Early-week pressure gives way to recovery
Wheat The market finished lower July 6 on spillover pressure from corn and soybeans. The outside markets also were lending pressure to the market with the dollar moving higher and crude oil lower. The long weekend provided favorable weather condi...
The market finished lower July 6 on spillover pressure from corn and soybeans. The outside markets also were lending pressure to the market with the dollar moving higher and crude oil lower. The long weekend provided favorable weather conditions and winter wheat harvest continues to progress adding to the momentum. However, as the same with last week, wheat isn't falling as much as other grains because they are seen to be oversold. At this point, the market is just looking for some fundamentals to help turn it around. There could be some help from expectations that winter wheat harvest is wrapping up, with the market waiting for crop progress report.
The trend continued July 7 with wheat moved lower again, though the oversold conditions helped to limit losses. Spillover from soybeans and bearish outside markets pushed the market lower for the day. Winter wheat harvest continues to progress with weather conditions looking favorable for harvest through the week. Monday's crop progress report showed that harvest is 56 percent completed. Until harvest is completed, the market seems to be following the other grains waiting for fresh news to help it turn around.
Midweek, the market saw some relief with wheat moved higher after experiencing losses for over a week. The market was seen to be oversold and finally the market bounced back. Gains were modest as there aren't really any fundamentals driving the upward movement. Limiting gains also are bearish soybeans and not much strength in corn. The bearish fundamentals and outside markets trimmed gains after midday brining the Minneapolis Grain Exchange lower and taking back some of the gains on the Chicago Board of Trade and Kansas City Board of Trade.
Wheat saw recovery on short covering and export demand July 9. Export sales numbers were bullish, signaling an increase in world buying interest. Also, other grains were moving bullish pulling wheat along with it. Even though wheat saw some gains July 8, it was due for more of a recovery after its downward trend.
USDA's July reports were released July 10. In it, winter wheat production was up 2 percent from June estimates to 1.52 billion bushels. USDA supply-demand reports raised 2009 to '10 carry-over forecasts to 706 million bushels, which is higher than the 647 mbu June estimate. This is still within the range of preliminary estimates, however, more than the average estimate of 693 million bushels. The increase was a result of higher production estimates that were not offset by the increase in use. Wheat production was raised to 2.112 billion bushels. This was up from the June estimate of 2.016 billion bushels and slightly higher than the average pre-report estimate of 2.107 billion bushels. In the world report, wheat ending stocks for 2009/2010 were trimmed to 181.3 million tons, down from the June estimate of 182.7 million tons. World production was raised slightly with increases in the U.S. mainly offsetting losses in Argentina because of dry conditions. Production for 2009 to '10 now is estimated to be for 656.48 million tons, up from June estimate of 656.06 million tons.
Corn futures were lower by about 25 cents (December) compared with the close July 2. The reports that came out this week were bearish (but most of the numbers were within estimates) to the corn market, although export sales were good and seen as friendly.
The market traded lower July 6 to finish with 3- to 12.75-cent losses. The corn market opened lower and traded there most of the day to close near session lows. The corn market was pressured by the outside markets as crude oil and the Dow Jones Industrial Average were down and the dollar was firmer. As we said a few weeks ago, this market will trade the acreage report and weather for the summer. The acreage report is behind us and we are watching the weather. The call is for good weather through the Corn Belt for the next 10 days with moderate temperatures and moisture, which are beneficial for pollination. The weather now will play a very critical role in how this crop turns out and how this market performs. The inspection report that came out today also pressured the corn.
We also had the weekly export inspection report out July 6. The report was seen as bearish to corn. There were 31.1 million bushels of corn reported that was below the 40.9 million bushels needed to meet USDA's projection of 1.75 billion for 2008-2009.
The planting progress report also was released July 6. Last week, we had 72 percent of the corn crop in the good-excellent categories. This week's report stated that 71 percent of the corn is in the good-excellent, down 1 percent from last week in the good category. The report also stated that 8 percent of the corn is in the silk stage compared with a five-year average of 16 percent.
