USDA report supports market

Wheat Wheat traded with gains every session last week. A friendly U.S. Department of Agriculture report started wheat off to the races while reports of an end to the Russian Ukraine ceasefire added fuel to the buying frenzy. For the week ending Nov.

Ray Grabanski
Grabanski is president of Progressive Ag, a Fargo, N.D.-based hedge brokerage firm. Reach him at 800-450-1404.


Wheat traded with gains every session last week. A friendly U.S. Department of Agriculture report started wheat off to the races while reports of an end to the Russian Ukraine ceasefire added fuel to the buying frenzy. For the week ending Nov. 13, December Minneapolis closed 38 cents higher, December Chicago closed 39.25 cents higher and December Kansas City picked up 36 cents.

Wheat started the week on the defense, but managed to recover to trade with gains. Early selling was tied to expectations of a negative USDA report. Another week of disappointing export shipments added pressure. But USDA's November crop production report had a few surprises for wheat. USDA cut harvested acreage 100,000 acres and reduced yield by 0.1 bushels. This resulted in a production decrease of 9 million bushels. USDA made no changes to wheat's demand estimates. The net result was a decrease in wheat's ending stocks of 10 million bushels, now estimated at 644 million bushels, compared with the average trade estimate of 660 million bushels. World wheat projections were negative, as stocks were estimated at 192.9 million metric tons, compared with 192.59 million metric tons in October and the average trade guess of 192.15 million metric tons. Overall, the report was friendly for wheat.

The Nov. 11 session also had wheat trading with gains, as commercial buying and spillover support from row crops pushed wheat higher. Cold weather in the forecast provided additional support, as it could stress the winter wheat crop as it heads toward dormancy. A firm U.S. dollar limited wheat's gains.

The rest of the week, wheat traded with gains. By the end of the Nov. 13 session, wheat had gained ground in all four sessions for the week and traded at two-month highs. The lack of farmer selling combined with commercial buying to help wheat push higher. Traders are concerned the recent cold snap will result in damage to the winter wheat crop, since there is limited cover to protect the crop.


Russia has been reported moving troops back in the Ukraine. This helped renew export concerns for wheat out of the Black Sea region. Gains were trimmed late in the session by a selloff in the corn and soybean markets.

As of Nov. 9, winter wheat planting is estimated 93 percent complete, compared with 90 percent the previous week and 93 percent for the five-year average. Winter wheat emergence was estimated at 83 percent, compared with 77 percent the previous week and 79 percent for the five-year average. Winter wheat crop condition was estimated at 60 percent good to excellent, 34 percent fair and 6 percent poor or very poor, up 1 percent from the previous week.


The corn market pushed to highs last seen in mid-July last week, with a smaller yield and stocks number from USDA in its monthly report. The strength in the wheat market this week has also spilled over with increased tensions between Russia and the Ukraine. Talk was that farmer selling on Nov. 12 was the highest since harvest began. As of Nov. 14, the December contract was up 16.75 cents for the week, while the March contract gained 16.25 cents.

Corn traded with decent gains to start the week. USDA's report was the focus on Nov. 10 and there were some surprises for corn. USDA dropped the yield to 173.4 bushels per acre, down 0.8 bushels from the October report and well below the trade estimate of 175.23 bushels per acre. The production number came in at 14.407 billion bushels, down 68 million from the October report and well below the trade estimate of 14.551 billion. This left us with an ending stocks number of 2.008 billion bushels, well below the 2.135-billion-bushel trade estimate, also down 73 million bushels for the October report. The stocks-to-use ration is 14.7 percent versus 15.2 percent last month. USDA did increase the world stocks to 191.5 million metric tons, up from 190.58 million last month and well above the trade estimate of 190.77 million metric tons. In other news, the export inspections came in above estimates and Mexico bought 130,000 metric tons of U.S. corn.

The corn futures remained firm midweek as traders continue to look back at the Nov. 10 report where USDA came in with a slightly smaller crop than what it stated in October, and below estimates. The ethanol report also showed corn use up from the previous week and ethanol futures have been trending higher. The Farm Service Agency also updated its numbers on Nov. 13 and raised corn acres 640,000 to 85.842 million. This is below the 87.7 million USDA has estimated. But FSA will update these again, and not all farmers are in the farm program. Harvest progress was up 15 percent to 80 percent harvested and at the five-year average, while the winter weather slows harvest in the North Country.

