Wheat
Wheat started the week out higher on technical buying and short covering. This was fueled by the market's lower close Sept. 25. However, by midday, this upward movement had tapered off some with the fundamentals limiting upward movement. Also playing a part in the market is uncertainty about whether the Commodity Futures Trading Commission will change storage mechanism for Chicago Board of Trade wheat to try to remedy the convergence problem.
Sept. 29's session had wheat as traders looked to Sept. 30's USDA reports. Traders are taking whatever profit they can take from the Sept. 28 technical bounce. However, it should be noted that the market is hitting contract lows in the December contract, and could be poised for another round of technical buying after the report is out of the way.
The market moved lower early in the day by Midweek, responding to the fresh bearish news from USDA. The quarterly stocks report revealed larger stocks than expected at 2.215 billion bushels, compared with 1.858 billion bushels a year ago. Pre-report estimates averaged 2.131 billion bushels. In the small grains report, the U.S. all wheat production for 2009 to '10 came in above expectations at 2.22 billion bushels. The average pre-report estimate was for 2.196 billion bushels. Spring wheat held the real surprise with production coming in at 587 million bushels, compare with the August report of 548 million. Pre-report estimates put production at 552 million bushels. Yields accounted for the increase as they were increased to 45 bushels per acre, up from the 41.5 bushels per acre in the August report. Winter wheat production came in below expectations at 1.523 billion bushels; this is compared with the August estimate of 1.537 billion bushels.
Corn
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Corn futures were 5 cents higher this week (December) compared with the close Sept. 25. This week, the corn market traded the weather forecast. Cooler temperatures materialized across the country, with some areas in the northern Corn Belt being hit with frost. The outside markets also influenced the corn market.
To start the week, corn traded higher and closed with 5-cent gains. The corn market opened slightly higher and closed with strength from weather forecasts calling for freezing temperatures for the night of Sept. 28 and possibly the night of Sept. 29. The weather forecast calling for the frost was for the Northern Plain states as well as for the western Corn Belt regions. The outside markets supported the corn higher as well.
Sept. 29's session had corn trading higher as well and ending with 3.25- to 3.5-cent gains. The weather forecasts again supported corn. Temperatures were in the low 30s for much of the northern part of the country this morning, in addition to the western region of the Corn Belt. This front is scheduled to move eastern Corn Belt in the next couple of days.
The corn market traded slightly higher Sept. 30 and closed with 2-cent gains. The market didn't know what it wanted to do, trading both sides of unchanged. The corn was caught in the land of limbo, with the USDA stocks report coming in lower than expected (up 3 percent from year-ago levels), but the weather looks good in the near future giving the crop a chance to further mature.
The corn market traded slightly lower Oct. 1 and closed with 4.5- to 4.75-cent losses. The market traded lower on the weakness in the outside markets as the dollar was stronger and the Dow Jones Industrial Average was lower. The export sales report was seen as bullish to the corn and helped to limit the losses today.
The end of the week also brought pressure to the corn market as corn started the session Oct. 2 on the defense. Technical selling and pressure from the outside markets were the main pressure points for corn. The outside markets were lower (crude oil and the Dow Jones Industrial Average). The losses in the soybean complex also carried over the corn market.
The weather now is less of a concern, as the majority of the crop in the country will not be affected by a freeze. The northern part of the country is where we lack maturity and some of those areas have seen a frost. As a whole, the corn crop appears that it will make it to the bin. Short term, the outside markets will influence the market on a day by day bases. Long term, the path of least resistance is down, especially when you think of the yield estimates of this crop. Also, demand and exports will influence the market once we get through harvest.
Soybeans
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Soybeans started the week off closing lower, keeping the pattern of adjusting to weather threats. The market has been moving in either direction on weather for quite some time and Sept. 28 was no different. Without any weather concerns in the immediate future, traders are taking premium out of the market. Also, harvest is under way, adding some additional pressure. Providing underlying support and trimming loses is the bullish fundamentals of strong export demand and uncertainty regarding the 2009 crop, with little old crop stocks to hold us over if something happens to this crop . Weather forecasts are calling for colder weather to move into eastern North Dakota, eastern South Dakota and Minnesota in the next couple days, which could put temperatures in the mid to lower 30s. However, this is not seen to be a threat to the crop and should have minimal impact.
