Markets: Selling returns in July
Wheat Wheat struggled again last week, but at least it had a few stronger sessions. For the week ending July 30, September milling wheat dropped 18.25 cents, September Chicago dropped 15.25 cents and September Kansas City dropped 16.25 cents. Sep...
Wheat struggled again last week, but at least it had a few stronger sessions. For the week ending July 30, September milling wheat dropped 18.25 cents, September Chicago dropped 15.25 cents and September Kansas City dropped 16.25 cents. September milling wheat dropped $1.11, September Chicago dropped $1.19 and September Kansas City dropped $1.19 for the month.
The week started off how it ended, with wheat trading with losses. Early selling spilled over from a disappointing export inspections estimate, which continues to show limited demand for U.S. wheat in the export market. Wheat did try and make a recovery at one point mainly with support from a sharply lower U.S. dollar. Weather forecasts continue to be negative as warm, dry weather is suppose to dominate most of the U.S. major growing regions. This should help push winter wheat harvest and allow for the spring wheat crop to mature with little issues.
For the week ending July 30, wheat traded with gains. It was a true turnaround July 28 as this was the only session wheat traded with gains. All three of the exchanges managed to shake off the bearish sentiment and trade with gains with early support spilling over from the stronger soybean complex. Technical buying was also evident as wheat remains oversold and ripe for a correction.
July 29 and 30 brought more selling pressure, with most of the selling tied to bearish fundamentals. Selling was tied to improving growing conditions in much of the major wheat producing regions of the U.S. Winter wheat harvest has about wrapped up in the Southern Plains, and weather conditions are drying up to allow for soft red wheat to be combined. Warm, dry conditions are also helping push the spring wheat to harvest. The Spring Wheat Quality Tour is taking place, and reports have yields at or near 21-year highs. Most of the field reports have the spring wheat crop at a potential record. This will certainly limit upside potential. Technically, wheat is ready for a correction; fundamentally, it is not.
July 30 ended with mixed support coming from U.S. Department of Agriculture’s friendly export sales report. This was one of the strongest weekly sales estimates for wheat, and that helped keep the market firm early in the session. Late session pressure came from a sharply higher U.S. dollar, as well as from reports from the Spring Wheat Quality Tour of potential record breaking yields in much of North Dakota.
For the week ending July 26, 2 percent of the nation’s spring wheat crop was harvested, compared with zero the previous week and 5 percent for the five-year average. Spring wheat’s crop condition rating increased 1 percent to 71 percent good to excellent, 22 percent fair and 7 percent poor to very poor. Winter wheat harvest was estimated at 85 percent complete, compared with 75 percent the previous week and 80 percent for the five-year average.
For the week ending July 30, corn futures struggled again and had the largest monthly drop in four years. Selling pressure remained in place, with favorable weather to end pollination and the crops condition has improved. Traders will continue to monitor the weather and will start to focus on the next monthly USDA supply and demand and production report on Aug. 12. As of the July 30 close, the December contract lost 19 cents for the week and 48 cents for the month.
Corn traded lower July 26 and selling pressure remained in place July 27 with fund long position liquidation. Additional weakness came from the good weather and better-than-expected rain in the West. Traders were also looking ahead to the crop condition report and ratings were expected to remain at least steady with a possible slight increase. The report did show a 1 percent increase in the good to excellent category that came from the fair, while the crop is rated at 70 percent good to excellent, and above the five-year average at 64 percent. The futures did close with 2-cent gains July 28, with the strength in the soybean and wheat markets, but selling pressure increased on July 29. The market lacks any buying interest, with ideal weather to end pollination with light rain into the weekend and moderate temperatures around the country. The fund long liquidation into the end-of-the-month squaring continues to add pressure. The ethanol report also showed corn use down and stocks up from the previous week, while margins remain under pressure with the recent weakness in the crude oil and gas markets. Demand remains quiet and corn is cheaper in South America and the Ukraine, with reports of corn being shipped to the U.S. from Brazil.
