Wheat: weather concerns drive gains
The winter wheat exchanges traded higher each day while Minneapolis was higher every day except May 14. For the week ending May 17, July Minneapolis gained 41 cents, September Minneapolis was up 38.5 cents, July Chicago was up 60.75 cents, September Chicago gained 55.5 cents, July Kansas City gained 62 cents and September Kansas City was up 58.5 cents.
On May 14, wheat opened the week with choppy trade. Outside markets were bearish with strong gains in the U.S. dollar combined with lower energy and equity markets. Ideas that a large crop is already priced-in combined with a belief the market is oversold to provide some underlying support. Forecasts for hot, dry weather in the southern Plains provided additional support. Weekly export inspections were bullish, coming in well above trade expectations.
Wheat opened higher on May 15 and 16. Hot, dry weather in the Southern Plains provided support, as did concerns about dry conditions in the Black Sea region. The weakening carry-in futures spreads indicated commercial buying. The outside markets were mixed, but the wheat markets were able to ignore the higher U.S. dollar. In addition, noncommercial traders continue to hold a near-record net-short position.
Wheat opened slightly higher on May 17 as concerns over crop conditions in dry areas continue. A lack of rain combined with above-average temperatures in the Southern Plains continues to support the market. Similar concerns exist in the Black Sea region. In addition, there is talk of dry conditions in Australia slowing winter wheat planting. These concerns led to noncommercial short-covering and strong gains in winter wheat futures. The U.S. Department of Agriculture announced a sale of 100,000 metric tons of hard red spring wheat to Iraq on of May 17. The May 17 export sales report from USDA came in above expectations.
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USDA reported wheat export inspections pace for the week ending May 11 at 28 million bushels. This brings the year-to-date export shipments pace for wheat to 968.64 million bushels compared with 1.2 billion bushels for last year. With three weeks left in the marketing year, shipments need to average 10.5 million bushels to keep pace with USDA's projection of 1 billion bushels. Wheat export sales pace for the week ending May 11 was estimated at 26.1 million bushels with 11.8 million bushels being old crop while 14.3 million bushels were new crop. This brings the year-to-date export sales pace for wheat to 1.022 billion bushels compared with 1.301 billion bushels last year.
Corn: weather concerns supports
The corn market traded higher last week, with the July contract up 55 cents and December was up 35 cents on the May 17 close. Spillover support from the wheat complex supported corn last week. The weather has also been dry and that should complete the planting season for corn, but talk of dry weather and lack of farmer selling created buying interest in the market.
It was a quiet trade on May 14 as traders continue to absorb May's bearish USDA report. Traders were also expecting another good week of planting progress and that left any buying interest on the sidelines. The report stated that 87 percent is planted and 56 percent is emerged compared to a five-year average of 28 percent. The crop is going in at a rapid pace along with an increase in acreage.
The market moved up on May 15 and closed sharply higher on May 16. Technical buying surfaced May 15 as the futures traded to support. Talk of some dry areas starting to surface in the U.S. and that the Chinese are buying corn offered additional strength. Active fund buying supported the market on May 16. Private exporters reported to the USDA sales of 900,000 metric tons of U.S. corn for China. The breakdown was 180,000 metric tons for the 2011 to '12 season and 720,000 for the 2012 to '13 season, which only 240,000 metric tons for 2012 to '13 season were new sales as the rest was previously reported as unknown destinations.
Corn traded in a choppy two-sided trade on May 17 and slightly higher on May 18. Dry conditions in key wheat growing areas of the world is supporting the wheat market and spilling over to corn. The dry conditions created buying interest on May 18, but the end of the week weather runs showed moisture in the extended forecast.
Ethanol production for the week ending May 11 averaged 904,000 barrels per day. This is up 0.78 percent versus the previous week and up 0.44 percent versus last year. Corn used in ethanol production for the week ending May 11 was estimated at 96.3 million bushels. Corn use needs to average 93.9 million bushels per week to meet the USDA estimate for the season. Stocks were 20.63 million barrels, which is down 3.5 percent versus the previous week.