The lower close continued Sept. 29 as soybeans closed lower on a lack of fresh news and without any weather concerns in the near future. Weather forecasts have been the main driving force for the soybeans in the past few months, however this trend could be tapering off as more and more of the crop goes into harvest. The main concern is replenishing the tight old crop situation; however, as new stocks come rolling in, more premium could be removed from the market. But until then, the market's losses are limited by the strong export demand and uncertainty over the crop. Also, we are seeing the seasonal trend of harvest pressure which will keep soybeans moving lower.
Sept. 30 USDA reports brought fresh bearish fundamentals to the market as they expanded the amount of soybeans available in what already was expected to be a large crop. The quarterly stock report for the fourth quarter of the 2008 '09 marketing year is estimated to be at 138 million bushels as of Sept 1. The average pre-report estimate was for 111 million bushels. Soybean production for 2008 was revised to be 2.97 billion bushels, which is up 7.83 million bushels from the last estimate. Harvested area was raised 40,000 acres to 74.7 million acres and yield was raised 0.1 bushels per acre to 39.7 bushels per acre. The market fell lower on the news of larger supplies but then moved higher on technical buying (which was spurred on by trader's position squaring ahead of the end of September, which also is the end of the third quarter). The underlying fundamentals remain bullish, which is keeping the market from moving lower. Export demand remains strong and there still is a tight stock situation until the 2009 crop comes in.
Soybeans moved lower Oct. 1, focusing on the fresh bearish news from the day before. USDA expanded its estimates Sept. 30 for soybean production and quarterly stocks, which is weighing on the market today. Also, the lack of threatening weather and harvest pressure is providing additional support. One of the main underlying bullish fundamentals is the concern about replenishing dwindling stocks, and with Sept. 30's news and harvest moving closer in the northern states, there isn't much additional support being added to the market.
Barley
USDA reported no barley shipments for last week. This brings the year-to-date export shipments pace for barley to 806,000 bushels compared to 6.8 million bushels for this time last year. Last week's barley export sales report was estimated at 1 million bushels. This brings the year-to-date export sales total for barley to 3.1 million bushels compared with 8.2 million bushels for last year at this time. Cash feed barley bids increased 10 cents this week to now be at $2. Cass County, N.D.'s barley loan deficiency payment dropped to zero Oct. 2. Progressive Ag took the barley loan deficiency payment when it was 18 cents (Sept. 2).
Durum
USDA put last week's durum shipments at 808,000 bushels with a majority of the bushels (716,000 bushels) going to Turkey. Last week's durum export sales pace was estimated at 3 million bushels. This brings the year-to-date export sales pace for durum to 22.7 million bushels compared with 11.7 million bushels for last year at this time. Cass County's durum loan deficiency payment now is at $1.56.
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Canola
Canola futures on the Winnipeg futures exchange finished the week lower with most months ending with more than (Canadian) $5 losses. Most of the pressure was a result of a weak tone in the world veg oil market. Additional selling pressure came from a mostly lower U.S. soybean complex. Pressure also was a result of an announcement from the Canola Council of Canada, which is estimating this year's crop at 11 million metric tons compared with Statistics Canada's 9.5 million metric tons. Statistics Canada did release its production report Oct. 1 and it was bearish as expected.
Sunflower
As of Sept 27, 75 percent of North Dakota's sunflower crop had bracts turning yellow compared with 55 percent last week and 88 percent for the five-year average. Twenty-five percent of the states sunflower bracts are turning brown compared with 9 percent last week and 58 percent for the five-year average.
USDA estimated sunflower stocks at 492.99 million pounds, up 86.4 percent from last year at this time. North Dakota is the state that is holding more than 50 percent of the stocks.
