Improving weather and negative report
Wheat Wheat stumbled last week with pressure coming from improving weather conditions, as well as from advancing harvest activity. Additional pressure came from the U.S. Department of Agriculture's crop production report, which showed higher prod...
Wheat stumbled last week with pressure coming from improving weather conditions, as well as from advancing harvest activity. Additional pressure came from the U.S. Department of Agriculture's crop production report, which showed higher production. For the week ending June 13, July Minneapolis dropped 7.75 cents, September Minneapolis dropped 10 cents, July Chicago dropped 10.75 cents and July Kansas City gave up 16.5 cents.
Wheat opened and traded lower to start the week. Harvest progress combined with spill-over selling from the lower corn market to push the winter wheat exchanges lower. A disappointing export inspections estimate added to the pressure. Planting concerns helped limit losses in the Minneapolis exchange.
Wheat traded flat June 11. The trade seemed to be in a tug of war between
the friendly crop progress report (which showed another weekly decline in winter wheat conditions, as well as continued slow planting progress for spring wheat) and position squaring ahead of USDA's crop production report.
Report day had wheat struggling. Wheat opened lower as a result of position squaring ahead of USDA's June crop progress report, but then accelerating to the down side after the numbers were released. The report was not bearish for wheat, as production estimates for winter wheat were only slightly higher than expectations. It seems hard to believe that all winter wheat production should increase for as much as the Southern Plains have been under drought conditions.
The June 13 session traded lower to start, with early selling tied to a bearish export sales estimate. Additional pressure spilled over from the weaker corn and soybean complex. Late in the session, traders turned to be buyers, as the market neared support levels. Additional support came from continued production concerns, as yield results out of the Southern Plains continue to be less than expected, as well as from reports of idle planters in the Northern Plains from wet soil conditions.
As of June 10, 87 percent of the nation's spring wheat crop was planted, compared with 80 percent the previous week and 96 percent for the five-year average. Seventy-one percent of the nation's spring wheat was emerged, compared with 61 percent the previous week and 89 percent for the five-year average.
Spring wheat's crop condition rating is at 62 percent good to excellent, 31 percent fair and 7 percent poor to very poor, 2 percent lower than the previous week. Winter wheat harvest is estimated at 5 percent complete, compared with zero the previous week and 16 percent for the five-year average. Winter wheat's crop condition rating is at 31 percent good to excellent, 27 percent fair and 42 percent poor to very poor, a decline of 1 percent from the prevoius week.
USDA's June crop production report made a few adjustments to the 2012 crop estimates. For 2012, USDA cut wheat exports by 15 million bushels, which increased ending stocks to 746 million bushels. For the 2013 crop year, USDA increased the wheat yield by a half a bushel per acre, which increased production 23 million bushels. This added to the 15-million-bushel increase in beginning stocks increased wheat supply by 38 million bushels to 2.956 billion.
The increase in supply was completely offset by an increase of 50 million bushels to wheat exports. The net result was an 11-million-bushel decrease in ending stocks, now estimated at 659 million bushels, and a 10-cent increase in average price, now estimated at $6.90. World wheat numbers were friendly, as old crop stocks were trimmed to 179.9 million metric tons, compared with expectations of 180.4 million and 180.2 million in May.
Corn: larger stocks
Corn was under pressure, with selling tied to a bearish USDA report. USDA increased old crop stocks while lowering new crop estimated stocks, but the decrease was not as much as analysts predicted. Part of the increase in old crop stocks came from a reduction in exports (if realized, it would be the lowest level since 1969 and 1970 at 612 million bushels). For the week ending June 13, July lost 23 cents and December was down 22 cents.
Corn traded choppy the first two days of last week, as traders looked ahead to the crop progress and crop production reports. Futures were lower on June 10, as less rain fell over the weekend than expected. The export inspections were also disappointing and that added additional weakness. The market rebounded on turn around June 11. Support came from the 4.8 million acres of corn that remains to be planted, with most of these acres in Iowa, Minnesota, Wisconsin and North Dakota. There is talk that these acres will remain unplanted, as the insurance deadline has passed.
The futures were under pressure June 12 from a negative USDA crop production report. The report was considered negative for the market after U.S. ending stocks for 2013 to '14 were estimated at 1.949 billion bushels, which was only slightly lower than 2.004 billion bushels in May, and up from trader estimates of 1.795 billion.
