Grains stage strong rally
Wheat Wheat started the week higher with most of the early support coming from spillover buying from April 11's higher session. Wheat followed the other grains higher in the overnight session and that helped to encourage early session buying. But...
Wheat started the week higher with most of the early support coming from spillover buying from April 11's higher session. Wheat followed the other grains higher in the overnight session and that helped to encourage early session buying. But once the corn and soybean markets started to struggle, the selling spilled over to wheat as well. USDA's export inspections report was friendly to wheat, but it was not friendly enough to help wheat hold gains without some help from some other source. Spring wheat seeding has started to take place so traders are starting to try and put in some sort of risk premium back into wheat so that did help to encourage some buying. The wheat market started the session on the defense April 13 with much of the selling tied to the April 12 crop progress report. USDA is rating the winter wheat crop at an impressive 65 percent good/excellent, which was unchanged from the week before. But the wheat markets were not to remain under pressure all session. Strength from the soybean complex spilled over to help the wheat trim losses and once the market traded to old technical resistance levels, more buy orders were hit accelerating the gains. Fund short covering and profit taking was noted as well. A lower dollar helped to support both the soybean complex and wheat exchanges.
Midweek had the wheat starting the session with modest gains as it followed the other grains higher. Additional early support was a result of spillover strength from a weaker U.S. dollar. Weakness in the dollar entices export demand to the U.S. as it makes U.S. products cheaper. So far. the value of the dollar has not had a big influence on exports, but in theory, it usually does. Just as was the chance for soybeans, corn led the charge, spilling over to help support wheat. The wheat exchanges were not able to hold onto its gains as a late round of selling pushed corn off of its highs and a buying spurt moved into the dollar to help cut its losses. Both of those events cut into the wheat exchanges, pushing them lower on the close.
The April 15 session had wheat starting sloppy and with little direction. It appeared that wheat was going to be the weak link in the grains, but a rally in the corn and soybean complex changed that. Abundant wheat supplies and the thought that stocks will get nowhere near being tight for at least a year has been keeping the wheat market on the defense and limiting gains. But if the other grains are going to stage a rally, wheat will follow. Most of the strength was technical in nature as there is no supportive news for wheat on the fundamental side. USDA's export sales report was slightly supportive and did help support the wheat.
USDA is estimating wheat's export pace for the year at 865 million bushels. With seven weeks left in wheat's marketing year (starts June 1), to make USDA's projections, wheat shipments will have to average 19.8 million bushels per week and the export sales pace needs to average 10.5 million bushels per week.
To start the week, the corn market opened 4 cents higher with the higher overnight market and the lower dollar. The market did back off to 1 cent higher at midday, but the corn firmed up into the close at 2.5 cents higher. The dollar remained weak for the day and that supported the corn market. The market also is looking at the weather forecast for some direction. Good field conditions and a mostly favorable weather forecast limited upside movement. The export inspection report also was bearish for the corn market to also limit upside. The first crop progress report for corn was released stating 3 percent of the corn was planted, with 2 percent complete one year ago.
The corn market opened 2 cents lower and traded there until midsession, at which time it moved into positive territory and closed 4 cents higher. The market traded lower early in the day with the lower overnight trade and the bearish outside markets. Corn did firm up at midday with the strength in the soybean and wheat markets. Also, there is limited farmer selling and buying interest came into the market at the close.
USDA did release its first crop progress report April 12 with the results coming in just below the estimates for percentage planted. This report will give the market more direction as we go through spring. The weather also will play a vital part in making the corn market move.
The corn market opened 3 cents higher April 14 with a higher overnight trade. By midsession, the market bounced to 10 cents higher then came back to close with 5.5-cent gains. The crude oil market traded $2 higher and supported the market early. There also was some speculative and commercial short covering to give the market a push. Additional news was that a major commercial might cancel some corn receipts that were previously registered for delivery. These items were all supportive as there continues to be a lack of farmer selling.
The corn market opened 1 cent higher April 15 and traded with green numbers for the day. The market did close 5 cents higher on the day as outside money rolled into the market. Lack of farmer selling and good export sales also were supportive. Also, rumors continue to circulate about China importing corn, but are not yet confirmed. This has been a nice push as we have hit three-week highs in the corn market. Soybeans
Soybean's started the week higher with most of the early support coming from spillover strength from a higher overnight session. News that China was in overnight and purchased old crop soybean helped to support the soybean complex. By midsession, the soybean complex had a reversal of sorts as the old crop contracts remained firm, but the deferred contracts lost ground. Bull spreading returned and is working as old crop tight supply concerns remain while traders seem to be a little more comfortable with the new crop supplies. USDA's export inspections report was friendly as it is continuing to show decent old crop demand.
The soybean complex traded higher April 13 with most of the early buying centered on thoughts of tight supplies. Bull spreading was again the focus of traders attentions early in the session, but as the session matured, the new crop contracts gained ground and ended higher than the front months. The soybean complex rallied up to and closed at or near resistance levels. At this point, it is going to be interesting to see if the soybean complex can trade through these levels or if technical pressure will step back in and force the soybean back lower. Reports out of Brazil has harvest progress at 81 percent complete with producer selling estimated at 42 percent. A rumor has officials in Brazil cutting the potential size of their crop because of lower yields of the late harvested soybeans.
The soybean complex started April 14's session higher, slipped to post small losses and rallied to post decent gains, only to lose those gains to end the session steady to slightly higher. Bull spreading was the main focus of trader's attentions early in the session but just as was the case yesterday, diminished as the session proceeded. The front months were supported by continued concerns toward old crop demand while the new crop months were supported by production uncertainty.
The soybean complex struggled at the beginning of the April 15 session with most of the early support coming from supply concerns while the selling was tied to a stronger U.S. dollar. But within the first hour of the session, the soybean complex rallied with most of the months breaking convincingly above resistance levels by the close. The soybean complex flirted most of the morning with resistance levels as the market looked for strength to break above the highs that we have not been able to break above since early Jan 2010. That is until the afternoon session. The soybean complex traded up to the resistance level, triggering buy stops, which accelerated the soybean complex to 14 to 15 cent gains. This forced weak traders to start to liquidate positions, which only encouraged more buying. A second close in this region could result in further strength in the next week.
USDA is estimating soybean exports at 1.445 billion bushels. With 20 weeks left in the soybean export marketing year (starts Sept 1), soybean shipments will have to average 8.9 million bushels per week and export sales pace will have to average 4.75 million bushels per week.
Cash feed barley bids in Minneapolis are at $2.00.
USDA reported last week's durum shipments at 1.098 million bushels with 780,000 bushels headed for Italy. There was no durum export sales reported for last week. This brings the year-to-date export sales total for durum to 36.2 million bushels compared with 16.5 million bushels for this time last year. USDA is projecting durum's 2009 export pace at 50 million bushels.
Canola futures on the Winnipeg, Manitoba, futures closed the week ending April 15 steady. Most of canola's direction for the week was in reaction to the direction that either the Canadian dollar or U.S. soybean complex traded. The canola market started the week lower with much of the pressure tied to a stronger Canadian dollar with additional pressure coming from rain in much of the driest areas of Canada. The canola market was able to recover its losses and trade higher with much of the strength coming from strength in the U.S. soybean complex as well as from rumors of new potential export business. But those gains were quickly removed on the fact that those rumors of improving demand could not be confirmed.
The April 15 cash canola bids in Velva, N.D., decreased 3 cents to $17.05.
Cash sunflower bids April 15 in Fargo, N.D., were $13.70.