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All three exchanges gain on wheat

Wheat All three of the wheat exchanges closed the week with gains. For the week, Chicago wheat gained 30 cents, Kansas City wheat was up 29 cents and Minneapolis was 27 cents higher. All of the strength was tied to fundamental concerns with this ...

Wheat

All three of the wheat exchanges closed the week with gains. For the week, Chicago wheat gained 30 cents, Kansas City wheat was up 29 cents and Minneapolis was 27 cents higher. All of the strength was tied to fundamental concerns with this year's potential production.

The wheat market started the week steady to only slightly lower, which was much better than the opening call was looking for. Early selling pressure spilled over from a lower overnight session which traded lower because of spillover pressure from the lower outside markets. All three of the wheat exchanges started the session higher May 27 and rallied to be sharply higher by midsession. The Minneapolis exchange was the leader as traders started to show concerns toward this year crop. Planting progress has been less than ideal and that has attracted the funds to come into the market as buyers. The strength in the wheat market was enough that it forced many of the wheat contracts into buy stops which helped to accelerate the session gains. The wheat markets all started the session higher May 18 with much of the early support coming from fund buying and concerns that not all of the spring wheat acreage for the 2009 season will get planted. Current estimates have about 1 million acres of spring wheat not getting planted this spring. This helped to support the wheat in the early stages of the session but once the wheat exchanges traded to highs not seen since early January 2009, a massive amount of selling pressure stepped into the market to drive the market off of its highs.

USDA estimated last week's export shipments pace for wheat at 18.98 million bushels compared with 15.1 million bushels for last week and 15.5 million bushels for the year before. Wheat's export shipment pace to date is estimated at 966.3 million bushels compared with 1.199 billion bushels for last year at this time. There is one week left in wheat's export marketing year. Last week's wheat export sales pace was estimated at 12 million bushels with 3.8 million bushels being old crop and 8.4 million bushels being new crop. This brings the year-to-date export sales total for wheat to 975.3 million bushels compared with 1.244 billion bushels for last year at this time. USDA is estimating this year's export sales pace for wheat at 1.01 billion bushels.

Corn

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Corn futures ended the week 6 to 9 cents higher. The weather and the weaker dollar (at a nine-month low) supported this market.

The market started the week slightly lower with 1 to 3 cent losses compared with May 22. The weather in the Midwest over the weekend was more favorable than forecast for planting and that news started us lower. Then the weekly export inspection report came out and they were down from last week which also pressured the corn. The market was waiting to see what the planting progress report would say May 26. The report came out stating that 82 percent of the corn is planted and the pre-report estimate was 80 percent to 85 percent. This report was seen as neutral for the trade. The states that we have been watching are Illinois and Indiana which reported 62 percent and 55 percent planted and a five-year history of 96 percent and 89 percent planted. These states produce 25 percent on the U.S. corn and their progress and replanting will need to be monitored closely.

The lack of new news to push this market this week and it the fact that corn was content in being the follower, kept the corn market in line. There was some unexpected rain that did move into the Eastern Corn Belt May 28 and this will further delay any unfinished planting and replanting in that region. This market will continue watching the weather and planting progress for the next two weeks.

U.S. ethanol production data for March came out May 28. USDA had earlier estimated that the 2008 to '09 corn used for ethanol would be 3.75 billion bushels. Based on the amount of corn used to date for ethanol, we are running slightly below what we need to use the reach USDA's estimate.

Soybeans

The soybean complex ended the week with decent gains in all months. The front month July ended the week 14 cents higher while the new crop November closed with 27 cent gains. The unwinding of long old crop-short new crop spreads was part of the reason.

The soybean complex started the shortened trading week steady to slightly lower with much of the early weakness coming from a lower overnight session. Additional selling was tied to thoughts that USDA's crop progress report would be bearish to the soybean complex. But once the bullish export inspections report was released the soybean market started to firm up, starting with the new crop. But it did not take traders long to turn the market around and put most of the strength in the front months and less into the deferred contracts.

