Weather concerns supportive

Wheat: USDA report friendly

Wheat pushed higher last week as a result of news that China was buying U.S. wheat. Buying strength was added to the winter wheat exchanges because of a post harvest rally, while Minneapolis' gains were trimmed by improving growing conditions in the Northern Plains. For the week ending July 11, September Minneapolis gained 3.75 cents, while September Chicago and September Kansas City were up 23 cents.

Wheat started the week with gains. On July 11, the U.S. Department of Agriculture announced a wheat export sales of 840,000 metric tons to China, above the announced 480,000 metric tons the week before.

Wheat opened the July 9 session with gains, but rallied to end with strong gains.

Late support spilled over from corn and soybeans. Weather forecasts are calling for a high pressure ridge to move into the Corn Belt at corn pollination. The July 10 session was mixed as traders positioned themselves ahead of USDA's July crop production report.

Wheat started July 11 with little fanfare, as traders took to the sidelines ahead of the release of USDA's July crop production report. Wheat was able to push higher early, with most of the early support coming from a friendly USDA export sale estimate. USDA's crop production report was also friendly, as USDA cut both old and new crop stocks. This helped wheat push higher and trade with decent gains around noon, but late in the session, the hard wheat exchanges (Minneapolis and Kansas City) came under pressure from advancing harvest activity against the Kansas City exchange and favorable growing conditions against the Minneapolis.

In its report, USDA cut old crop wheat stocks by 28 million bushels. This was done by a 3 million bushel cut in supply (less imports) and an increase in demand of 25 million bushels (decrease of 3 million in seed use, 28 million bushel increase in feed demand and a 1 million bushel decrease in exports). The net result was a 28 million bushel cut in ending stocks, now estimated at 718 million. In addition, 2013's wheat estimates were friendly as USDA cut stocks by 83 million bushels. This was done by a 6 million bushel increase in supply (34 million bushel hike in production from yield increase and a 28 million bushel decrease in beginning stocks) and 89 million bushel increase in demand (decrease of 1 million bushels in seed, decrease of 10 million bushels in feed, a 100 million bushel increase in exports).

USDA's export inspections for wheat were estimated at 25.59 million bushels for the week ending July 5. Wheat export sales pace for the week was estimated at 54.1 million bushels. Last week was the fifth week (47 weeks left) for wheat's 2013 export marketing year. USDA's expectations are at 975 million bushels.

Corn: weather forecast

The corn market traded with decent gains last week ahead of the July 11 USDA report. Support came from a hotter forecast, fresh export sales and estimated smaller old crop stocks. The USDA report was seen as slightly bearish, but traders remained focused on weather. As of the July 11 close, September gained 34 cents and December was up 35 cents.

Corn rebounded the first three days of the week, as buying interest resurfaced. The weather forecast is being closely watched. Some risk premium is being added because of drier conditions in the western Corn Belt and hotter temperatures forecast for the last half of July for most of the country. This time frame is critical, as this year's late-planted crop will be pollinating. News that Mexico and China each bought 120,000 metric tons of U.S. corn and a friendly ethanol report were supportive. Traders were also looking ahead to the USDA monthly supply and demand report.

The corn market traded slightly lower the morning of July 11, ahead of the monthly USDA supply and demand report and then firmed up into the afternoon. The report was seen as slightly bearish to the corn market. U.S. ending stocks for 2013 and 2014 was estimated at 1.959 billion bushels, which was up from 1.949 billion in June and up from estimates of 1.896 billion. Planted acreage was slightly higher at 97.4 million acres versus 97.3 million in June and the yield was left unchanged at 156.5 bushels per acre. Total production was estimated at 13.95 billion bushels, which was slightly lower than the June forecast because of a 400,000-acre drop in harvested acres. The 2012 and 2013 ending stocks were estimated at 729 million bushels versus the June estimate of 769 million bushels, because of an increase in feed demand. World ending stocks came in 150.97 million metric tons for the 2013 to '14 marketing year, down slightly from the June estimate of 151.83 million metric tons. Corn was able to fight back into the afternoon on weather concerns. The export sales report was also supportive.

USDA's export inspections for corn were estimated at 8.2 million bushels for the week ending July 5. Corn export sales pace for the week was estimated at a combined total of 41.3 million bushels with 9.2 million old crop. With seven weeks left in the marketing year, shipments need to average 11.9 million bushels and sales need to average 70,000 bushels to make USDA's expectations of 700 million.

Soybeans

Soybeans pushed higher last week as the long-range weather forecasts are calling for a high pressure ridge to set up at about the time the crop starts to flower. As of the July 11 close, August soybeans were up 40 cents, while November 2013 soybeans were 62.5 cents higher.

