Holidays leave thinner markets
Wheat The wheat markets finished the Dec. 28 session at three-week highs, fueled by technical buying. In addition, short covering added some upward momentum. The markets are viewed to be oversold, which is inviting the buying interest seen in the...
The wheat markets finished the Dec. 28 session at three-week highs, fueled by technical buying. In addition, short covering added some upward momentum. The markets are viewed to be oversold, which is inviting the buying interest seen in the Dec. 28 session. The outside markets also lent support with the U.S. dollar lower and crude oil higher. Export inspections once again were bearish and serve as a reminder of the low demand for U.S. wheat; however, this had little impact.
Wheat closed lower Dec. 29, taking back some of the gains from Dec. 28's rally to three-week highs. The Dec. 28 rally was seen to be overdone and, as a result, traders took profits during the session pushing the market lower. In the absence of technical buying and fresh news, wheat has little to direct it other than to focus on the bearish fundamentals. The week is much like the previous, both being holiday weeks, so thinner trading volume and choppy trade patterns probably will continue.
Wheat closed higher midweek as trader's position ahead of the New Year. There is an expectation that commodity funds will buy into wheat after the New Year as they reposition their portfolios.
This has traders buying in now. Commodity funds were responsible for buying 1,000 contracts of Chicago Board of Trade wheat during the session. Commodity funds continue to provide direction for the market and are holding a large net short position, which could open the market up to some short covering in the future.
Export inspections are bearish for wheat at 10.6 million bushels. The market needed 18.3 million bushels to stay on pace with the USDA marketing year projection of 875 million bushels. Preliminary estimates were for 12 million to 16 million bushels. Export sales were within expectations at 13.6 million bushels. Preliminary estimates were for 11 million to 18.4 million bushels. This also is above the 13.1 million bushels the market needed to stay on pace with the USDA projection of 875 million bushels for the marketing year.
To start the week, the corn market opened higher and closed with 7-cent gains. The overnight markets were higher and that carried over to start the session. As the day went along, the outside markets were stronger and the funds came in and purchased an estimated 4,000 contracts to add further strength to the corn.
Also, there still are concerns regarding the number of bushels still in the field, and that does provide underlying support. The export inspection report was seen as bearish to the market and that did limit the upside.
Corn opened slightly lower Dec. 29, recovering slightly to trade mostly steady throughout the session and then firmed to close with a 1-cent gain. The corn market was thinly traded and was caught between the weakness in the wheat and the strength in the soybean markets.
Fundamentally, there was no new news to move the market one way or another and we expect more of the same to close out the week.
After the start of the New Year, we may see the funds enter the commodities as they reallocate their positions. The question is will this drive the market higher? Most traders think it will and we will have to wait and see. Remember the old saying is to buy the rumor and sell the fact.
The corn market opened slightly lower Dec. 30 and traded there for the day losing 3 cents. The market was thinly traded and there was no new news to make it move one way or another. The outside markets were mixed and did not give any direction. There also was some profit taking and positioning before the year's end and we can expect more of the same.
Corn open 1 to 2 cents higher and was trading there at midsession Dec. 31, the last trading day of the week. The overnight session had the grains higher and that carried over to start the day. The market still traded thinly with some year-end positioning taking place.
USDA's export inspection report was seen as bearish to corn. There were 27.1 million bushels of corn reported shipped and that was below the 44.1 million bushels needed to meet USDA's projection of 2.05 billion bushels for 2008 to '09. This was at the low end of the range of the pre-report estimates of 28 million to 32 million bushels.
USDA's export sales report estimated last week's export sales pace for corn at 30.4 million bushels, which was equal to the 30.4 million bushels needed to meet USDA's projection of 2.05 billion bushels. This was above the range of the pre-report estimates of 21.7 million to 31.5 million bushels and bullish for corn. This brings the year-to-date export sales pace for corn to 984.7 million bushels compared with 828.3 million bushels one year ago.
Soybeans started out the week rallying on technical buying. There is a lack of fresh news to direct the market and trading volume is thin ahead of the end of the year. Export inspections were supportive, with the bullish number supporting the idea of strong demand. The outside markets also lent some support with the lower U.S. dollar and stronger crude oil.
The market continued to move higher Dec. 29, though the market did experience holiday trading. The market was seeing lighter volume and more choppy trade as we moved closer to the end of the year. The fundamentals remain supportive with the strong demand for U.S. soybeans providing underlying support. Markets had a regular session Dec. 31, but were closed Jan. 1 for the New Years holiday.
The soybean market finished the day lower Dec. 29 as traders took profits ahead of the holiday weekend. Rallies earlier in the week helped to set the market up for its lower close.
Trading volume was thin as holiday trading continues to affect the grain markets. Fundamentally, the market is keeping an eye on the weather situation in South America, though conditions continue to look favorable for crop development.
Export inspections for soybeans were bullish at 51.9 million bushels. Preliminary estimates were for 32 million to 36 million bushels. The market needed 20.6 million bushels this week to stay on pace with the USDA marketing year projection of 1.34 billion bushels.
Export sales came in on the low end of expectations at 29.4 million bushels. Preliminary estimates were for 29.4 million to 44.1 million bushels. The market needed 5.8 million bushels to stay on pace with the USDA marketing year projection of 1.34 million bushels.
USDA estimated last week's barley export inspections estimate at 393,000 bushels, with all of the bushels going to Japan. This brings the year-to-date export inspections estimate for barley to 2.45 million bushels compared with 10.46 million bushels for last year at this time. Last week's USDA export sales pace was estimated at 400,000 bushels, with all of the bushels going to Japan. This brings the year-to-date export sales pace for barley to 3.6 million bushels compared with 10.2 million bushels for last year at this time.
USDA reported last week's durum export shipments pace at 184,000 bushels. Last week's durum export sales pace was estimated at 200,000 bushels. This brings the year-to-date export sales pace for durum to 32.5 million bushels compared with 14.5 million bushels for last year at this time.
Canola futures on the Winnipeg, Manitoba, futures exchange traded with small gains for the shortened final trading week of the year. The Winnipeg exchange was closed Dec. 28 and Jan. 1, so the week was short. Dec. 29 and 30 sessions did bring small gains to the canola market.
The canola market started the week playing catch up to the U.S. soybean complex as the soybean complex traded sharply higher Dec. 28. Light support was a result of the lack of farmer selling as winter weather places a grip on the region.
Gains were kept in check by a strong Canadian dollar, as well as from a sloppy trading session from soybean oil futures.
For the most part, canola hitched its wagon onto the U.S. soybean complex this week and followed them where ever they went. The Dec. 30 cash canola bids in Velva, N.D., were at $16.48.