Wheat
The wheat markets closed near four-week lows Dec. 7 as traders focused on the bearish fundamentals in the absence of fresh news. It's no secret that wheat is abundant worldwide, but the disappointing export inspection numbers confirmed that U.S. wheat exports continue to be sluggish. Spillover support from neighboring corn and a lower U.S. dollar helped to support the market during the session, though wheat fell lower at the close.
Wheat finished lower once again Dec. 8 as the market continued to drift on a quiet news day. The market has been absent of bullish catalysts, with speculators not wanting to buy under the bearish fundamentals and a lack of spillover support as most of the grains also are moving lower. A stronger U.S. dollar provided additional selling pressure. There isn't much driving the market right now, and while traders were eyeing the Dec. 10 USDA report as a source of fresh news for the markets, it wasn't expected to hold any surprises for wheat.
The Dec. 9 session closed lower as the wheat markets continue to focus on the bearish fundamentals. Wheat is moving lower in the absence of fresh news. The outside markets and neighboring grains are not providing any additional support. Traders are taking profits, which is pushing prices lower. The outlook remains bearish for wheat as the abundance of wheat worldwide continues to pressure prices. On the upside, as U.S. wheat prices move lower, they are more competitive in the world market, which could work to stimulate some export demand. The cure for low prices is low prices.
Wheat finished the Dec. 10 session lower because of a bearish USDA report and disappointing export sales. The Chicago Board of Trade, however, was able to recover on spillover from a rallying corn market and speculative buying. The monthly USDA reports were bearish for the market as wheat stocks in the United States and globally came in higher than expected. U.S. ending stocks were increased 15 million bushels since last month's reports because of a 15 million-bushel cut in food demand. Global wheat supplies were increased by 1 million tons, reflecting the increased production from Canada and the European Union.
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Corn
To start the week, corn opened slightly lower and closed with 5-cent losses. The corn market was lower overnight and that carried over to start the day. The outside markets were not supportive, as the crude oil and gold market were lower. Fundamentally, there was no news to support the market and the Minneapolis cash bids are down 50 cents over the past 10 days. Demand has been poor for corn the past few weeks and the export inspection report released Dec. 7 confirmed that. The crop progress report, which continues to be released, stated that 88 percent of the crop is harvested, an increase of 20 percent in the past two weeks.
The corn market opened mixed Dec. 8 and closed with 2-cent gains. A winter storm hit much of the country, thus delaying harvest. This helped to support the market. The outside markets were not supportive, as the crude oil, gold and the Dow Jones Industrial Average markets were down and the dollar was stronger.
The corn market opened slightly higher Dec. 9, but closed with 1-cent losses. The overnight market was slightly higher and that supported the opening. At midsession, the soybeans broke and that spilled over to take corn lower. The outside markets also turned negative at midday and that added additional weakness. To add additional pressure, the funds are taking profits and either going to the sidelines or are selling the market. Although, the winter storm, that is taking place throughout much of the country, did limit the losses.
The corn market opened slightly higher Dec. 10 and closed with 9-cent gains. USDA released its December crop production report and it was seen as neutral to bearish for corn. USDA increased ending stocks for corn by 50 million bushels to 1.675 billion bushels (exports were reduced). The market shrugged this report off and traded concerns toward the corn that still is in the field. There may be some crop loss from the late harvest, but most of the corn will get combined.
The reason for corn's rally this week, traders are starting to figure out how much corn is left out in the fields. With 12 percent of the corn left to harvest as Dec. 6, that equates to 1.5 billion bushels. Corn ending stocks are estimated at 1.675 billion bushels. You do the math. Of course, most of that corn that is left will get harvested at some point. But let's assume 5 percent remains out in the field over winter, and into the spring, that equates to 645 million bushel left in the field. Corn numbers could tighten if not all of the corn does get harvested. This is a stretch, but the market is very responsive to anything that could disrupt supply. USDA's export inspection report was seen as bearish to corn. There were 25.9 million bushels of corn reported shipped and that was below the 43.6 million bushels needed to meet USDA's projection of 2.1 billion for 2008 to '09. This was below the range of the pre-report estimates of 29 million to 32 million bushels.