Ethanol production for the week ending Nov. 7 averaged 946,000 barrels per day, up 0.85 percent from the previous week. Total ethanol production for the week was 6.503 million barrels. Corn used in production the week ending Nov. 7 is estimated at 97.55 million bushels and needs to average 98.833 million bushels per week to meet this crop year's USDA estimate of 5.125 billion bushels. Stocks were 17.7 million barrels, up 0.76 percent from the previous week.



As of the Nov. 13 close, January soybeans were 16.75 cents higher for the week. At 11 a.m. Nov. 14, January soybeans were trading 15 cents lower.

Soybeans traded higher overnight ahead of USDA's monthly report Nov. 10. The weekly export inspections report was bullish again, as it came in well above the amount needed to keep pace with USDA's projection. The November World Agricultural Supply and Demand report came out and the market turned lower shortly after, ultimately finishing the day with moderate losses. Soybean yield was increased to 47.5 bushels per acre from 47.1 bushels per acre in October, leading to an increase in production to 3.958 billion bushels from last month's 3.927 billion bushels. U.S. ending stocks were unchanged at 450 million bushels, while world ending stocks declined to 90.3 million metric tons from 90.7 million in October. World production was unchanged with Brazil and Argentina's projections remaining at 94 million metric tons and 55 million metric tons, respectively.

Soybeans traded sharply higher Nov. 11, with the January contract closing at its highest level in 12 weeks. Planting continues to move forward in South America with Brazil's planting at 46 percent complete, near the normal pace. Rain in the forecast for Mato Grosso should help improve planting conditions further. Demand remains active and strong for soybeans and soymeal and clearly has the market's attention.

Soybeans started with strong gains Nov. 12, as the market traded to its highest levels in three months before buying interest dried up and the market reversed to close lower. This might indicate an end to the short-term uptrend in soybeans, at least for the time being. But demand for soybean meal remains strong.

Soybean trade started the day higher again Nov. 13, tied to early buying in soymeal. As on Nov. 12, meal turned lower later in the day, though this time soybean futures held on to close with gains, though well off the day's highs. South American planting continues with beneficial rains in the five-day forecast, though some weather concerns continue to linger.

USDA reported soybean export inspections pace for the week ending Nov. 7 at 91.2 million bushels. This brings the year-to-date export shipments pace for soybeans to 495.8 million bushels, compared with 432.7 million for last year at this time. Soybean export sales pace was estimated at 39.5 million bushels. This brings soybean's export sales to 1.349 billion bushels, compared with 1.249 billion bushels last year. With 42 weeks left in soybean's export marketing year, shipments need to average 29.1 million bushels and sales need to average 8.8 million to reach USDA's estimate of 1.72 billion bushels.

As of Nov. 9, soybeans harvested were at 90 percent, compared with 83 percent the previous week and the five-year average of 91 percent.



USDA made a few adjustments to barley's supply and demand estimates in its November report. Barley harvested acreage was cut 100,000 acres to 2.4 million and yield was reduced one bushel. This reduced barley production 3 million bushels to 177 million bushels. Feed demand was reduced 5 million bushels. The net result was a 2-million-bushel increase in ending stocks, now estimated at 70 million bushels.

Nov. 13 cash feed barley bids in Minneapolis were at $2.45 per bushel, while malting bids were $7.35.


In its November crop production report, USDA decreased durum production 4 million bushels to 53 million, but increased imports by 5 million bushels. The net result was a 1-million-bushel increase in durum ending stocks, now estimated at 17 million bushels.

Nov. 13 cash bids for milling quality durum were at $15 per bushel in Berthold, N.D., while the Dickinson, N.D., bid was at $14.


Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Nov. 13 with $10.50 (Canadian) losses. Canola started the week with small gains, gaining $1.50 (Canadian) the first session of the week (the market was closed Nov. 11 in observance of Veterans Day). Canola slipped lower the last two sessions of the week, losing $12. Canola's early support was from a weaker Canadian dollar. The rest of the week saw selling pressure from spillover selling from a stronger U.S. soybean complex. Additional selling was tied to technical selling and spread trading.

Nov. 13 cash canola bids in Velva, N.D., were at $17.15 per hundredweight.



As of Nov. 9, 70 percent of the nation's sunflower crop was harvested, compared with 50 percent the previous week and 69 percent for the five-year average.

Nov. 13 cash sunflower bids in Fargo, N.D., were at $17.45 per hundredweight.

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