Finding a bottom
Wheat The wheat market started the week off higher with most of the early support coming from spillover buying from a stronger overnight session as well as from friendly news from the U.S. Department of Agriculture's November supply and demand re...
The wheat market started the week off higher with most of the early support coming from spillover buying from a stronger overnight session as well as from friendly news from the U.S. Department of Agriculture's November supply and demand report. Reports still are showing this year has the potential to be a record global production year and that weighed on the wheat late in the session. As far as wheat numbers in the report, USDA made little changes. The only adjustment was a decrease of 2 million bushels to seed and that followed right through to the ending stocks estimate. A late round of buying in the other grains did help to spur some buying strength in the wheat market, but the buying was not enough to push all contracts to the plus side.
Nov. 11's session had wheat starting the session off lower in all contracts, but not with as much of pressure as the other grains saw. By midsession, the wheat markets had started the firm with many of the contract months only posting 5-cent losses. As the close approached, the funds that were selling in the early part of the session turned to be buyers and that spilled over to help all three of the wheat exchanges to recover all losses and turn higher going into the close. Technically, the December Chicago contract traded within cents of its contract low, so the late-session buying spurt was friendly to wheat.
The wheat market started lower Nov. 12 with much of the early selling pressure coming from spillover selling from the other grains and with some pressure coming from carry-over selling from a lower overnight session. But the early session selling was short lived. By midsession, the Chicago wheat contracts were forced down to test contract lows. Once the Chicago wheat hit the support lines, which also were Nov. 11's low, buy stops were hit. This helped the market to accelerate to the upside and helped to push the entire wheat complex to more than 30-cent gains. The wheat, of course, could not hold this strength and gave two-thirds of the gains back, but the end result still was wheat closing higher. Technically, the close was significant as it shows wheat can trade on its own news and without the help of the other grains.
The wheat market started the Nov. 13 session better than expected with most of the contracts opening higher. Early strength was a result of traders who were looking to buy wheat on a lower opening. The large number of buy orders on the opening was enough to cause the wheat to open with small strength, but once that early session strength ran out of steam and the buy orders dried up, the wheat market started to stumble. The early buying seemed to be from local traders, and once that stopped, fund selling stepped in to push the wheat lower. A late round of buying in the grains, which was spurred on by a recovering stock market, helped to bring wheat back to small gains by the close. The Minneapolis December contract did not fair as well as it closed lower, virtually taking away the inverted market we have been seeing. This could mean that demand is starting to slow, but we will need to see that confirmed.
USDA put last week's wheat export inspections estimate at 12.8 million bushels. This compared with 14.1 million bushels for last week and 23.9 million bushels for last year. This does bring the year-to-date wheat shipments total to 551.5 million bushels compared with 641.4 million bushels for last year at this time.
News from the USDA crop production reported started the week. Corn closed up with moderate gains as a relatively friendly crop production report was released early Nov. 10. The report did show the market some support. There were no big surprises to push the market extremely higher; this report was mediocre at best for the market. Outside markets still contributed to the movement of prices. The U.S. dollar was weak, crude oil was strong and the stock market was strong for most of the day.
Corn finished the Nov. 11 trading day lower. Outside markets were negative with big losses in the stock market and the dollar being up more than 100 points and crude oil has slid back below $60. There wasn't a heavy round of bearish selling interest in the market right away. Slow harvest continues this fall and the slowed progress seems to have no apparent affect on the markets. And with winter weather moving in across much of the Northern Plains, many farmers will continue the struggle to get their corn harvested.
By midweek, corn closed down but managed to limited loses. Crude oil hit a 22-month low Nov. 12. Looking back, it is no surprise that corn is trading back at the current levels. Twenty-two months ago, corn was trading at similar ranges to now. The lack of fundamentals in this market is not going to support corn prices. We have seen a weakening in demand the pass few months, and now see crude oil dropping more than $90 from the high in July. Once the crude oil market stops, we should see corn level flatten as well. The other outside markets such as the U.S. dollar and the stock market pushed corn down as well.