Planted acreage was left unchanged at 97.3 million acres (harvested acres at 89.5 million). USDA cut the national yield down to 156.5 bushels per acre versus 158 million in May. The 2012 to '13 ending stocks were raised 10 million bushels to 769 million. Old crop stock estimates were realized by an increase in imports and ethanol usage, while exports were lowered. World ending stocks came in at 151.83 million metric tons for the 2013 to '14 marketing year, down slightly from the May estimate of 154.63 million metric tons.
Brazil and Argentina production remained unchanged at 72 million metric tons and 27 million metric tons respectively. World production came in slightly lower at 962.58 million metric tons versus the May estimate of 965.94 million. The ethanol report was supportive to the front months and stocks are down to numbers last seen in 2009. Selling pressure continued on June 13 from the negative USDA report.
Soybeans struggled last week as farmers resumed planting. Additional pressure came from rumors that China was continuing to cancel previous soybean purchases. USDA's June crop production report was a negative to soybeans, as stocks came in higher than traders were expecting. For the week ending June 13, July soybeans were down 18.5 cents, while November was 29.75 cents lower.
Soybeans closed lower and near the middle of the day's trading range on June 10 ahead of USDA's crop progress report. Soybean planting progress of 71 percent and emergence of 48 percent were both near expectations. More favorable weather in the coming weeks should help some areas, while additional precipitation in already wet areas will continue to hinder planting. June 10 export inspections were below the amount needed to keep pace with USDA's projection.
The June 11 session posted gains as traders were squaring positions ahead of the June 12 USDA report. The June 10 crop progress report was somewhat supportive with planting progress behind the average pace and at the low end of pre-report expectations. Tight old crop supplies and more rain in the forecast for already wet areas provided additional support.
Soybeans traded sharply lower June 12, after the release of the USDA's June World Agriculture Supply and Demand report before climbing off the lows to close near the middle of the day's trading range. The report is seen as neutral against expectations for soybeans, but more negative for corn and wheat, which pressured the market. U.S. old crop ending stocks were unchanged at 125 million bushels, in line with expectations. U.S. new crop ending stocks were also unchanged at 265 million bushels, below average trade expectations of 273 million bushels.
Old crop world ending stocks came in at 61.2 million metric tons, below 62.5 million last month and the average trade prediction of 62 million metric tons. New crop world ending stocks were at 73.7 million metric tons, below last month's 75 million and the trade prediction of 74.2 million. Soybean crush and export numbers were unchanged from the May report.
Profit taking and continued questions about soybean planting was the main feature June 13. There was little rain on the weather map, allowing some planting, which pressured new crop contracts. Questions persist as it is difficult to predict soy acreage this year because of wet conditions and significant unplanted corn acreage. June 13 export sales were considered bullish, coming in within pre-report expectations.
As of June 9, 88 percent of the nation's barley had been planted, compared with 83 percent the previous week and 96 percent for the five-year average. North Dakota producers have 68 percent of their barley planted, compared with 58 percent the previous week and 92 percent for the five-year average. This means there are still 300,000 acres left to plant in North Dakota. Barley emergence was estimated at 78 percent, compared with 62 percent the previous week and 88 percent for the five-year average. Barley's crop condition rating is estimated at 63 percent good to excellent, 32 percent fair and 5 percent poor to very poor.
As of June 9, 78 percent of North Dakota's durum crop was planted, compared with 54 percent the previous week and 85 percent for the five-year average. Durum emergence was at 55 percent, compared with 30 percent the previous week and 74 percent for the five-year average. Durum's crop condition rating was estimated at 85 percent good to excellent, 14 percent fair and 1 percent poor, unchanged from the previous week.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending June 13 with almost $21 (Canadian) losses. Canola traded with significant losses every session except June 11, which saw support from technical buying, as traders corrected an oversold market condition. The rest of the week was spent in negative territory, with the main pressure point spilling over from a lower U.S. soybean complex (which was under pressure from news that China canceled another two to three cargos of South American soybean purchases).
As of June 9, 39 percent of North Dakota's dry bean crop had been planted, compared with 22 percent the previous week and 83 percent for the five-year average. North Dakota's crop condition rating was at 42 percent good to excellent, 36 percent fair and 22 percent poor to very poor.
Minnesota producers reported planting progress at 75 percent complete, compared with 44 percent the previous week and 89 percent for the five-year average. Nebraska producers reported planting progress at 62 percent complete, compared with 57 percent for the five-year average.