Grabanski: Late week rally for markets
Wheat Wheat traded with gains in three out of the four sessions last week, but the lower session was enough to keep wheat close to unchanged, or softer. Wheat seems to be in holiday mode, as the market searches for direction. For the week ending Dec.
Wheat traded with gains in three out of the four sessions last week, but the lower session was enough to keep wheat close to unchanged, or softer. Wheat seems to be in holiday mode, as the market searches for direction. For the week ending Dec. 17, March Minneapolis wheat gained 0.25 cents, March Chicago lost 6.5 cents, and March Kansas City lost 2 cents.
The first two sessions of the week had wheat moving higher. All three exchanges started sloppy, but by the end of the session, posted decent gains. The lack of news put pressure on wheat early, but that gave way to technical buying late. Technically, wheat is trading near its lows, but more importantly, this is currently the largest short position the funds have held since May. This helped bring some traders off the fence, becoming buyers. The Dec. 15 session had wheat ignoring the stronger U.S. dollar and trend set by corn and soybeans.
Light support also came from expectations the Federal Reserve would increase interest rates. Trading was thin, as most traders seemed reluctant to take a position in wheat ahead of the holiday season.
Wheat slipped into the red on Dec. 16, following the other grains.
After a couple days of higher prices in wheat, profit-taking seemed to be the main order of business. News that the Federal Reserve increased interest rates didn’t have much impact. Fundamentals continue to be negative, as demand for U.S. wheat remains sluggish. Weather conditions across much of the major winter wheat growing region continues to be a nonevent to the trade, as conditions are turning to be more favorable for crop development.
The Dec. 17 session had wheat lower throughout the session, with selling tied to pressure from a sharply higher U.S. dollar. Additional selling was tied to another bearish export sales report, which continues to show lighter-than-expected sales. The stronger dollar is one thing keeping wheat on the defense, but the world is awash in wheat, and that adds to the pressure. Wheat recovered late in the session, as technical buying stepped in after the exchanges traded to support.
For the week ending Dec. 12, the U.S. Department of Agriculture estimated the wheat export shipments pace at 15.97 million bushels.
This brings wheat’s year-to-date shipments pace to 402.9 million bushels, compared with 471.2 million bushels last year. The wheat export sales pace was estimated at 11.8 million bushels. This brings the export sales pace for the year to 552.1 million bushels, compared with 655.9 million bushels last year.
Corn continued to trade sideways for the week as we near the end of the calendar year. Support came from the soybean trade and talk of dry conditions in northern Brazil. The upside was limited with the change in interest rates, a strong dollar and disappointing export sales.
Argentina also cut its export tax, and will begin to lift currency controls on the peso, which could increase export sales for them. As of the Dec. 17 close, March corn slipped 1 cent.
Corn futures were slightly higher Dec. 14 on quiet trading, with light short covering the main focus. New lows were reached in the crude oil market, but futures came off lows and helped support corn. Traders were cautious with the Federal Reserve meeting, as many expected a rate hike Dec. 16 for the first time in nearly 10 years.
Selling interest came back into the market on Dec. 15 and 16. Early pressure came from the negative outside markets, with crude oil sharply lower and ethanol trading at a premium to gasoline. The ethanol report showed production up from the previous week, but stocks were higher. Additional pressure came from private estimates projecting a larger corn crop in South America. CONAB, Brazil’s ag statistics service, is estimating Brazil’s corn crop at 82 million metric tons, and above USDA’s estimate of 81.5 million metric tons, while Argentina crop scouts are projecting a crop of 27 million metric tons, with USDA at 25.6 million metric tons. Corn futures made new contract lows Dec. 17, but firmed later in the day. Support came from strength in soybeans and light short covering.
Ethanol production for the week ending Dec. 11 averaged 1 million barrels per day, up 0.70 percent from the previous week. Total ethanol production for the week was 7 million barrels. Corn used in production is estimated at 105 million bushels, and needs to average 98.427 million bushels per week to meet this crop year’s USDA estimate of 5.175 billion bushels. Stocks were 20.322 million barrels, up 2.49 percent, compared with last week, and up 15.08 percent, compared with last year.
