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Outside markets pull grains down

Wheat Wheat opened the week lower and tried to rally but slipped to end lower. Wheat traded with decent strength early because of continued concerns toward planting progress in the Northern Plains and from drought concerns in the Southern Plains....

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Wheat

Wheat opened the week lower and tried to rally but slipped to end lower. Wheat traded with decent strength early because of continued concerns toward planting progress in the Northern Plains and from drought concerns in the Southern Plains. Wheat sold off the second half of the session as pressure spilled over from the lower corn market.

May 3, wheat opened higher. Strength was because of the May 2 USDA crop progress report. The report continued to show poor planting progress -- only 4 percent of the nation's spring wheat was planted -- and another week of declining crop ratings for the Southern Plains. Wheat slipped lower with late session pressure from a lower soybean complex. By the close, Kansas City wheat was able to rally to end with strong gains while the other exchanges ended mixed.

By midweek, wheat opened and traded with double-digit losses. Wheat opened lower than expected at the gate and extended losses from there. Early losses were because of improving weather forecasts for the Northern Plains. The Wheat Quality tour's first day of observations, which were for the north-central and northwest regions of Kansas, averaged 40 bushels per acre, which compares with the 40.7 bushels per acre from last year. Part of wheat's pressure was because of pressure from another rough day in the metals and energy markets.

The May 5 wheat market started on the defense with pressure coming from a disappointing export sales report. Additional pressure was because of selling from the other grains as well as from the outside markets. The energy sector as well as the metals market has been under extreme pressure, losing almost 10 percent of their value per day. This has spilled over, causing traders to liquidate all positions in an attempt to cover margin calls. The market seems to be willing to ignore the fundamental news and is focusing more in the flow of money. Technical wheat is at support.

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USDA reported last week's wheat export inspections pace at 36.4 million bushels. This brings the year-to-date export shipments pace for wheat to 1.129 billion bushels compared with 779.1 million bushels last year at this time. Last week's wheat export sale pace was estimated at a combined total of 20.2 million bushels with 10.1 million bushels being old crop and 10.1 million bushels being new crop. This brings the year-to-date export sales pace for wheat to 1.285 billion bushels compared with 809.1 million bushels last year at this time. With only four weeks left in the marketing year, wheat shipments need to average 36.5 million bushels to make USDA's projection of 1.275 billion bushels. Wheat's export sales pace has exceeded USDA's projection.

Corn

To start the week, corn opened lower and closed sharply lower. Dry weather is forecast for the Western Corn Belt this week, and that may open a window for an opportunity to get some corn in the ground. Below normal temperatures and above normal rainfall is forecast for the Eastern Corn Belt, and that did offer some support to the new crop months. There also was some unwinding of old crop vs. new corn crop spreads and technical selling in the front months.

May 3, corn traded lower in the old crop months but firmer in the new crop months. The old crop contracts were pressured from noncommercial long liquidation and fund selling. New crop contracts found support from the lack of planting progress, which is the third- slowest on record. State breakdown is that Iowa is 8 percent planted compared with 82 percent one year ago, Illinois is 10 percent planted compared with 85 percent one year ago, Indiana is 2 percent planted compared with 69 percent one year ago and Minnesota is 1 percent planted compared with 84 percent one year ago.

Corn recovered May 4 to end the session with small gains. The market followed the other commodities lower, with weakness also coming from the metals markets and fund selling. Additional pressure came from disappointing ethanol numbers, which showed lower production and higher stocks.

Ethanol production for the week ending April 29 averaged 875,000 barrels per day. This is down 0.91 percent vs. the previous week and up 5.17 percent vs. last year. Corn used in production is estimated at 91.87 million bushels. Corn use needs to average 100.7 million bushels per week to meet this crop year's USDA estimate of 5 billion bushels. Stocks were 19.771 million barrels, up 2.53 percent vs. last week and up 0.45 percent vs. last year. Corn firmed up and did close with decent gains, being supported by projected tight ending stocks and continued planting delays.