USDA's export inspection report was bearish for corn. There were 26.8 million bushels of corn reported shipped and below the 34.8 million bushels needed to meet USDA's projection of 1.7 billion bushels. This was below the prereport estimates of 28 million to 33 million bushels. The export sales report for corn was 34.1 million bushels, which was above the 13.1 million bushels that was needed to meet USDA's projection of 1.7 billion buslels. This was at the low end of the estimates of 31.5 million to 55 million bushels and neutral for corn. Total shipments this week were at 26.2 million bushels and below the 35.5 million bushels needed last week.
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Soybeans: moderately higher
As of the May 17 close, July soybeans were up 32 cents last week and the November contract was down 14.75 cents. Technically, the November soybean contract is holding above the physiological $13 level, but two closes below this level will not be viewed as positive for soybeans.
On May 14, soybeans opened lower as noncommercial traders continue to liquidate their near-record net-long futures position. Follow-through selling from May 12 contributed to the early weakness, and weak outside markets added to that weakness. Strong gains in the U.S. dollar combined with losses in energy and equity markets to pressure soybeans. The May 14 export inspections were bullish, coming in above trade expectations.
Soybeans opened higher on May 15 and lower on May 16, but closed with solid gains both days. New-crop soybeans closed slightly lower on May 16, but well off the daily lows. Talk that the market was oversold supported the market on May 15, while strong gains in the other grains were a positive force on May 16. Rumors China will continue importing old-crop soybeans were seen as supportive and strong commercial buying seemed to support the rumors.
On May 17, soybeans opened higher with support from strong commercial buying. Technically, the chart remains negative in the near-term. Outside markets were mixed, with the U.S. dollar staying near unchanged through much of the session. USDA announced a sale of 480,000 metric tons of old-crop soybeans to China. The May 17 export sales report from USDA came in below expectations, but above the amount needed to keep pace with projections.
USDA reported soybean export inspections pace for the week ending May 11 at 20.3 million bushels. This brings the year-to-date export shipments pace for soybeans to 1.12 billion bushels compared with 1.37 billion bushels for last year at this time. Soybean export sales pace for the week ending May 11 was estimated at 22.6 million bushels. This brings the year-to-date export sales pace for soybeans to 1.29 billion bushels compared with 1.518 billion bushels last year at this time.
Barley
USDA reported barley export inspections pace for the week ending May 11 at 12,000 bushels. This brings barley's year-to-date export shipments pace to 6.37 million bushels compared with 5.4 million bushels last year. There were no reported barley export sales for the week ending May 11. This brings the year-to-date export sales pace for barley to 3.9 million bushels compared with 4.6 million bushels for last year at this time.
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Cash barley bids in Minneapolis increased slightly last week putting feed barley bids at $5.20 per bushel while malting barley bids remained at $7.
Canola
Canola futures on the Winnipeg, Manitoba, exchange were $3.10 (Canadian) higher as of the close on May 17. Weakness in the Chicago Board of Trade soybean complex combined with speculative selling and good crop conditions in Western Canada to pressure the market on May 14 and 16. Gains in the CBOT soybean complex combined with strong end-user demand and a weaker Canadian dollar to support the market on May 15 and 17.
Cash canola old-crop bids on May 17 in Velva, N.D., were at $28.04 while new-crop bids were $23.83.
Durum
USDA reported durum export shipments pace for the week ending May 11 at 209,000 bushels shipped. USDA estimated durum export sales pace for the week ending May 11 at 300,000 bushels. This brings the year-to-date export sales pace for durum to 18.3 million bushels compared with 35.6 million bushels for last year at this time.
As of May 13, 76 percent of North Dakota's durum crop was planted compared with 55 percent the previous week and 32 percent for the five-year average. Durum emergence was estimated at 47 percent compared with 19 percent the previous week and 10 percent for the five-year average.
Cash bids for milling quality durum on May 17 were at $6.75 per bushel in Berthold, N.D., while Dickinson, N.D.'s bid was at $7.
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Sunflowers
Soybean oil export sales pace for the week ending May 11 was estimated at 8.1 trillion metric tons, bringing the year-to-date total to 411 trillion metric tons, compared with last year's 1177.1 trillion metric tons.
Cash sunflower old crop bids on May 17 in Fargo, N.D., were at $25.65 while new crop bids were $24.15.
Grabanski is president of Progressive Ag, a Fargo, N.D.-based hedge brokerage firm. Reach Grabanski at (800) 450-1404.