The market traded lower July 7 to finish with 8.25- to 9-cent losses. The corn market opened mixed after a higher overnight session and then sold off at the end to close at near session lows. The corn market held up quite nicely most of the session compared with the soybean market only to succumb to the pressure from the beans at the close.
The market traded slightly lower July 8 to finish with losses of 0.50- to 1.75-cent losses. The corn market opened mixed after a slightly higher overnight session and closed with slight losses. The corn market held up quite nicely most of the session compared to the soybean and outside markets.
The market traded slightly higher to finish with 4.50- to 5.75-cent gains. The corn market opened higher after a slightly higher overnight session and closed at near session highs. The corn market was supported by a weaker dollar and strength in the soybean and wheat markets. The USDA export sales report also was released and was viewed as friendly to bullish to give this market further support. The weather continues to be the conversation in this market.
Export sales seem to continue to be good for corn, with a decent week of sales. Weekly export sales were good at 29.5 million bushels old crop (down 16 million bushels from last week), and 16.4 million bushels new crop (up 11.8 million bushels from last week). Decent exports this week and the export sales were seen as friendly to corn.
Soybeans started off the week sharply lower on good weather coming out of the holiday weekend. With the long weekend of good crop growing weather behind us the market moved lower. Weather conditions look to be favorable for growing conditions in the Midwest for the next ten days. The outside markets aren't helping to provide any support and are instead lending to the bearish pressure. Providing a small amount of support to trim losses continues to be the tight global stocks and the knowledge that there is still a long growing season to go.
Soybeans were sharply lower again July 7, but this time on profit taking. Soybeans moved sharply lower with traders continuing the trend of taking profits. The market saw more gains in the past week than corn or wheat, leaving room for more profit taking. Weather conditions continue to look favorable. Crop condition ratings were reported to be lower in the July 6 crop progress report, though it was not enough to return buying interest to the market. The outside market lent to the downward pressure.
Midweek the market was lower once again as traders' positioned ahead of the July 10 reports and bearish weather outlook. Soybeans moved sharply lower again in the front months with traders taking profits and rolling positions ahead. The front months have gotten more support over concerns of tight stocks, so there is more room for liquidation. New crop months finished slightly lower. Adding to the bearish pressure of the past couple of days were rumors that China would not be buying soybeans this coming marketing year. But just on Wednesday, private exporters reported a sale of 1.4 million bushels to China for the 2009 to '10 marketing year.
After a couple of days of losses, the market bounced back July 9, recovering on bullish export sales. Sales this week put cumulative sales over the USDA projections for the marketing year that ends in September, despite export concerns that China may not import next year. If sales are able to hold, the market will not be largely affected by China. Traders are more comfortable with the tight ending stocks situation and are rolling positions forward adding some strength to the new crop months.
USDA reported last week's barley shipments pace at 32,000 bushels with most of the bushels going to Mexico. Last week's export sales pace for barley was estimated at 518,000 bushels with most of the bushels going to Canada. Twain also was a buyer of barley last week.
There was no durum shipments reported for last week. Last week's durum export sales pace was estimated at 600,000 bushels. This brings durum's export sales pace for the year to 8.8 million bushels compared with 9.2 million bushels for last year at this time.
Canola futures on the Winnipeg, Manitoba, futures exchange closed sharply lower in all months and with most of the contracts $32 to $34 (Canadian) lower. Most of the selling pressure was a result of a sharply lower U.S. soybean complex and a sharply lower energy sector added pressure. The canola market came under enough pressure that the technical picture turned ugly adding to the selling pressure. This resulted in technical selling and fund long liquidation to add to the selling late in the week. The July 9 cash canola bids in Velva, N.D., for old crop were at $16.32 while new crop bids ended at $15.90.
The July 9 cash sunflower bids in Fargo, N.D., for old crop sunflowers were at $13, while new crop bids were at $13.70.