Soybeans trade sharply higher
Wheat: small retreat The wheat market turned to a follower last week, virtually latching onto the coat tails of corn and soybeans. To start the week, wheat traded with decent gains, but all of those gains, and then some, where lost late in the week.
Wheat: small retreat
The wheat market turned to a follower last week, virtually latching onto the coat tails of corn and soybeans. To start the week, wheat traded with decent gains, but all of those gains, and then some, where lost late in the week. For the week ending Aug. 23, September Minneapolis lost 7 cents, September Chicago was unchanged and September Kansas City dropped 4.75 cents.
Wheat traded on both sides of unchanged to start the week, but favored the plus side for most of the session. Early support came from spillover buying from a stronger soybean complex. It appears that wheat has handed its leader role over to soybeans, as traders are now aggressively buying soybeans as weather forecasts turn hotter and drier. Wheat did get modest support from harvest results from the Black Sea region. Ukraine's Agriculture Ministry reported that, as of Aug. 24, grain harvest was 65 percent complete. To date, average yields are off 20 percent. The Kazakhstan Agriculture Ministry is estimating harvest 30 percent complete. To date, average yields are off 33 percent. Russia's harvest is estimated 51 percent complete. All three of the wheat exchanges traded with decent gains Aug. 21, following the trend set by the soybean and corn market. Soybeans traded sharply higher and to new all-time contract highs as a result of lower-than-expected pod counts being found by the Corn Belt tour that is currently winding its way across the U.S.
Wheat opened and traded with losses throughout the session Aug. 22 and 23 because of spillover selling from a lower corn and soybean complex. Wheat is searching for news of its own to give it direction. Additional selling was tied to a weather forecast that is calling for rains for parts of the Southern Plains. This will help replenish soil moisture concerns. Additional direction came from the Statistics Canada report, which showed larger production estimates for Canada.
All three of the wheat exchanges struggled Aug. 24, opening mixed but then selling off hard into the afternoon. Once corn and soybeans started to break lower, selling pressure became more evident in wheat. Russia again stated that it has no plans to reduce wheat exports this year and that added late session selling pressure to wheat.
Statistics Canada's July crop production estimate put all wheat production for Canada at 27.01 million metric tons, an increase of 7 percent from last year. Spring wheat production was estimated at 19.6 million metric tons, an increase of 6 percent from last year. Winter wheat production was estimated at 3.7 million metric tons, an increase of 20 percent from last year. The report is expecting a lower yield than last year, but harvested acreage is higher as a result of a decrease in prevented planting.
Corn: lower yield estimates
Corn found support last week, enough to push it above $8, from disappointing yield estimates from the Pro Farmer Tour. Talk of a lower harvested acreage number provided additional strength. The market gave back some of those early week gains as profit taking entered the market on Aug. 23. For the week ending Aug. 23, September gained 10 cents, while December was up 8 cents.
Corn traded with 16-cent gains on both Aug. 20 and 21. Support came from news out of the Pro Farmer Tour and talk of worse-than-expected yields. Yields were estimated at 110.5 bushels per acre for Ohio and 74.3 bushels per acre for South Dakota and the tour had Indiana at 113.25 bushels per acre, down 21 percent from last year. Nebraska's crop was estimated at 131.7 bushels per acre, down 14 percent from last year. These lower yield estimates have traders estimating the U.S. average corn yield to be near 121 bushels per acre versus the USDA estimate of 123.4 bushels per acre. There was also talk about the number of corn acres that have been chopped for silage, which should lower the harvested acres. Traders think this number is actually as low as 83 million acres. The International Grains Council also cut its forecast for global corn production by 26 million tons to 838 million tons. The cut in production is 11 million tons lower than the current USDA estimate.
The corn market traded with small losses on Aug. 22 and sharply lower Aug. 23. Profit taking came into play after early strength in the week. The high price of corn also has done some damage to exports, feed and ethanol usage. Export sales have slowed and Japan's usage of corn for feed fell for the sixth straight month and to a 20-year low in June. It is estimated that Japan imports nearly 16 million tons of corn per year, but a decline to 15 million is being discussed. The Statistics Canada report showed a 9.5 percent increase in Canadian corn production compared with 2011. The ethanol report showed an increase in corn usage for the fourth week in a row, but still is running behind USDA estimates. Talk of better yields in Iowa, Minnesota and Illinois (estimated at 121.6 bushels per acre versus USDA at 116 bushels per acre) all added weakness. As a note, the U.S. Environmental Protection Agency has begun the 30-day public comment period on the petitions to waive the Renewable Fuels Standard mandated ethanol use.