May 5, corn opened lower and traded under pressure for the session. Most of the session pressure was led by the weakness in outside markets and demand worries. The losses in the outside markets were huge -- crude oil was down $11, gold was off $40, silver was $4 lower and the dollar up more than a cent. Export sales for corn were disappointing.

USDA's Export Inspection Report was seen as bearish for corn. There were 34.6 million bushels of corn reported shipped, below the 43.8 million bushels needed to meet USDA's projection of 1.95 billion bushels. This was below the pre-report estimates of 31 million bushels to 36 million bushels. Last week's export sales report estimated corn export sales pace at 11.2 million bushels, which was below the 18.3 million bushels needed to meet the USDA projection of 1.95 billion bushels. This was below the estimates at 13.8 million bushels to 21.7 million bushels and bearish corn. This brings the year-to-date export sales pace for corn to 1.614 billion bushels compared with 1.630 billion bushels one year ago. Total shipments the week of May 2 were at 31.4 million bushels, below the 43.8 million bushels needed to meet projections.

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Soybeans

Soybeans started the week on the defense and ended the session lower. Pressure was tied to selling from a sharply lower corn market. Additional selling came from reports that Argentina's soybean harvest is more than 65 percent complete. Soybeans were able to shake off early pressure once the U.S. dollar retreated. The U.S. dollar is close to testing its all-time contract low.

The May 3 session traded with heavy losses. Pressure was tied to slow demand, as China has been visibly absent from the export market. Additional selling was tied to delayed spring wheat and corn planting, as many traders feel soybeans will be the default for the acres. In the end, fund long liquidation in the energy market and metals market spilled over to cause traders to liquidate soybean positions in an attempt to cover margin calls.

The soybean market continued to trade with losses midweek. The May 4 session marked the third straight session soybeans have drifted lower. All of the week's negative items -- slow demand, harvest nearing completion in Argentina, slow planting progress for wheat and corn, which lead to thoughts of acreage switching -- pressured the soybean market. Probably the most relevant was spillover pressure from another sharply lower session in the metals and energy markets.

Soybean traded lower May 5, with selling tied to a bearish export sales report. Traders were disappointed with the previous week's pace and with the news of a cancelation of a cargo to an unknown destination. The selling gained momentum late, as carry-over selling from the outside markets added pressure to soybeans. Gold, down $76 for the week, silver, $17 lower for the week and crude oil, down $14.75 for the week, have continued their sell off, which has resulted in traders having to liquidate commodities to meet margin calls. The May 5 session once again was all about the flow of money.

Barley

As of May 1, barley planting progress was estimated at 18 percent compared with 15 percent the previous week, 51 percent for last year and 43 percent for the five-year average. Barley emergence was estimated at 6 percent compared with none the previous week, 16 percent for last year and 12 percent for the five-year average. USDA estimated the barley shipments pace at 28,000 bushels. Cash barley bids in Minneapolis dropped on the week, putting cash feed barley bids at $4.75 and malting barley at $6.20.

Durum

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As of May 1 no durum had been planted in North Dakota compared with 12 percent planted last year and 15 percent for the five-year average. USDA estimated last week's durum shipments pace at 312,000 bushels. Last week's durum export sales pace was estimated at 700,000 bushels. Cash bids for milling quality durum dropped 15 cents to $9.35 in Berthold, N.D., while bids in Dickinson, N.D. remained at $8.80.

Canola

Canola futures on the Winnipeg exchange closed lower for the week, with the front month, July, dropping $15 (Canadian) for the week ending May 5. Canola started the week higher with support because of planting concerns in the Northern Plains. The rest of the week, canola traded on the defense because of pressure from improving weather forecasts. Additional selling pressure spilled over from a lower U.S. soybean market. As of May 1 no canola planting progress had been reported, compared with 15 percent planted last year and 13 percent for the five-year average. May 5 cash canola bids in Velva, N.D., were at $25.78 while new crop bids were $23.53.

Sunflowers

May 5 cash old crop sunflower bids in Fargo, N.D. were at $33, while new crop bids were at $26.10.

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