Beginning (or end) of weather market
Wheat Wheat fell lower once again Sept. 14 without any fresh supportive news to help it hold onto the gains from Sept. 11. After reaching contract lows last week, the market saw a technical bounce Sept. 11. With some gains back into the market, a...
Wheat fell lower once again Sept. 14 without any fresh supportive news to help it hold onto the gains from Sept. 11. After reaching contract lows last week, the market saw a technical bounce Sept. 11. With some gains back into the market, and without fresh news, traders turned their attention back to the fundamentals and took profits. The bearish fundamentals have been a constant theme with the main issue being the lack of demand for U.S. wheat with the situation of plentiful global stocks. The Sept. 11 USDA reports held little news for wheat, though they did confirm that globally the stocks are abundant and this will continue to be a bearish factor in the market unless the U.S. dollar or prices fall enough to bring some export demand back.
The Sept. 15 session had wheat close higher on spillover support from neighboring grains. Corn and soybeans rallied on concerns about frost in the Upper Midwest. This is of particular concern this year because of the late planting of the crop. While the frost will have little effect on wheat, it allows the market to follow the upward momentum coming for both of these neighboring crops. The fundamentals remain bearish with spring wheat harvest almost 70 percent completed and world wheat stocks abundant. Though wheat has returned to its role as a follower, and that is enough to see some premium being added back into the market.
Wheat closed lower Sept. 16, following the trend of soybeans and corn. Wheat had followed neighboring grains higher Sept. 15, but when those same grains turned around, wheat followed them back down. Trimming losses in wheat are the oversold conditions. The premium has all but been removed from the market, and so even with bearish spillover, wheat doesn't have that far to fall. The upside of the lower prices, and the lower U.S. dollar, is that we could see more export demand as U.S. wheat becomes more competitive in the world market.
Wheat finished the day Sept. 17 mostly lower, following the trend in corn. Providing additional pressure are the fundamentals, which have been a lingering pressure. Global wheat stocks remain abundant and, thus, there is a lack of demand for U.S. wheat. The Minneapolis Grain Exchange was able to some support from the winding down of the spring wheat harvest.
For the week, wheat will end with minor gains. It appears that with spring wheat harvest drawing to a close, the wheat exchanges are desperately looking for a bottom. Of course, as long as the corn and soybean complexes remain under pressure, it's likely that wheat will not rally much. Cash bids have started to improve at most locations as both basis levels and protein discounts improve. It just seems odd that at a time when the wheat market should be looking at encouraging planting, this market is dropping. Maybe this is the market's way of telling us that there is enough wheat in the world?
Corn futures were 5 cents higher this week (December) compared with Sept. 11's close. For the week, the corn market traded the weather forecast and the USDA crop production report. The big crop continues to get bigger.
The corn market traded lower most of the Sept. 14 session and closed with 1- to 2-cent losses. The corn market was influenced by the good weather that is forecast for the week of Sept. 21 and the negative outside markets.
The corn market traded higher Sept. 15 and closed at session highs with 28- to 29-cent gains. Weather forecasts calling for a potential frost in the next week and short covering came in to help support the corn. The forecast was changed putting much cooler temperatures in for the eight- to 10-day time frame, with a chance of frost for most of the Northern Plain and western Corn Belt states. This has the market worried when you look at the maturity of the crop.
The corn market traded lower Sept. 16 and closed with 10- to 11-cent losses. Weather rallies never are sustainable, and this is a perfect example of that saying. All of the weather forecasts changed and removed the frost scare and that led to the removal of part of the weather premium traders had put in the day before.
Sept. 17, the corn market traded lower and closed with 8- to 8.25-cent losses. The corn market traded lower on continued selling pressure from yesterday and that the weather forecast that looks good for the next 14 days.
The corn market again opened lower Sept. 18 with continued pressure from the past couple of days of selling. Also, the weather looks good for the next 14 days with the frost threat taken out of the forecast. This will continue to allow most of the corn a chance to mature.
