Markets continue to retreat
Wheat: winter wheat conditions remain poor Wheat opened and closed last week under pressure, but had decent gains in the middle of the week. Pressure came from the March 28 quarterly grains stocks estimate, while mid-week support was from product...
Wheat: winter wheat conditions remain poor
Wheat opened and closed last week under pressure, but had decent gains in the middle of the week. Pressure came from the March 28 quarterly grains stocks estimate, while mid-week support was from production concerns. For the week ending April 4, May Minneapolis and May Chicago were up 6.25 cents, while May Kansas City was off 5 cents.
Wheat opened and traded with minor losses to start the week. Losses extended into the session once the corn and soybean complex sold off. Pressure continued to come from the bearish quarterly grain stocks report. Additional selling was tied to expectations of improving conditions for the Southern Plains winter wheat crop, from recent rain.
The April 2 session opened and traded with minor gains. Early support came from technical buying, as all of the grains are oversold and in need of a correction. Wheat also had follow-through buying from the friendly April 1 crop progress report, which showed a 1 percent improvement in the U.S. winter wheat crop since the end of November.
Wheat traded higher throughout most of the April 3 session. Early support came from continued concerns about the condition of the U.S. winter wheat crop. Rain has been in the forecast for much of the Southern Plains, but so far, actual rain amounts and area of coverage has been disappointing. Traders are also concerned that current forecasts calling for cold weather could result in another potential frost event.
The April 4 session started good, but ended bad. Early support continued to come from production concerns. Light support was also a result of rumors that China was buying wheat. But as the session advanced, wheat slowly lost its gains. Spillover selling from a lower corn and soybean complex was the main pressure point. The U.S. Department of Agriculture's export sales estimate added pressure.
USDA's export inspections for wheat were estimated at 25.7 million bushels for the week ending March 29. This brings the year-to-date export sales pace for wheat to 792.5 million bushels, compared with 828 million bushels for last year at this time. Wheat export sales pace for the week ending March 29 was estimated at a combined total of 11.6 million bushels with 5.2 million old crop and 6.4 million new crop. This brings the year-to-date export sales pace for wheat to 934.5 million bushels, compared with 948.7 million for last year at this time. With 10 weeks left in the marketing year, shipments need to average 23.3 million bushels and sales need to average 9.1 million to make USDA's expectations of 1.025 billion.
As of March 31, USDA estimated the nation's winter wheat crop condition rating at 34 percent good to excellent, 36 percent fair and 30 percent poor to very poor, a 1 percent improvement from when wheat went into dormancy last November (33 percent good to excellent, 41 percent fair, 26 percent poor to very poor). This compares with 58 percent good to excellent for last year at this time. Oklahoma crop condition rating improved 1 percent to 27 percent good to excellent, 40 percent fair and 33 percent poor to very poor. Texas's crop condition rating declined 3 percent to 16 percent good to excellent, 35 percent fair and 49 percent poor to very poor. Kansas's crop condition rating improved 2 percent to 31 percent good to excellent, 40 percent fair and 29 percent poor to very poor.
Corn: increase stocks
The corn market traded under pressure last week, with pressure continuing to come from the quarterly grain stocks report. The freefall March 28 and April 1 was the largest two-day drop in the history of the market. USDA will give us its monthly supply and demand report this week and we should then see where all of the extra corn came from. For the week ending April 4, corn dropped 65 cents.
Corn opened the overnight session 20 cents lower and additional selling and long liquidation continued during April 1. Pressure came from the USDA report that showed 400 million bushels more corn than expected. This has created talk that ending stocks may now be raised to 900 million bushels in this week's USDA April crop production report.
The old crop contracts continued to trade under pressure the rest of the week, with technical selling and long liquidation the main feature. The weekly ethanol report was disappointing and news that weekly ethanol imports jumped to the highest level since mid-January did not help. The export sales were decent, but were offset with news that South Korea was buying corn from South America. The basis has also weakened with this freefall in the futures, which was not expected and is starting to show increasing available supplies of corn in the country.
The new crop months also traded under pressure, but have since stabilized. The new crop contract losses were limited from the late spring and forecasts that remain wet and cool for the next two weeks. Planting delays have also created talk that some corn acres may get switched to soybeans.
