USDA report a non-event
Wheat: competing on the feed grain market The wheat markets had losses of 16 to 28 cents last week. Winter wheat is now cheaper to feed than corn in many areas, with the May winter wheat contracts now trading on par with corn. The wheat markets c...
Wheat: competing on the feed grain market
The wheat markets had losses of 16 to 28 cents last week. Winter wheat is now cheaper to feed than corn in many areas, with the May winter wheat contracts now trading on par with corn.
The wheat markets came under heavy selling pressure to start the new week on March 4. Forecasts called for another round of moisture in the Southern Plains. Global news was negative for wheat, as well, with increasing projections for Ukraine's wheat production and news that China may release wheat from its reserves.
Wheat markets recovered a small portion of those losses on March 5. Forecasts for warmer-than-normal weather had traders concerned about wheat coming out of dormancy early, increasing the risk for frost damage later this spring. There are also rumors of strong glyphosate sales in the Southern Plains, indicating that farmers may be preparing to kill off their poorer winter wheat fields in favor of spring-planted crops.
Selling pressure returned on March 6, pushing the markets to new lows. The higher dollar and lower corn markets provided initial pressure. The lower market seemed to feed itself as the day went forward. The wheat markets slowly crept back during the day on March 7. A setback in the dollar index was supportive, as was a better weekly export report than what we have seen for some time.
March 8 trade brought single-digit losses to the wheat markets after the release of the U.S. Department of Agriculture's March World Agricultural Supply and Demand Estimates report. USDA raised ending stocks projections by 25 million bushels to 716 million bushels, which was slightly above trade expectations. This increase was a 25-million-bushel cut in export projections, reflecting the slow pace of U.S. wheat exports.
USDA's export inspections for wheat was estimated at 24 million bushels for the week ending March 1, with the year-to-date pace at 692.3 million bushels, compared with 743.7 million for last year at this time. With 13 weeks left in the marketing year, shipments need to average 27.3 million bushels to make USDA expectations of 1.05 billion bushels.
USDA reported export sales of 22.7 million bushels, above the 15.4 million needed to keep pace with projections. Shipments of 28.2 million were slightly below the 29.8 million needed.
Corn: cash market strong, futures struggle
The corn market was down 8 to 12 cents last week. Old crop corn is now being supplemented with wheat in feed rations, while new crop continues to come under pressure from moisture in the Corn Belt and projections for larger 2013 production.
The corn market started the week March 4 under pressure, driven lower by the double-digit losses in the wheat complex. May Chicago wheat is now even with May corn, and that could force more wheat into feed rations. Additional selling pressure came in at midmorning with a disappointing export inspections report that was below USDA's estimates.
Corn firmed up on March 5 with spillover support from the soybeans and the Dow Jones that traded to an all-time high. The old versus new crop contracts continue to widen, while old crop finds support from tight stocks and a strong cash market. The new crop market struggles with large production estimates.
Corn broke lower again March 6, as the May contract was unable to break through key resistance and that created long liquidation selling. Additional weakness came from a disappointing ethanol report. Trade was mixed on March 7 ahead of the USDA report.
USDA released the WASDE report on March 8. U.S. ending stocks for corn were unchanged from last month at 632 million bushels. Corn exports were lowered by 75 million bushels, while feed use was increased to make up the difference. Global corn stocks were decreased 560,000 metric tons, while estimated South American production decreased slightly, with Brazil production remaining unchanged and Argentinean production decreasing by 500,000 metric tons. The market reacted with single-digit gains.
Ethanol production for the week ending March 1 averaged 805,000 barrels per day, down 11.2 percent from last year. Corn used in production is estimated at 84.5 million bushels and needs to average 87.8 million bushels per week to meet this year's USDA estimate. Stocks as of March 1 were 19.4 million barrels, down 12.3 percent from last year.
USDA's export inspections report was bearish for corn. There were 15.7 million bushels shipped, with 20.4 million bushels needed to keep pace with USDA projections. The export sales report for corn was at -2 million bushels, below the 12.1 million needed to meet USDA's projection of 900 million bushels. Total shipments last week were at 11.7 million bushels, below the 19.8 million needed for the 2012 to '13 marketing year.
Soybeans: little change in USDA report
May soybeans were up 30 cents last week, while November 2013 soybeans were 7 cents higher. Strong exports continue to provide support to the old crop market, while the new crop market has pressure from the potential rebuilding of global stocks.
Soybeans traded higher March 4 and 5, despite mixed influences. Outside markets were negative March 4, including losses in the corn and wheat markets. There was some bearish influence from weekend rains in Argentina, but forecasts called for a drier trend going forward. Another strong export inspections report March 4 provided support.
May soybeans traded both sides of unchanged March 6 before closing with light losses. Support was tied to ongoing loading delays in Brazil, while losses in corn and wheat limited gains. The sharply higher U.S. dollar provided additional pressure. May soybeans closed higher on March 7 with moderate gains. Support was tied to commercial buying and positive export sales data. The South American weather forecast has been quiet and is expected to remain that way in the near-term.
According to the March 8 WASDE report, U.S. ending stocks for soybeans are projected to be 125 million bushels, unchanged from last month. Global ending stocks of 60.21 million metric tons were up slightly from 60.12 million last month. Brazilian production was unchanged from February, at 83.5 million metric tons, while Argentinean production decreased from 53 million metric tons in February to 51.5 million in March. The market reacted with an initial sharp drop March 8, but as the day progressed, the May contract found its footing, while the November contract came under pressure.
USDA reported soybean export inspections pace for the week ending March 1 at 40.3 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.147 billion bushels, compared with 908.5 million for last year at this time. Soybean export sales pace for the week ending March 1 was estimated at 14.4 million bushels, bringing this year's total to 1.286 billion bushels, compared with 1.098 billlion last year at this time.
USDA reported export inspections of 32,000 bushels of barley last week. Year-to-date export inspections for barley stand at 5.65 million bushels, compared with 5.98 million last year. USDA reported export sales of 165,000 bushels of barley to Japan and 9,200 bushels to Taiwan. March 7 cash feed barley bids in Minneapolis were at $5.15 per bushel, with malting barley bids at $7.05.
USDA reported export inspections of 257,000 bushels of durum last week. USDA reported export sales of 1.4 million bushels of durum last week, with year-to-date sales at 17.4 million, up from 15.2 million at this time last year. Cash bids for milling quality durum on March 7 were at $7.50 per bushel in Berthold, N.D., and $7.85 in Dickinson, N.D.
Canola futures on the Winnipeg, Manitoba, exchange had gains of up to $10 (Canadian) per ton last week. Commercial support returned to drive the old crop market higher, with continued strong demand for oilseeds and weakness in the Canadian dollar. The new crop market, however, managed only small gains. Uncertainty about future demand and the potential for supplies to be replenished kept a lid on new crop prices. Cash canola bids in Velva, N.D., were at $27.80 per hundredweight on March 7.
USDA reported export cancellations of 19.7 trillion metric tons of soybean oil, with shipments of 36 trillion metric tons. Total sales so far this year are at 789.4 trillion metric tons, up from 288.1 trillion last year. Cash bids for NuSun sunflowers in Fargo, N.D., were at $22.70 per hundredweight on March 7.
USDA is reporting steady bids of $30 for navies and $30 to $32 for pintos in this region. Trade activity remains slow, with little activity seen in the new crop market. Buyers are not willing to bid for acres in 2013, after the large 2012 crop.