The soybean complex started the week closing higher on technical buying after last week's losses. The market moved lower for most of last week positioning ahead of the September USDA reports, which were released Sept. 11. The reports were viewed as bearish for soybeans with USDA expanding production, though this expansion was within preliminary estimates. This pushed soybeans lower Sept. 11, and provided the stage for the technical buying that took place Sept. 14. The market needed to bounce higher, though upward momentum was limited by the bearish fundamentals of a good crop starting to roll in as harvest is under way in the southern states and a lack of concern on the weather front.
Soybeans closed sharply higher Sept. 15 on weather concerns. Weather forecasts remained favorable into the next week, but reports of a chance of frost in the Upper Midwest had traders adding premium back into the market. With the tight stock situation and with the strong export demand, there isn't room for losses in this crop. The crop is behind in development after the late planting season, as evident in the Sept. 14 crop progress report in which only 17 percent are dropping leaves compared with the five-year average of 36 percent. Also, a lot of the crop that is behind is in these northern states, which would be the hardest hit by this frost forecast.
The market fell lower midweek as frost fears got removed from the forecast. With frost fears out of the forecast, the market turned around Sept. 16. Losses were trimmed by the strong underlying fundamentals. Export demand remains strong and the market has not forgotten about the tight stocks situation. Also after the previous week's losses, the market doesn't have as much room to fall.
Soybeans finished the day Sept. 17 mixed as the front months were able to finish higher on uncertainty about the 2009 crop. Strong export demand, and the tight old crop situation have traders adding premium back into the market in the front months. However, past that, the market is negative with the market lacking any fresh news and with no immediate weather threats in the forecast.
The fundamental picture for soybeans is starting to turn more bearish with each passing day. With the current weather forecasts, it appears that most of the U.S. soybean crop is going to have time to make it to maturity. So far, the crop that is being harvested has seen impressive yields. Reports have Iowa soybeans averaging 67 bushels per acre and Arkansas soybeans averaging the same. Demand has remained strong and still has traders sitting on the edge of their seats, but South America is planting and so far, planting progress has been good. Basis levels have slipped slightly over the past few weeks, but still remain close to the long-term average. Once the pipeline gets full of soybeans, the strong basis levels will not remain. Producers should consider moving as many soybeans off the combine as possible and look for cheaper methods of ownership.
USDA reported no barley shipments for last week. This brings the year-to-date export shipments total for barley to 710,000 bushels compared with 2.6 million bushels for last year at this time. USDA estimated last week's barley export sales pace at 300,000 bushels. This brings the year-to-date export sales total for barley to 2 million bushels compared with 8.2 million bushels for last year at this time.
The barley loan deficiency payment in Cass County, N.D., dropped 2 cent to 7 cents. Progressive Ag took the barley loan deficiency payment when it was 18 cents (Sept. 2).
USDA estimated last week's durum shipments pace at 483,000 bushels with 289,000 of those bushels going to the UK. Last week's durum export sales pace was estimated at 1 million bushels. This brings the year-to-date export sales total for durum to 18.3 million bushels compared with 11.4 million bushels for last year at this time.
Canola futures on the Winnipeg, Manitoba, futures exchange ended the week with modest gains. The strength all came in one day while most of the rest of the week we saw the canola market struggling. Most of the pressure came from an active harvest activity. The past few weeks' weather has been as close to ideal as one can get to help the crop reach maturity and to aid in harvest activity. The one big day rally was a result of weather forecasts that were calling for a potential frost event for Sept. 24 to 26. This helped to push the U.S. grain market sharply higher and, in turn, that spilled over to the canola market. This forecast was shortlived, though, as many of the next day's forecast had removed this chance and that, in turn, put pressure on the canola.
As of Sept. 13, 70 percent of North Dakota's crop had ray flowers dropping compared with 46 percent last week and 88 percent for the five-year average.