Weather a driving force

Wheat: strong gains

The wheat market traded with strong gains again last week, as dry conditions take center stage. Most of wheat's strength spilled over from the other grains as drought concerns continued to support corn and soybeans. Additional support was a result of dry soil conditions in Australia and Russia. For the week ending June 28, July Minneapolis gained 8.75 cents, September Minneapolis was up 56.25 cents, July Chicago was 52.75 cents higher, September Chicago was 58.5 cents higher, July Kansas City was 49 cents higher and September Kansas City was 51.5 cents stronger.

Wheat opened higher last week with most of the early support spilling over from the other grains. Additional support was a result of little to no rain recently in the Corn Belt and extended forecasts are calling for no rain for the next week. That would not be bad, but temperatures are expected to be extremely high, with most regions crossing over triple digits. Additional support was a result of continued concerns about production in Australia and the Black Sea.

The wheat markets opened and traded with strong gains June 27, as drought concerns continue to take center stage. Statistics Canada's acreage report was bearish and did help bring wheat off of its highs, but the dry weather concerns still have a bigger grip on the market performance. In its June report, Statistics Canada estimated Canada's total wheat acreage at 23.812 million acres, compared with 21.464 million for last year, an increase of 11 percent. Spring wheat acreage is estimated at 17.035 million, an increase of 8 percent from last year. Winter wheat acreage is estimated at 2.067 million, an increase of 22 percent from last year.

The June 28 session had wheat opening higher and trading with gains, but once the rally in corn stalled, so did the rally in wheat. Position squaring ahead of the reports was also noted. Wheat stocks are also estimated at 726 million bushels compared with 862 million bushels for last year.

USDA's weekly crop condition rating report for the week ending June 24 estimated the U.S. winter wheat crop at 54 percent good to excellent, 29 percent fair and 17 percent poor to very poor, unchanged from the previous week. Winter wheat heading was estimated at 98 percent complete as of June 24, compared with 94 percent for the previous week and 95 percent for the five-year average. Winter wheat harvest was estimated at 59 percent complete as of June 24, compared with 48 percent the previous week and 27 percent for the five-year average. Spring wheat crop rating was estimated at 77 percent good to excellent, 19 percent fair and 4 percent poor to very poor, an increase of 1 percent from the previous week. Spring wheat heading was estimated at 57 percent complete as of June 24, compared with 33 percent for the previous week and 18 percent for the five-year average.

Corn: weather forecast supportive

For the week ending June 28, July gained 60 cents, while December was up 76 cents and at nine-month highs. Corn traded sharply higher last week as a result of a hot and dry forecast. Old crop found support from tight stocks and a strong cash market.

Corn traded limit up on June 25 and gained 79 cents through the June 27 close. The weather remains hot and dry for the next two weeks and that sparked buying interest. The western Corn Belt was hot last week, with temperatures reaching triple digits in Texas, Kansas and Oklahoma, along with southern Illinois and Indiana. The futures found additional support from the crop conditions report. Corn dropped a whopping 7 percent in the good to excellent category, coming in at 56 percent good to excellent compared with 68 percent good to excellent one year ago. The report showed 8 percent of Illinois, 12 percent of Indiana and 9 percent of Missouri in very poor condition. The report also showed 10 percent of the crop silking and 20 percent of the crop pollinating last week. More ethanol plants continue to slow down because of tight margins. The ethanol report is confirming that, as we hit a nine-week low for corn used for ethanol.

Record high temperatures across the Corn Belt last week was expected to cause issues with the pollinating corn.

Ethanol production for the week ending June 22 averaged 883,000 barrels per day. This is down 1.9 percent versus the previous week and down 1.1 percent versus last year. Total ethanol production for the week ending June 22 was 6.18 million barrels, down from 6.3 million barrels the previous week. Corn used in production the week ending June 22 was estimated at 94.06 million bushels, which is a nine-week low.

Crop conditions had 56 percent of the crop rated as good to excellent, 30 percent fair and 14 percent poor to very poor. Corn silking was at 10 percent, compared with 2 percent one year ago and the five-year average of 3 percent.

Soybeans

As of the June 28 close, July soybeans were up 23.5 cents and November was up 28 cents. Longer-term fundamentals remain bullish for the soybean market as global stocks tighten. Weather will be the main force in the market in the coming weeks.

Soybeans traded significantly higher throughout the June 25 session as a result of continued weather concerns. Sparse weekend rains did little to alleviate dry conditions. USDA's crop condition report showed a 3 percent decrease in soybeans.

Soybean futures traded higher on June 26 and 27, as the hot, dry forecast continued to threaten crops. The market struggled to hold onto gains both days, closing with moderate losses on June 26 and narrowly mixed on June 27. Statistics Canada released its acreage estimates on June 27. Manitoba and Ontario saw acreage set new records, adding a combined 510,000 acres to last year's numbers, while Quebec decreased slightly by 19,800 acres.

The June 28 session had soybeans higher overnight, but on both sides of unchanged by midday. Gains in corn were supportive early in the session, but later, the outside markets turned negative, sparking some profit taking.

Soybean blooming as of June 24 was at 12 percent, compared with 5 percent the previous week and the five-year average of 4 percent. USDA's weekly crop condition rating report estimated the U.S. soybean crop at 53 percent good to excellent, 32 percent fair, and 15 percent poor to very poor, a decrease of 3 percent.

Barley

As of June 24, 40 percent of the nation's barley was headed, compared with 19 percent the previous week and 16 percent for the five-year average. Barley's crop condition rating declined 1 percent to 66 percent good to excellent, 29 percent fair, and 5 percent poor to very poor.

Statistics Canada estimated Canada's planted barley acreage at 7.365 million acres, compared with 6.472 million acres last year, a 14 percent increase. Cash barley bids in Minneapolis increased 20 cents June 29, putting feed barley bids at $5.25 per bushel, while malting barley bids improved to $7.10.

Durum

As of June 24, North Dakota's durum crop was 33 percent headed, compared with 11 percent the previous week and 4 percent for the five-year average. North Dakota's durum crop condition rating improved 1 percent to 92 percent good to excellent, 7 percent fair and 1 percent poor to very poor.

Statistics Canada estimated Canada's durum acreage for 2012 at 4.71 million acres, compared with 4.015 million last year, a 17 percent increase.

June 28 cash bids for milling quality durum were at $7 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $7.35.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending June 28 with close to $25 (Canadian) gains. Most of last week's strength spilled over from the U.S. soybean complex, which also traded with strong gains as a result of drought concerns. Statistics Canada released a slightly bearish acreage report, but the market seemed to take those numbers in stride.

According to Statistics Canada, Canada producers planted 21.273 million acres of canola in 2012, compared with 18.862 million last year, a 13 percent increase and the sixth straight new acreage record.

As of June 24, North Dakota's canola crop was 55 percent in bloom, compared with 14 percent the previous week and 15 percent for the five-year average. North Dakota's canola crop condition rating improved 6 percent to 93 percent good to excellent, 6 percent fair and 1 percent poor to very poor. Minnesota's canola crop is rating 24 percent good to excellent and 76 percent fair.

June 28 cash canola bids in Velva, N.D., were at $24.51 per hundredweight.

Sunflowers

As of June 24, 95 percent of the nation's sunflower crop was planted, compared with 88 percent the previous week and 88 percent for the five-year average.

Soybean oil export sales pace for the week ending June 22 was estimated at 13.5 trillion metric tons, bringing the year-to-date total to 481.8 trillion metric tons, compared with last year's 1,257.2 trillion metric tons.

June 28 cash sunflower bids in Fargo, N.D., were at $22.70 per hundredweight.