Wheat
Wheat started out the week mixed with spring wheat falling lower after last week's gains. Last week, the market went into recovery mode, but with a lack of fresh news to drive prices, the market fell lower. Export inspections were strong this week and, coupled with higher export sales from July 16, we are seeing more export demand than we experienced earlier in the summer. However, how long this demand will last with world wheat stocks plentiful is the question.
Winter wheat markets saw more strength near the close pushing them slightly higher for the day. There still is potential for some short covering from commodity funds, with the July 14 Commodity Futures Trading Commission report showing that speculative funds are net short 53,353 contracts. This short covering stepped in to push Chicago Board of Trade higher near the close. The largest bullish contributor was the wrapping up of winter wheat harvest, which is alleviating some of the pressure felt over the past month.
The market turned and fell lower July 21 on spillover pressure from lower soybeans and corn. The outside markets didn't lend any help with the U.S. dollar higher and crude oil moving lower. Commodity funds added pressure as well by selling off 2000 contracts on the CBOT. There really wasn't much supporting the recent gains with the world wheat supply looking good and crop conditions remain bearish. Weather conditions continue to look favorable.
Wheat continued its move lower July 22 with a lack of news to push the market higher. The outside market and neighboring grains did little to help wheat find direction. Instead, the market focused on the bearish fundamentals with plentiful world stocks and a favorable weather forecast and crop conditions. Spring wheat fell to its lowest close since March, and this helped limit it losses as the market is seen to be oversold. In the background, discussion that the CFTC will be ending position limits exemptions for index traders is helping the bearish momentum.
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The market closed higher July 23 on spillover support from corn and soybeans. Corn was the leader with expectations that USDA may cut acreage sending the market higher. Wheat acted as a follower with the CBOT and Kansas City Board of Trade moderately higher for the day. The winter wheat markets have more room for upward movement with the winter wheat harvest winding down. Spring wheat also saw some gains but have less room to move upward after the premium built into the market this spring on planting concerns and with good crop and weather conditions. The idea that the CBOT may be tightening limits on commodity funds to help convergence issues still is lingering in the background, but had little effect on the market.
Corn
Corn futures were unchanged (December) compared with the close July 17. The planting progress and inspection reports that came out were bearish to the corn market, although export sales were good and seen as friendly.
The market opened July 20 2 to 3 cents higher and held small gains early before a lack of continued buying interest left the corn market at mid-session to trade lower and then closed slightly higher. The weekly inspection report came out bearish to the corn and that pressured the market early in the session. The corn market did turn around and was able to close slightly higher with the strength in the outside markets. The dollar was weaker along with crude oil trading higher nearing $64 a barrel and a good performance in the Dow Jones Industrial Average.
The market opened lower July 21 and continued the slide to close near the lows of the day with 12 cents losses. USDA's crop progress report results were bearish to corn.
The market again opened lower July 22 and stayed there for the session to close with 2- to 3.5-cent losses. A private estimate for production came out, estimating the corn yield at 161.9 bushels an acre much above the 153.5 bushels an acre that USDA came out with one month ago, and this weighed on the market.
The market opened higher July 23 and stayed there for the session to close with 19 to 20 cent gains. The big news in the corn market was that USDA announced that it is going to resurvey seven major corn-producing states on their acres that were planted to corn and soybeans. This gave the market a shot in the arm as there is a lot of buzz about the acres that actually were planted vs. USDA's estimate of last month. On the other hand, even if USDA lowers the acres in its next report, it may be possible for it to increase the yield to offset the acres lost (if any).
The market traded July 24 with slight losses. There was some profit taking and squaring up before the weekend. It appears that we will trade the weather forecast until the next major report (crop production) comes out Aug. 12. The report will adjust the acres and yield for the 2009 corn crop. While the crop is slow to develop, the crop ratings still are very good and a very large crop could be possible if the near-perfect conditions continue in the heart of the Corn Belt. It won't be long and the conversation with the weather will be the heat units that are needed to get the crop to harvest and most parts of the country are behind average.
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The corn market has been driven by the weather, as the lower temperatures and the adequate rainfall have been ideal for the crop to pollinate. But, the past few weeks Progressive Ag has been talking about the need for heat throughout the country to get this crop to harvest. It appears that the month of July will go down as one of the coldest in more than 100 years for the Midwest. As an example, the average temperature in Iowa for the month of July is 68.1 degrees, the low was 68.3 and the 100-plus-year average temperature is 73.8 degrees. It is hard to make up lost heating degree units this time of year because we are at the time when we should be hot and the days are getting shorter.
Soybeans
The market started out the day higher July 20 after last week's losses and with supportive outside markets. The outside markets provided support with a lower U.S. dollar and higher crude oil. Gains in the front months are on the concern of tight stocks, the prices need to be higher to ensure we have enough supply with the increased export demand. Other than that, the market really doesn't have much driving it. Weather conditions continue to look bearish with temperatures normal to below normal with scattered showers in the Corn Belt.
Soybeans were lower July 21 on good weather and crop conditions. Soybeans closed sharply lower after the favorable crop progress report. Despite some concerns earlier in the year, the soybean crop is making strides with crop conditions continuing to look bearish. At this time of the year the market also looks for direction in the weather forecasts, and the forecast continues to look favorable into the extended forecast. Demand does remain strong for old crop due to tight stocks, though much of this premium already is built into the market.
Midweek the market experienced small gains in a quiet trading day. Soybeans finished with small gains after July 21's losses. The market was trapped in two sided trade but eventually bounced after recent losses with traders not wanting prices to fall too low. The fundamentals continue to look bearish with good crop conditions and an extended weather forecast that looks favorable. Temperatures look to continue to be normal to below normal. Strong export demand and tight old crop stocks continue to provide some underlying support.
Soybeans moved higher July 23 after the mornings bullish export sales report and spillover support from neighboring corn. Soybeans have experienced some sharp losses in the past couple of weeks and were waiting for something bullish to pull them back upward. The speculation that USDA could cut corn acreage pulled corn sharply higher and this trend spilled over into soybeans pulling them along to finish sharply higher. Providing the underlying support for gains is the strong export demand that they have seen through export sales and the sales reported from private exporters. In the morning an export sale to China for 4.3 million bushels was announced for the 2009 to '10 marketing year.
Barley
USDA estimated last week's barley export shipments pace at a impressive 11.4 million bushels with all of the bushels going to China. This brings the year-to-date export shipments pace for barley to 11.8 million bushels compared with 1.2 million bushels for last year at this time. USDA reported no barley sales for last week. This brings the year-to-date export sales pace for barley to 1.5 million bushels compared with 5 million bushels for this time last year. USDA is projecting barley exports pace at 15 million bushels.
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Cash barley bids in Minneapolis dropped this week. Feed barley bids dropped 30 cents to $1.90, while there remains to be no quote for malting barley.
Durum
There was no durum shipments or export sales reported for last week. This brings the year-to-date export sales estimate for durum to 8.8 million bushels compared with 9.3 million bushels for the time last year.
Canola
Canola futures on the Winnipeg, Manitoba, futures exchange closed lower for the week with many of the contracts dropping between $7.50 to $13 (Canadian). The canola market was pressured by a stronger performance from the Canadian dollar as well as from poor demand. Light selling pressure also was tied to weakness in the Malaysian palm oil market. Also adding pressure was technical selling from funds.
Sunflowers
Cash sunflower bids in Fargo, N.D., for old crop sunflowers were at $13.15, while new crop bids were at $13.90.