The soybean complex started the session higher May 27, rallied to be sharply higher early in the session, but then fell hard soon after trading above resistance levels. The front month July contract started the session higher and trade up more than its long term resistance level of $12. Once the soybeans hit $12 a massive amount of sell stops were triggered and the soybean complex dropped like a rock. This profit taking sell off resulted in the July contract to drop 23 cents off of its high before buying stepped back in to slow the decent. Cooler heads then prevailed and the soybeans calmed down slightly. The front months never really gained any ground back until the close when the old crop contracts (with the exception of August) rallied to end only slightly higher. The deferred new crop contracts held onto most of its gains as traders know that if old crop supplies are going to be tight, then more soybean acres are going to be needed just to build stocks back up again. In addition, once the front months came under profit taking pressure, traders started to unwind their long old crop-short new crop spreads. This added to the front month pressure.

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The soybean complex started the session higher May 28, and better than expected. The soybean complex was able to rally slightly early in the session but ran into a brick wall early. The trade was looking for news to feed the bull but with no export sales report, the news was limited and not enough to give the market direction. This resulted in the front months to lose strength and sell off, taking the path of least resistance. Of course anytime the front months trade lower rumors that China is cancelling exports starts to surface. This will be known once USDA's export sales report is released. A strong export sales estimate would result in a rally in the soybean complex. All that is needed is 9 million bushels sales pace per week for the rest of the export marketing year for the US. to run out of soybeans. The deferred contracts were supported by planting progress concerns.

As of May 24, 48 percent of the nation's soybean crop was planted compared with 25 percent last week and 65 percent for the five-year average. Emergence is estimated at 17 percent compared with zero last week and 31 percent for the five-year average.

Barley

USDA estimated last week's export shipments pace at 12,000 bushels with all of the bushels going to Mexico. This brings the year-to-date export shipments pace for barley to 11.3 million bushels compared with 37.4 million bushels for last year at this time. There was not barley export sales reported for last week. This brings the year-to-date export sales pace for barley to 11 million bushels compared with 41.9 million bushels for last year at this time. As of May 24, 77 percent of the nation's barley had been planted compared with 50 percent for last week and 94 percent for the five-year average. Emergence is estimated at 40 percent compared to 20 percent for last week and 73 percent for the five-year average. North Dakota, Montana and Minnesota continue to lag behind in planting progress. Cash barley bids in Minneapolis for feed barley increased 5 cents to $2.85 while malting barley bids remained unchanged at $4.50.

Durum

USDA estimated last week's durum export shipments pace at 456,000 bushels with all of the bushels going to Italy. Last week's durum shipments pace was estimated at a negative 1,300 metric tons as Italy purchased 13,900 metric tons, but that was entirely offset by a cancelation of 15,300 metric tons. As of May 24, 69 percent of North Dakota's durum crop was planted compared with 27 percent for last week and 77 percent for the five-year average. Durum's emergence is estimated at 29 percent compared with 3 percent for last week and 51 percent for the five-year average.

Canola

Canola futures on the Winnipeg, Manitoba, futures exchange closed $9 to $18 (Canadian) lower for the week. Most of the selling was tied to spill over selling from an overall weaker world veg oil market. Losses in the deferred contracts were limited by spillover support from a stronger U.S. soybean and energy complex. Pressure was also a result of sluggish demand and improving weather conditions that are allowing farmers to get planting. Additional selling pressure was a result of sharply lower Canadian dollar, which is trading at its highest level since October. Cash canola bids in Velva, N.D., finished May 27 at $18.

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Sunflower

Cash sunflower bids in Fargo, N.D., finished unchanged for the week ending May 27 at $15.50. Bean oil futures closed 25 cents lower for the same time frame. As of May 24, 16 percent of the nation's sunflower crop was planted compared with 2 percent for last week and 28 percent for the five-year average.

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