Export inspections also came in under estimates, adding pressure.
July 12, corn traded with strength for the entire session with support coming from a friendly USDA crop production report. The U.S. ending stocks for 2010 to '11 were estimated at 880 million bushels, vs. 730 million bushels in June, but below expectations of about 965 million bushels.
For the 2011 to '12 season, ending stocks were estimated at 870 million bushels, up from 695 million bushels in June, but below trade expectations near 1.095 billion bushels. This results in a 6.4 percent stocks to usage ratio, which is above last year and above June's estimate, but still is the second-lowest since 1995 to '96. Yield was left unchanged from June at 158.7 bushels per acre. Planted acres were revised, up 1.6 million acres to 92.3 million acres, and harvested acres were up 1.7 million acres to 84.9 million acres. As a result, production came in at 13.47 billion bushels, up 270 million bushels from June. Usage for feed, (up 50 million bushels), ethanol (up 100 million bushels) and exports (up 100 million bushels) all were revised higher and helped to offset the larger estimated production. World ending stocks for the 2011 to '12 season came in at 115.66 million metric tons, up from 111.89 million metric tons in June, but down from 120.88 million metric tons for 2010 to '11. This results in a 13.2 percent world stocks to usage ratio, which still is the tightest since 1973. South Korea also purchased 110,000 metric tons of U.S. corn and another 233,000 metric tons were sold to an unknown destination.
The July 13 session had corn trading with strength for the session and ending the day with strong gains. Corn found support from the outside markets and July 12's friendly USDA report. Weather concerns also supported the market, as the forecast calls for a hot and dry weather pattern for the next two weeks through the Corn Belt.
July 14, corn traded with small losses. The market saw some profit taking after the last two strong upward-moving days. Weather continues to be closely watched and supported the market toward the end of the session.
Ethanol production for the week ending July 8 averaged 872,000 barrels per day. This is down 32,000 barrels per day vs. last week and up 51,000 barrels per day vs. last year. Total ethanol production for the week was 6.104 million barrels, down 224,000 barrels vs. last week and up 357,000 barrels vs. last year. Corn used in last week's production is estimated at 91.56 million bushels. This crop year's cumulative corn used for ethanol production for this crop year is 4.15 billion bushels. Corn usage needs to average 116.16 million bushels per week to meet this crop year's USDA estimate of 5.05 billion bushels. Stocks as of July 8 were 18.775 million barrels. This is up 222,000 barrels vs. last week and down 899,000 barrels vs. last year.
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Soybeans
The soybean market traded mixed to start the week because of position squaring ahead of USDA's July crop production report but firmed late in the week because of the report's friendly numbers. For the week ending July 14, August soybeans improved by 32.25 cents while new crop November soybeans increased 37.5 cents.
Soybeans opened the week mixed. Outside markets put pressure on the grains with sharply higher trade in the dollar index and weak energy markets, but corn and soybeans were able to fight off most of the negative influence. Traders likely will hold a weather premium in this market through August as there is little room for error in 2011 production because of tight ending stocks. USDA announced a sale of 110,000 tons of soybeans to China, affirming traders that demand still is there despite the disappointing export inspections report.
Soybeans opened the July 12 session with small gains and had mixed trade during the day before the strong gains in the corn market spilled over to help the soybean market finish with gains. Outside markets turned supportive during the day, which helped the grain contracts trade higher. The USDA supply and demand report was neutral to bearish for soybeans, but the sharply higher trade in the corn market and supportive outside markets helped soybeans. USDA is estimating old crop soybean ending stocks at 200 million bushels, slightly above expectations and above June's 180 million bushels.. New crop ending stocks of 175 million bushels also were above expectations but below June's 190 million bushels. There also were small increases in global ending stocks.
Soybean's traded with strength throughout the session July 13 following the lead from the corn market. Support also came from news that China was going to aggressively take measures to slow food inflation. This will result in China buying more commodities from the U.S., such as pork and soybeans.
The soybean market ignored the performance of the other grains and traded higher throughout the session July 14. Early support for the soybean market was because of weather forecasts that still are calling for a hot and drier spell of weather for the major growing regions of the U.S. Weather forecasts are calling for temperatures to be in the 90s to 100s through much of the U.S. midsection, and that has traders somewhat concerned. It seems to be a little early to be worrying about soybean production now, as August is more important month for soybeans than July.
Barley
USDA lowered projected 2011 to '12 ending stocks for barley by 9 percent to 62 million bushels. Ending stocks were 119 million bushels two years ago.
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Cash barley bids in Minneapolis for feed barley are $5.30 while malting barley bids are $7.80.
Durum
USDA is estimating 2011 durum production at 63.7 million bushels, down more than 40 percent from 107.2 million bushels last year.
July 14 cash bids for milling quality durum were at $14 in Berthold, N.D., while bids in Dickinson, N.D., were $13.60.
Canola
Canola futures on the Winnipeg, Manitoba, exchange closed over $15 (Canadian) higher. The canola market was supported by spillover support from a stronger U.S. soybean market as well as from slow farmer selling in the wake of improving export demand because of a declining Canadian dollar. Additional support came from USDA's July crop production report. USDA is estimating 2011 U.S. canola acreage at 1.14 million acres, down from 1.45 million last year.
July 14 cash canola old crop bids in Velva, N.D., were at $26.51 with new crop September bids at $26.28.
Sunflowers
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USDA is estimating 2011 U.S. sunflower acres at 1.86 million acres, down from 1.95 million acres last year.
July 14 cash old crop sunflower bids in Fargo, N.D., were at $36.25 while new crop bids were at $28.20.
Dry beans
USDA is estimating 2011 U.S. dry bean acreage at 1.26 million acres, down 34 percent from last year's 1.91 million acres. The weekly market report from USDA is reporting bids of $30 to $33 for pintos, $32 to $35 for blacks and $32 for navies in the North Dakota-Minnesota region. Buyers are watching the weather conditions in the region, with late planting and wet weather putting the pinch on 2011 production.