USDA’s export inspections report was bearish for corn at 22.3 million bushels, below the 38.9 million bushels needed to meet USDA’s projection. Corn export sales were estimated at 26.7 million bushels, just below the 27.4 million bushels needed to meet USDA’s estimate of 1.75 billion bushels for the year. Shipments came in at 19.5 million bushels, below the 38.9 million bushels needed to keep pace with USDA projections.
The rate of devaluation for Argentina’s peso, interest rate increases in the U.S., and South American weather was the news driving the soybean market last week.
Rain in the forecast for Brazil pressured soybeans early in the week. Technical buying and short covering helped soybeans move into positive territory. For the week ending Dec. 17, soybeans were up 6.25 cents.
It was a positive start to the week for grains, with soybeans getting in on the action. There were small gains across the board, with soybeans gaining a couple cents. Some short covering and higher crude prices the upside. Argentina lower the soybean export tax by 5 percent Dec. 14 to 30 percent. But producers in Argentina were waiting to see if the plan to devalue the peso would happen.
The Dec. 15 session had the market on the defense, with the market losing the Dec. 14 gains, and more. Without much news, soybeans found weakness, with the crush reports and a higher dollar. The monthly soy crush numbers came out with weaker-than-anticipated numbers for November. National Oilseed Processors Association crush numbers came in at 156.1 million bushels, compared with expectations of 161.7 million bushels. There was an export sale of 120,000 metric tons of U.S. beans to China for 2015 and ’16 delivery.
Soybeans had a second lower day in a row, starting off the day with double-digit losses. The market cut losses in half at the close. Reports say the tax credit for biodiesel will stay at the blender level, and not change for the producer. This will not help domestic soybean oil usage, as foreign blenders will get the credit. The positive is there still is a credit, and it gives incentive to grow the biofuels industry. Despite bearish news Dec. 17, soybeans turned around to finish with positive gains. Soybeans, and the rest of the grains, started off in red territory, but rallied into the close. Despite a sharply higher dollar, Argentina devaluing its peso, weaker crude and poor USDA export sales numbers, soybeans ended with solid gains. There was a big sale of 424,000 metric tons of U.S. soybeans Dec. 17, which gave the market good news. More bullish news is dryness concerns in Mato Grosso, Brazil.
For the week ending Dec. 12, USDA reported the soybean export inspections at 49.4 million bushels. This brings the year-to-date export shipments pace to 851.9 million bushels, compared with 941.8 million bushels last year.
The soybean export sales pace was estimated at 32.6 million bushels. This brings the year-to-date export sales pace for soybeans to 1.29 billion bushels, compared with 1.51 billion bushels last year at this time. That is ahead of the pace need to meet USDA estimates.
For the week ending Dec. 12, USDA reported the barley export shipments pace at 14,606 bushels, with all of the barley going to Israel. This brings the year-to-date export shipments pace for barley to 1.26 million bushels, compared with 4.71 million bushels last year.
The year-to-date barley export sales pace is 1.2 million bushels, compared with 6.2 million bushels last year at this time. Dec. 17 cash feed barley bids in Minneapolis were $2.60 per bushel.
For the week ending Dec. 12, USDA reported the durum export shipments pace at 3,674 bushels, with all of the durum going to Canada. The durum export shipments pace was estimated at 700,000 bushels. This brings the year-to-date export sales pace to 21.3 million bushels, compared with 19.5 million bushels last year at this time. Dec. 17 cash bids for milling quality durum were $6.75 per bushel in Berthold, N.D., while the Dickinson, N.D., bid remained at $6.75 per bushel.
Canola futures on the Winnipeg, Manitoba, exchange closed the week ending Dec. 17 at $5.40 (Canadian) lower.
Canola started the week with gains, then slipped lower for the rest of the week. Early support spilled over from a weaker Canadian dollar and stronger U.S. soybean complex. The rest of the week, canola traded with small losses during each session. A weaker U.S. soybean complex was the main reason for the selling pressure, while losses were limited by a weaker Canadian dollar. Dec. 17 cash canola bids in Velva, N.D., were at $14.52 per hundredweight.
For the week ending Dec. 12, USDA estimated the export sales pace for soybean oil at 10.2 thousand metric tons. This brings the year-to-date export sales pace for soybean oil to 522.3 thousand metric tons, compared with 401.3 thousand metric tons for last year.
Dec. 17 cash sunflower bids in Fargo, N.D., were at $16.65 per hundredweight.