Ethanol production for the week ending Aug. 17 averaged 823,000 barrels per day, which is down 8.96 percent from last year.
Soybeans: sharp gains, record highs
For the week ending Aug. 23, November soybeans were up 69.25 cents. Longer-term fundamentals remain bullish for the soybean market as global stocks tighten.
Soybeans opened the week sharply higher as demand remains strong against a declining supply outlook. The November contract reached a new high before closing near the high on heavy buying from both commercial and noncommercial traders. The weather has been cooler and wetter recently, but traders are concerned it hasn't helped the crop as much as hoped. Time is running out for weather to be a factor, as early harvest will be under way soon. Traders expected a crop ratings increase of 1 percent on Aug. 20 and that is what happened, with good to excellent ratings climbing to 31 percent.
The Aug. 22 session had soybeans trading lower on profit taking after strong gains early in the week. The November contract traded in a narrow 20-cent range before closing slightly lower, but well off the daily low. The market is susceptible to bouts of noncommercial long-liquidation, but low pod counts observed by the Pro Farmer Crop Tour continue to provide support.
Soybeans were sharply higher overnight on Aug. 23, as they reached a new all-time high for the third consecutive day. By midday, the market had slipped into negative territory, and closed with moderate losses as a result of technical selling and profit taking. Despite the losses, the market remains fundamentally bullish. The Pro Farmer Crop Tour continued to see below-average pod counts and poor plant conditions. Demand remains strong, as the USDA announced sales of 202,000 metric tons to unknown destinations and 165,000 metric tons to China, all for 2012 and 2013 delivery.
Statistics Canada is estimating Canada's barley production to be 24 percent higher than last year. Barley production is estimated at 9 million metric tons. Statistics Canada is estimating barley's yield to be a record this year.
Cash barley bids in Minneapolis had feed barley bids at $5.90 per bushel, while malting barley bids were $7.
USDA reported durum export inspections estimate for the week ending Aug. 17 at 733,000 bushels, with 556,000 bushels going to Italy and 100,000 bushels to Canada. There was no durum export sales reported.
Statistics Canada is estimating 2012 durum production at 4.27 million metric tons, an increase of 2 perent from last year.
Cash bids for milling quality durum were at $7.75 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $7.60.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Aug. 23 with more than $18 (Canadian) gains. The canola market continues to follow the U.S. soybean complex as soybeans trade to new all-time highs on lower production possibilities.
The canola market ignored Statistics Canada's bearish report. In the July 1 production estimate, Statistics Canada estimated Canada's canola production at 15.4 million metric tons, 9 percent more than last year and a record crop for Saskatchewan and Alberta.
Canola traded lackluster to start, as the market seemed to be waiting for direction from the U.S. grains. Once the U.S. grain markets started to sell off, the selling spilled over to canola, as well.
Aug. 23 cash canola bids in Velva, N.D., were at $26.98 per hundredweight.
For the week ending Aug. 19, the following states were reporting dry bean conditions: North Dakota: 52 percent good to excellent, 36 percent fair and 12 percent poor to very poor, an increase of 3 percent from the previous week, 2 percent was cut, compared with none for the five-year average; Minnesota: 65 percent good to excellent, 28 percent fair and 7 percent poor to very poor, unchanged from the previous week, 6 percent was dropping leaves; Nebraska: 45 percent good to excellent, 46 percent fair and 9 percent poor to very poor, a decrease of 6 percent, 4 percent was turning color, compared with 3 percent for the five-year average; Idaho: 2 percent harvested, compared with 9 percent for the five-year average; and Michigan: 53 percent good to excellent, 30 percent fair and 17 percent poor to very poor, an increase of 9 percent from the previous week, 4 percent was turning leaves, compared with 8 percent for the five-year average.
As of Aug. 19, North Dakota's sunflower crop had 5 percent bracts turning yellow, compared with 1 percent for the previous week and 1 percent for the five-year average. North Dakota's sunflower crop condition report estimated the crop at 67 percent good to excellent, 30 percent fair and 3 percent poor, a decrease of 3 percent.
Aug. 23 cash sunflower bids in Fargo, N.D., were at $26.90 per hundredweight.