Soybeans rallied throughout the session July 8, as tight supply concerns took center stage. Additional support was from technical buying, as traders tried to correct an oversold market condition. Speculator buying was also a large factor, as many traders felt losses the week ending July 5 were slightly overdone. Support July 9 came from news that Chinese soybean meal prices were up 2.5 percent overnight. On July 8, USDA reported a 120,000 metric ton soybean sale to China and a 135,000 metric ton soybean sale to an unknown destination.

Light volume was seen in the July 10 session, as traders positioned ahead of USDA's July crop production report. Pressure in old crop contracts was tied to profit taking in calendar spreads. Production concerns and weather provided support to the new crop. Chinese demand for soybeans remains strong and delays in the wheat harvest may hinder double-crop planting, supporting soybeans.

Soybeans traded higher much of the day July 11, despite slipping lower briefly after the release of USDA's July crop production report. The report was slightly bearish with an increase of U.S. 2013 and 2014 ending stocks to 295 million bushels, up from 265 million in the June report and above trade estimates of 270 million. Old crop ending stocks were unchanged at 125 million bushels. World carryover was increased to 74.12 million metric tons from 73.69 million in June. The July 11 export sales were below the amount needed to reach USDA's projection. USDA announced a sale of 120,000 metric tons of optional origin soybeans to unknown destinations.

USDA reported soybean export inspections pace for the week ending July 5 at 2.47 million bushels. Soybean export sales pace for the week was estimated at 16 million bushels (-2.6 million for 2012 and 2013), bringing this year's total to 1.351 billion bushels, compared with 1.395 billion last year at this time. Shipments were reported at 2.8 million bushels.

Barley

USDA reported barley export shipment pace for the week ending July 5 at 100,000 bushels, all going to the Philippines. No barley export sales were reported for the week.

As of July 7, barley emergence was estimated at 96 percent, compared with 94 percent the previous week and 99 percent for the five-year average. Heading was estimated at 51 percent complete, compared with 27 percent the previous week and 51 percent for the five-year average. Barley's crop condition rating declined 2 percent to 66 percent good to excellent, 30 percent fair and 4 percent poor to very poor.

USDA's July crop production report increased barley stocks 11 million bushels, because of an increase in supply by the same amount (imports were increased 5 million bushels and beginning stocks increased 6 million). Demand was unchanged.

July 11 cash feed barley bids in Minneapolis were at $4.85 per bushel, while malting barley bids were at $6.85.

Durum

USDA reported durum export shipment pace for the week ending July 5 at 305,000 bushels. Durum export sales pace for the week was estimated at 100,000 bushels.

July 11 cash bids for milling quality durum were unchanged at $8 per bushel in Berthold, N.D., while Dickinson, N.D., bids were at $7.95.

Canola

Canola futures on the Winnipeg, Manitoba, exchange closed the week ending July 11 with under $1 (Canadian) losses. Canola started the week off with strength from technical buying as a result of tight old crop supplies, as well as from spillover support from a sharply higher U.S. soybean complex. But those gains were completely erased July 11 because of pressure from forecasts for favorable weather in canola growing regions.

July 11 cash canola bids in Velva, N.D., were at $23.81 per hundredweight.

Dry beans

As of July 7, 95 percent of North Dakota's dry bean crop (35 percent of nation's acreage) had been planted, compared with 90 percent the previous week and 100 percent for the five-year average. Emergence was at 88 percent, compared with 78 percent the previous week and 100 percent for the five-year average. North Dakota's crop condition rating improved 3 percent to 57 percent good to excellent, 36 percent fair and 7 percent poor to very poor. Minnesota's dry beans (9 percent of U.S. acreage) are 96 percent emerged, compared with 92 percent the previous week and 100 percent for the five-year average. Minnesota's dry bean crop condition rating improved 5 percent to 63 percent good to excellent, 30 percent fair and 7 percent poor. Michigan dry bean producers (12 percent of the nation's acreage) reported emergence at 98 percent complete, compared with 84 percent the previous week and 97 percent for the five-year average. Michigan's crop condition rating was at 71 percent good to excellent, 20 percent fair and 9 percent poor to very poor.

Sunflowers

As of July 7, 94 percent of the nation's sunflower crop had been planted, compared with 90 percent the previous week and 98 percent for the five-year average.

USDA estimated soybean oil export sales pace for the week ending July 5 at a negative 2.3 trillion metric tons (cancellations from Mexico and Canada).

July 11 old crop cash sunflower bids in Fargo, N.D., were at $23.05 per hundredweight, while new crop bids were $23.25.