Corn finished the Nov. 13 trading day 7½ cents higher. Because of the recession, investors still are expecting lower demand and lower prices of goods and services. The short coverings kept the corn market volatile. There is a bullish side in the market because of the slow corn harvest and the fears that the last part of the corn crop could face a struggle to get it out. An unfavorable forecast looms for the near future and with already-saturated soil around many regions a heavy freeze will be very favorable.
To begin the week, soybeans closed higher but outside markets still remain king. The November USDA crop production report came out Nov. 10 and was rather friendly to soybeans by lowering the expected yield for the October report. The outside markets still pushed prices up. Soybeans followed crude oil and had some good gains doing it. The U.S. dollar also was weaker that managed to support some exports.
Soybean trade was sharply lower Nov. 11 because of a weak crude trade, a higher dollar and the USDA report, which did not provide the support for which bullish marketers were waiting. The crude oil market continues to drop off with it hitting a 19 month low today of $58.32. The soybean harvest appears to be wrapping up in many areas with farmers going strong in the corn harvest in many areas.
By midweek, soybeans closed down as did many other markets. Soybeans are feeling the pressure of outside markets for the time being. The U.S. dollar remains strong and crude oil dropping to new lows in almost two years. The good news for soybeans is that prices maybe dropping, but there is a good underlying demand for soybeans. This gives them some good fundamentals to base good prices on later. Farmers have been holding on to their crop, and that should slow the downward progression of prices. These good fundamentals could shape up to be something to work with later in the year. For now, we have to deal with the strength of the U.S. dollar that has limited countries ability to buy U.S. soybeans.
Soybeans finished the Nov. 13 trading day up after a fast-paced market. It still was considered a quiet day of trading with recessionary concerns turning investors bearish this week. Soybean harvest has all but finished up in the region with some acres still left in the field because of wet conditions during the past month and an unfavorable forecast for the rest of the week in the region.
USDA left barley's supply and demand estimates unchanged in its November crop production report. Current estimates have barley production at 239 million bushels, demand at 265 million bushels (exports at 25 million bushels and domestic demand at 240 million bushels), leaving ending stocks unchanged at 68 million bushels (which also is unchanged from last year). USDA did drop prices 10 cents from last month to $5. Last week's barley shipments were estimated at 24,000 bushels with 16,000 bushels going to China and 8,000 bushels going to Mexico. This brings the year-to-date shipments for barley to 8.3 million bushels compared with 16.9 million bushels for last year at this time. Minneapols cash bids for feed barley remain at $3.15. Malting barley bids increased 15 cents to $5.25.
USDA increased durum's ending stocks 5 million bushels this month. This puts the November crop production ending stocks estimate for durum to be at 24 million bushels. The increase was a result of a decrease in durum's imports (which now are estimated to be at 40 million bushels), which was offset by a 10 million bushels decrease in durum's potential export pace (which now is estimated at 20 million bushels). USDA estimate durum shipments at 229,000 bushels.
The Winnipeg, Manitoba, canola futures market closed weaker for the week. The canola market started the week higher with most of the early support coming from news of China's stimulus package. This package if realized could result in a pickup in exports, especially vegetable oil products. The gains were short lived as pressure moved into the canola market for the rest of the week. The Nov. 12 session was lower mainly because of carry-over selling from the lower U.S. soybean complex. The Nov. 13 session started with the U.S. grains higher, but that strength did not spill over to the canola market as that market started lower and remained lower throughout the session. Canola did try to recover around midsession in an attempt to follow the stronger U.S. soybean complex, but there was no follow-through buying to help hold the gains. The lack of export demand continues to pressure the canola market.
As of Nov. 9, 70 percent of the nations sunflower crop was harvested compared with 51 percent last week and 82 percent for the five-year average.