Soybeans
The soybeans market finished the Dec. 7 session higher with strong demand for U.S. soybeans being the catalyst. Soybeans took a cue from the strong close in China's soybean markets, which indicated that there is potential for the Chinese to need to import more soybeans in the near future. A friendly export inspections estimate served to reinforce this belief.
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Soybeans closed lower Dec. 8 as traders took profits amidst bearish outside market influences. Lower crude oil and metals, along with a firmer U.S. dollar, applied pressure to the soybean markets, which opened the door for traders to take profits. The majority of the selling pressure came from speculative funds, which sold an estimated 5,000 contracts on the CBOT. Despite the session's lower close, the fundamentals remain supportive.
Midweek the market finished the day lower once again as traders' square positions ahead of the Dec. 10 USDA report. Adding to the lower tone was the outside markets as the U.S. dollar finished higher for the day. Limiting losses are the fundamentals, which are bullish with the strong demand for U.S. soybeans and the bullish outlook for the USDA reports.
The session brought the USDA reports to the market place. The December supply and demand report was not as bullish as expected. While USDA did reduce U.S. soybean stocks, it was not as much as was predicted.
Barley
USDA estimated last week's barley export shipments pace at 1.04 million million bushels with all of the bushels heading to Japan. This brings USDA's export shipments pace for barley to 2.04 million bushels compared with 9.9 million bushels for this time last year. No barley export sales were reported for last week. This brings the year-to-date export sales pace for barley to 3.2 million bushels compared with 10.2 million bushels for the same time last year.
Durum
USDA estimated last week's durum export shipments pace at 1.36 million bushels. The major destinations for the durum were Algeria (582,000 bushels), while 776,000 bushels went to Italy. No durum was sold in the export market last week. To date, durum export sales for the year are at 32.4 million bushels compared with 13.7 million bushels for this time last year. Durum's supply and demand numbers became a little friendlier as USDA cut durum's ending stocks estimate 7 million bushels to now be at 40 million bushels. The 7 million-bushel increase in demand was a result of a 2 million-bushel increase in domestic use and from a 5 million-bushel increase in the export pace.
Canola
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Canola futures on the Winnipeg, Manitoba, futures exchange closed the week ending Dec. 10 off $2.60 (Canadian). The canola market played a follower to the U.S. soybean complex this week. When the U.S. soybean complex was firm, so was canola, but when the soybean market struggled so did canola. Most the weeks pressure was a result of the lower U.S. soybean market as well as from a strong Canadian dollar. Losses were limited by strong domestic crush demand and from the lack of farmer selling as farmers wait for warmer weather to continue moving grain. Additional pressure was a result export concerns as not all of the issues have been worked out between China and Canada in reference to blackleg in canola. The Dec. 10 cash canola bids in Velva, N.D., were at $16.80.
Dry beans
USDA broke down the 2009 dry bean production estimates. Total dry bean production was estimated at 25.176 million hundredweight, off 1.5 percent from last year. This production was off of 1.44 million harvested acres (1.53 million planted acres) with an average yield of 1737 pounds per acre. Last year's tight supplies remain tight and with quality concerns on the last half of the crop, this could be the market to watch this winter.
Sunflowers
As of Dec. 6, 94 percent of the nation's sunflower crop was harvested compared with 90 percent for last week and 99 percent for the five-year average. The state that is lagging behind in progress the most is Kansas, which is estimating harvest progress at 83 percent compared with 99 percent for the five-year average. USDA estimated last week's soybean oil export pace at 12.3 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 716,500 metric tons compared with 207,100 metric tons for this time last year. The Dec. 10 cash sunflower bid in Fargo, N.D., was at $13.20.