Corn traded slightly higher July 30, and remained there into the close. Early support came from a good export sales report that now exceeds USDA’s estimate for the year, while the question is if it all will be shipped. There was also some short covering and light fund buying that offered support. The futures were quiet July 31, and traded slightly lower.
For the week ending July 26, the crop was rated 70 percent good to excellent, 21 percent fair and 9 percent poor to very poor. Silking was 78 percent, compared with 75 percent one year ago and 77 percent for the five-year average. Corn in the dough stage was 14 percent, compared with 15 percent one year ago and 17 percent for the five-year average.
For the week ending July 30, November soybeans were 15 cents lower for the week. For the week ending July 31, November soybeans were down 7.5 cents. As of close July 30, November soybeans were down 87.25 cents for the month, the largest monthly decline in four years.
Soybeans traded lower July 27, with concerns about the Chinese economy putting widespread pressure on commodities. Commercial buying has provided support to the market lately, but had no answer for the July 27 noncommercial selloff. The losses continued throughout the day with new contract lows being hit late in the session. The July 27 export inspections report was weak, coming in below the amount needed to keep pace with USDA’s projection.
Soybeans closed higher July 28, recovering about one third of the July 27 sharp sell-off. The July 27 Crop Progress report showed soybeans blooming and setting pods within a couple of percentage points of the five-year averages. Crop ratings were virtually unchanged, with no movement except for 1 percent moving from good to excellent. Good weather for continued crop development will continue to pressure soybeans, as will ongoing concerns about China’s economy. Profit taking provided some support July 28.
Soybeans traded higher on July 29, with commercial buying responding the prices down about $1 in the past two weeks. Trade chipped away at the gains throughout the day though, eventually finishing with small losses in the November contract. Concerns about China’s economy continue to weigh on the market, as does weak corn and crude oil trade. The weather forecast is keeping the lid on prices, as well, with the forecast remaining nonthreatening and favorable for crop development in the near term.
Soybeans finished higher July 30, with commercial buying providing support. Demand has remained strong for soybeans despite strength in the U.S. dollar and recent concerns about a possible slowdown in the Chinese economy. Tighter supplies of old-crop soybeans has helped to support the front month August contract as it approaches delivery. For the week ending July 31, export sales were strong, adding 15.3 million bushels to a total that has already far exceeded USDA’s current projection for the year. In addition, another sale was announced July 31, this time for 140,000 metric tons of new-crop soybeans to unknown destinations.
For the week ending July 26, soybeans blooming was at 71 percent, compared with 56 percent the previous week and the five-year average of 72 percent. Soybeans setting pods was at 34 percent, compared with 17 percent the previous week and the five-year average of 31 percent. Soybean condition ratings were at 62 percent good to excellent, 27 percent fair and 11 percent poor or very poor.
For the week ending July 26, the barley harvest was 5 percent complete, compared with the five-year average of 3 percent. Barley conditions were rated at 69 percent good to excellent, 25 percent fair and 6 percent poor to very poor.
For the week ending July 30, cash feed barley bids in Minneapolis were at $2.45, and there was no bid for malting barley.
For the week ending July 24, USDA reported the durum export inspections pace at 1.57 million bushels. Durum export sales were reported at 1.2 million bushels. This brings the year-to-date export sales pace for durum to 12.2 million bushels, compared with 6.1 million bushels last year at this time.
For the week ending July 26, cash bids for milling quality durum were at $8.75 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was at $8.50 per bushel.
For the week ending July 26, the November canola contract lost $10.10 to $498.70 (Canadian). Canola started the week with sharp losses July 27, tied to improving weather in the western part of Canada and concerns about the Chinese economy. Trade was mixed July 29 and 30, and brought another round of gains following thunderstorms in western Canada.
For the week ending July 30, cash canola bids in Velva, N.D., decreased 38 cents to $16.19 per hundredweight.
For the week ending July 24, USDA estimated the export sales pace for soybean oil at 74.8 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 853.5 thousand metric tons, compared with 795.2 thousand metric tons for last year.
For the week ending July 30, August soybean oil futures were 20 cents lower to $30.28. Cash sunflower bids in Fargo, N.D., were at $21.30.