Ethanol production averaged 807,000 barrels per day, down 7.5 percent from last year. Corn used in production the week ending March 29 is estimated at 84.74 million bushels and needs to average 88.37 million bushels per week to meet this crop year's USDA estimate of 4.5 billion. Stocks were 17.48 million barrels, which is up 0.23 percent from the previous week and down 22.5 percent from last year.
USDA's export inspections report was friendly for corn, as there were 19.1 million bushels shipped. Shipments needed each week to hit the USDA export estimate are 17.9 million bushels. The export sales report for corn was at 13.9 million bushels, above the 9.9 million needed to meet USDA's projection of 825 million. Total shipments last week were at 22.3 million bushels and above the 17.6 million needed for the 2012 to '13 marketing year.
Soybeans: South American harvest pressures
The ongoing South American harvest and slowing Chinese demand pressured the soybean market. Add the recent bird flu outbreak, which puts in question future supply needs, and you have the making of a bear market. For the week ending April 4, soybeans dropped 32.75 cents.
Old crop soybeans closed near their lows April 1, while new crop soybeans posted small gains. The friendly acreage number on the March 28 report supported the new crop contracts, while sharp losses in corn and wheat spilled over to pressure the old crop. The April 1 export inspections estimate continued to trend above the amount needed to keep pace with USDA's projection.
Soybeans traded mixed April 2 before closing with small gains from a late round of buying. Crush margins remain mostly supportive and China continues to show some interest in U.S. soybeans to avoid lines in South American ports. The harvest in South America is beginning to shift to Argentina as Brazil's winds down.
Selling returned to the soybean complex on April 3 and 4, with a new low for the move coming April 4. Active selling is tied to the South American harvest, as it shifts to Argentina, while soybeans continue to flow out of Brazil. Questions about Chinese demand and improving U.S. soil conditions added pressure, while the bird flu outbreak in China contributes to further weakness. April 4 export sales were well above the amount needed to keep pace with USDA's projection.
USDA reported soybean export inspections pace for the week ending March 29 at 16.3 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.21 billion bushels, compared with 1.014 billion for last year at this time. Soybean export sales pace for the week ending March 29 was estimated at 27.5 million bushels (14.4 million for 2012 and 2013), bringing this year's total to 1.325 billion (20 million bushels short of USDA expectations for the year), compared with 1.165 billion bushels last year at this time. Shipments were reported at 17.4 million bushels.
USDA estimated barley export shipments pace for the week ending March 29 at 49,000 bushels with 13,000 bushels going to South Korea and 36,000 bushels to Mexico. This brings barley shipments for the year to 6.23 million bushels, compared with 6.34 million for last year at this time. No barley exports were reported. This brings the year-to-date export sales pace for barley to 6.1 million bushels, compared with 3.9 million for last year at this time. Cash feed barley bids in Minneapolis were steady at $4.90 per bushel, while malting barley bids remained at $6.25.
USDA reported durum export shipments pace for the week ending March 29 at 579,000 bushels, with all of the bushels going to Italy. Durum export sales pace was estimated at a negative 700,000 bushels (cancellation). This brings the year-to-date export sales pace for durum to 17.2 million bushels, compared with 16.5 million for last year at this time. April 4 cash bids for milling quality durum was steady at $7.75 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $7.70.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending April 4 with $14.70 (Canadian) losses. Canola traded back and forth to start the week, but dropped lower on April 3 and 4 to establish the week as a week of losses. Early support came from planting concerns, as canola acreage is expected to be much lower than last year in both the U.S. and Canada. Late in the week, pressure was from spillover selling from the U.S. soybean complex, as well as from concerns that South American soybean exports will soon overrun the world. April 4 cash canola bids in Velva, N.D., were at $27.48 per hundredweight.
USDA estimated soybean oil export sales pace for the week ending March 29 at a negative 4.6 trillion metric tons (cancellation). This brings the year-to-date export sales pace for soybean oil to 813 trillion metric tons, compared with 331.3 trillion for last year at this time. April 4 cash sunflower bids in Fargo, N.D., were at $22.10 per hundredweight.